Like it or not, tax season is just around the corner. And as a small or medium UK business owner, this means that if you haven’t got your accounts in order, now is most definitely the time. We’ve created a guide to having a successful tax return season but I’ve covered some of our top tips here to help you.

Company accounts for the year 5 April 2011 must be prepared and filed online by midnight on 31 January. The first installment of your tax liability must also be paid by the same deadline.

Update: HMRC have announced the following The SA deadline remains midnight on 31 January. But HMRC will treat all returns that come in by midnight on 2 February as though they were submitted by 31 January. No customer will have to pay interest on payments due on 31 January that are paid on 1 or 2 February. Full details are available on the HMRC website.

This means it can be a tricky time for any small or medium UK business; tracking back over old invoices, getting paper work in order and paying tax liabilities.

Now, this may seem obvious coming from us but using an accounts software package throughout the year can often take away that last minute strain for you or your accountant.  However, whether you use an accounts software package or not, there are some key considerations and tax changes that you must be aware of to ensure a successful tax return season.

Effective tax planning strategies

We may be too far into this year’s tax season to put this into place now, but something to remember for the next financial year is how important it is to know your profits and therefore your tax liability. It will give you the opportunity to view what you might owe and allow you to put money aside throughout the year to ensure cash-flow doesn’t become an issue. An effective tax planning strategy might just be the difference in keeping your business afloat or actually allowing your business to grow!

Types on income and financial information needed

Regardless of whether you run your business as a sole trader or a shareholder/director of a limited company, to complete your self assessment tax return generally you will need details of the following types of income:

• Interest income from banks and building societies
• Dividend income received during the year from UK and/or foreign equities, or from shares in your own company
• Details of any capital gains made in the year through the sale of assets, such as shares or investment property;
• Property income, such as rental income
• Income received from gilts or bonds (excluding premium bonds)
• Income from a pension
• Income from a trust, settlement or from a deceased person’s estate
• Income from any employment , self-employment or a partnership

Payroll software to help with your income details

Your business’ payroll software should also come in handy for filing your tax return. The payroll should give you details such as employment income – salary, benefits, bonuses, income tax and national insurance already paid and, so on. Shareholder directors should also make sure they have up-to-date information in their systems of any dividends paid from the company to themselves.

Changes to the tax return penalty system: don’t be late!

Making it more important than ever to get your tax return in on time, the new penalty system means that an automatic fine of £100 applies if your tax return is filed after the end of January. And the longer you leave your tax return, the more severe the penalty becomes – meaning a very unhealthy start to the year ahead if your tax return isn’t filed on time!

The top tip for successful self assessment tax return is to really treat it with respect. After all, it is a legal document on which you are declaring your income for the year to HMRC. Proper record keeping and effective accounts management should see you successfully complete correctly and on time!

If you’d like to know more about filing your tax return online then download our white paper for having a successful tax return season

Nicole Matues,  Small Business Team

When I was asked to write a blog about Payroll Year End, I pondered and asked myself what has kept me interested in working all these years with our payroll software and after a little deliberation, the answer was simple….a real passion in doing what is right for our customers and keeping it simple.

However, less about me and more about giving you my top 3 tips for preparing for Payroll Year End.

Payroll Year End veteran Neilson Watts

Tip 1 – Check that you are using the right version of your software

It’s important that you’re using the correct version of the software for the 2010/2011 tax year to ensure that you have been processing using the right legislation and will be able to submit your returns electronically to HMRC.

For users of Sage Instant Payroll or Sage 50 Payroll software:

Sage Instant Payroll: Open Tools and My Instant Payroll

• Sage Instant Payroll v12.00
• Sage Instant Payroll v11.12

Sage 50 Payroll: Open Help menu and choose About

• Sage 50 Payroll 2011, v17.00, v17.01
• Sage 50 Payroll 2010 v16.01, v16.03, v16.04
• Sage 50 Payroll 2009 v15.04, v15.06, v15.07
• Sage 50 Payroll 2008 v14.07, v14.09, v14.10
• Sage 50 Payroll 2007 v13.10, v13.12, v13.13
• Sage Payroll v12.13, v12.15, v12.16
• Sage Payroll v11.16, v11.18

If you’re not using any of these versions, please email us at support@sage.com or call us on 0845 111 5555, telling us which version you’re using. If you can include your Sage serial or account number in the subject line of your email, or have it to hand if you call that really helps.

