Figurate Ltd

New VAT Rate

admin — Mon, 24 Nov 2008 12:00:56 +0000

From Monday 1 December 2008, the VAT rate will drop to 15% and remain at this level until 31 December 2009, when it will revert back to 17.5%

The new VAT fraction is 3/23.

Invoice Payment Terms

admin — Thu, 10 Jul 2008 09:00:55 +0000

Some common invoice payment terms:

Net 7 Payment seven days after invoice
Net 30 Payment 30 days after invoice
Net 60 Payment 60 days after invoice
Net 90 Payment 90 days after invoice
Net monthly account Payment due on last day of the month following the one in which the invoice is dated
EOM End of month
COD Cash on delivery
Cash account Account no credit given
CND Cash next delivery
CBS Cash before shipment
CIA Cash in advance
CWO Cash with order
1MD Monthly credit payment of a full month’s supply
Contra Payment offset against the value of supplies purchased from the customer
Stage payment Payment of agreed amounts at stages
PIA Payment in Advance

Credit Checks

admin — Wed, 09 Jul 2008 09:00:37 +0000

Before giving your customer credit, it is advisable to do some checks. Below, in no particular order are some of the checks that could be made:

request a bank reference
request trade references
check the limited company’s details against Companies House
credit reference check
analysis of customer’s year-end accounts

You can ask for bank references, trade references (from your prospective customer’s other suppliers), you

Terms and Conditions

admin — Tue, 08 Jul 2008 09:00:33 +0000

Hopefully, you will have already made your customer aware of your standard terms and conditions at the start of business relationship. Many businesses consult a solicitor for help in setting these out clearly.

Having clear standard terms and conditions can help protect your rights in the event of a dispute. Having them printed on the back of your sales invoice can serve as a timely reminder to your customer.

Your terms and conditions can cover such items as:

payment terms
credit limits and credit period
interest charges on late payments

Sales Invoicing

admin — Mon, 07 Jul 2008 09:00:01 +0000

If you give your customers credit (and most businesses do), it’s important to get your invoicing and customer payments systems in order. The obvious benefit is to aid cash flow and it is the first step to good credit control and fewer bad debts.

Some while ago, I posted about some basic details that need to be included on a sales invoice. In addition, if the business is a limited company, the sales invoice must include:

the correct full company name (as written on the certificate of incorporation)
any “trading as” name or business name.
the names of the directors may also be included – but it is a case of naming all the directors or none at all.

Sole traders must give:

the business name, if the surname is not being used.
an address.

If the business is VAT registered, the VAT number must also be given.

It’s also important to send the invoices out as promptly as possible, particularly at month-end when many companies have a “cut-off” point and invoices received later are processed in the following month, resulting in later payment.

Emergency Tax Codes

admin — Thu, 05 Jun 2008 09:00:48 +0000

Occasionally, a new employee will start without a P45. An Employer must then use an emergency tax code. The emergency tax code is currently: 543L, although, from 7 September 2008 it will be 603L. Using this code usually means that the employee gets their basic personal allowance, but does not take into account any other [...]

Other Tax Codes

admin — Wed, 04 Jun 2008 09:00:40 +0000

Sometimes a tax code may have two letters and no numbers or be another combination:

BR Code
This code is commonly used where it is an employee’s second job and the all their personal allowances are used in the first/main job. All income earned under a BR tax code will be taxed at basic rate.

D0 Code
An employee with this code has all their income taxed at the higher rate of tax. This is also commonly used with a second employment, where the first job uses up all the personal allowances and income taxable at the basic rate of tax.

NT Code
An employee with this code has no tax deducted at all from their pay.

T Code
T at the end of a tax code indicates “temporary”, specifically that there may be items under review by HMRC.

Common Tax Codes

admin — Tue, 03 Jun 2008 09:00:15 +0000

L Codes
Used for employees who are eligible for the basic personal tax allowance and also as an “emergency tax code”. This is the usual code for employee’s main (or only) job with straightforward tax affairs.

P Codes
Used for people aged 65-74 who are eligible for the full Personal Allowance.

V Codes
Used for people aged 65-74 who are eligible for the full Personal Allowance, the full Married Couple’s Allowance and are estimated to be basic-rate taxpayers.

Y Codes
Used for people aged over 75 and who are eligible for the full Personal Allowance.

What is a Tax Code

admin — Mon, 02 Jun 2008 09:00:08 +0000

A tax code is the short alphanumeric (eg. 543L) code that an employer uses to work out the correct tax to deduct from an employee’s gross pay.

Net Book Value

admin — Thu, 08 May 2008 09:00:43 +0000

Also, called the “carrying value”, the net book value is the value of an asset in the accounts at any given point, calculated by: original value less accumulated depreciation OR previous year’s value less current year’s depreciation. (Ignoring, for the time being, revaluations and so on)

In yesterday’s examples, the net book values would be as follows:

Straight Line Method
At the end of year 1: £10,000 – £1,000 = £9,000
At the end of year 2: £10,000 – £1,000 – £1,000 = £8,000 OR 9,000 – £1,000 = £8,000
At the end of year 3: £10,000 – £1,000 – £1,000 – £1,0000 = £7,000 OR 8,000 – £1,000 = £7,000
etc…

Reducing Balance Method
At the end of year 1: £10,000 – £2,500 = £7,500
At the end of year 2: £10,000 – £2,500 – £1,875 = £5,625 OR £7,500 – £1,875 = £5,625
At the end of year 3: £10,000 – £2,500 – £1,875 – £1,406.25 = £4,218.75 OR £5,625 – £1,406.25 = £4,218.75