Tip 2 – Know what support is available from your Payroll solution provider

From March through to May all employers in the UK registered through a PAYE scheme will be working through their payroll year end returns to get them to the HMRC prior to 19^th May deadline as well as getting ready to start their new tax year.

Not only is it a busy time for you, it’s also a busy time for your payroll solution providers, so we would recommend that you check what support is available to you during this busy period.

At Sage we’ve prepared the following useful information and guides for you:

• Payroll Year End guide: A step-by-step guide that walks you through each process you need to undertake your Payroll Year End procedures.

• Payroll year end website: Our dedicated website contains information about how to prepare, process, reconcile and submit year end returns. There are also useful downloads, information about the status of the HMRC Gateway, the length of our telephone queue, and more.
• Ask Sage: Our Ask Sage online database contains over 1800 Sage 50 Payroll and 250 Sage Instant Payroll related questions and answers, including any known issues. You can access Ask Sage from www.sage.co.uk/pye or by visiting www.sage.co.uk/ask and enter your query into the Search text box then click Search.
• Email support: If you can’t find the answer to your query via Ask Sage, you can email us at support@sage.com. We aim to respond to all email queries within two working days. Please remember to include your Sage serial number or account number in the Subject line of your email.
• Telephone support – From Monday 28 March to Friday 27 May, we are extending our payroll technical support and customer service opening hours. During this period, you can call us on 0845 111 5555 from 8am to 6pm. And don’t forget to have your Sage 50 Payroll or Sage Instant Payroll serial number ready, as you may need to quote this when you call.

Tip 3 – Give yourself plenty of time and peace and quiet to run your Payroll Year End

Being a typical male, ordinarily I would leave everything to the last minute, but failing to prepare, you are almost certain to fail. This is probably the most important bit of advice I can offer (déjà vu with some Baz Luhrmann lyrics).

I have the concentration of a three year old, and use any interruption as an excuse not to do something I am not looking forward to, but seriously Payroll Year End is quite straightforward you just need to give yourself plenty of time and ensure where possible you remain uninterrupted.    My advice would be to block out your calendar, close down your email, take the phone of the hook and focus on getting those returns submitted with plenty of time spare.

Also remember this year is the first year HMRC have removed the statutory concession that used to allow employers to file up to 7 days after 19^th May without incurring a penalty.

Nielson Watts, Payroll Year End Veteran

Win a team building day worth £2500

To celebrate the release of our payroll software, Sage 50 Payroll 2011, we’re offering you the chance to win a team building day for your business.

And what do you have to do to be in with a chance of winning a team building day worth £2500? Just tell us your top tip for motivating your team.

Team building activities can improve productivity and motivation by taking everyone out of the office for a while. Getting rid of distractions and getting to know each other better whilst having some good old fashioned fun is one way of motivating people. But how do you motivate your team?

Just complete the form and tell us your top tip for motivating people.

And, of course, don’t forget to check out the t&cs

Jo Lennon, Small Business Division

Gary Ging, Sage Payroll Team (enjoying a Newcastle summer)

Online filing

This used to be a laborious task of having to produce two copies of the P14 form for every employee who worked for you during the year and the P35, which summarises all of the information on the P14s. This was all mailed in the post to HMRC (at the employer’s cost) or you went to your local tax office to deliver it personally. And don’t forget that you also have to give a P60, on paper, to all of your employees still employed by you at the end of the year.

The introduction of online filing has changed the way in which employers can send this information to HMRC and this year was the first year in which all employers, with a few exceptions, were required to submit their year end information online. Not only is this much easier than printing lots of paper work (it’s now just a couple of mouse clicks) but it gives you an immediate response from HMRC to tell you that they have received the information and if everything was ok or not.

How did we do?

We recently received our annual Vendor Report from HMRC detailing how our payroll products performed over the 2009/10 on-line filing period and we were once again very happy with the figures – 436,104 successful employer submissions for a total of 7,218,432 P14s.

Since the introduction of on-line filing we have always exceeded the previous year figures but the most pleasing aspect of the latest report is that it’s not just about the quantity of submissions but also the quality.

The Vendor Report doesn’t just tell us how many successful submissions were made using Sage Payroll software but also how many were unsuccessful, and this year there were 661. No, that isn’t a typo – out of 436,765 submission attempts there were only 661 failures.

This gives us a 99.85% success rate, which I think is pretty phenomenal considering the number of submissions made. And whilst 661 submission attempts were unsuccessful, this does not mean that 661 employers who use our products were not able to submit at all – our submission data shows that these employers did make a successful submission after correcting the original problem.

And I don’t refer to the number of failed submissions as ‘only 661’. We believe that this number is too high and so we have already set ourselves a target of improving these numbers for next year – not only on the number of submissions but we’re going for a 100% first time success rate.

On a final note, HMRC have changed their regulations and so from the 2010/11 year end it will be possible to give your employees their P60 electronically. Within Sage Payroll this will mean that you can either continue to print them on paper or email them directly to your employees, complete with password protection.

Gary Ging, Sage Payroll Team

Andrew Redhead, Sage Payroll Support Team

For those of you that don’t know, Payroll Year End is an annual event where everyone who processes payroll has to send their P35 and P14 reports to the HMRC to show what they have deducted from all employees over the previous year.  All reports have to be received by the 19th of May or they will kindly send you a fine for every day it is late.

Days at Payroll Year End are much like any other except they start earlier, end later and are very busy.  Due to the longer opening hours we have people in the office from 8 in the morning till 7 at night to answer calls.  It’s very intensive, and I need a high level of concentration to make sure we support our customers to the high standards they expect and deserve.

Calls from our customers can range from an installation of the new version to make sure they are all ready for the new year or a problem with a P35 not balancing and needing to find out why.  We will also receive calls about the more standard issues for payroll like statutory maternity pay and holidays.

Throughout the day there are various things Sage do to make it go as smoothly as possible.  If we work half lunches we get a free sandwich delivered to our desk.  There is chocolate passed around to keep our energy up and the coffee machine is free for part of the day.  They may sound like little things but they all add up to make the day go smoother.

With a job based on the phone though the biggest thing that effects your day is the customers you speak to.  It’s a stressful time of year for our Sage Payroll customers and you’d expect some of them to be frustrated and annoyed, they are however not.  They are very nice to speak to and although they may mention how busy we are they seem to understand why we are so busy.  Depending on the type of call there may be time to talk about things outside of payroll.  This is always a nice change of pace and can make the day go much quicker.  On other calls there is no time for conversation so it’s just a case of entering the notes then onto the next customer.

At the end of the day it’s a case of finishing the call you are currently on before you go home.  It might be time to go home, but it’s not a matter of passing the call to colleague to finish it or ringing the customer back the next day; what matters is taking the time to help the customer no matter how long it takes.  Once you’re done and it’s off home to relax and enjoy the evening before getting up to do it all again.

For our customers I’d say don’t worry if things aren’t going smoothly for you. The important thing about Payroll Year End is to just not let it get on top of you.  Yes you’re busy, yes it can get stressful, but if you do have a problem there is someone like me at the end of the phone to help you.

Useful links:

• Visit our Payroll Year End website for updates and information
• You can find P60s, Payroll Year End training and Payroll software at the Sage Store

Andrew Redhead, Payroll Software Support Team

At some time, all businesses, whatever their size, have posed this question and tried to deal with the reality of the answer.

Many businesses feel that the right option is to invest in payroll software and staff to manage the payroll in house, but many others feel that the better option is to outsource their payroll.

What are the key considerations?

Time:  Does your business have the time and expertise to take their focus away from their business so that they can deal with payroll weekly or monthly?  Payroll is a task that has natural peaks and troughs throughout the month – will filling this role internally be cost effective for your business?

Reliability: It goes without saying that your staff will require payment on time, every time.  The payroll must be accurate and must be processed when it is due regardless of holiday, sickness or any other unforeseen circumstances

Confidentiality: Payroll is probably the most sensitive subject within a business – an indiscretion can cause huge upset – can the organization be sure that sensitive information is kept confidential?

Flexibility: Changes may need to be made to payroll at any time – will the in house resource always be available to make last minute changes?

Cost: Last but by no means least, cost is a major consideration for businesses when considering outsourcing.  While it may be advantageous to have in house staff available ‘on tap’ as it were, there are costs involved in staffing this role, eg holiday/absence cover, on going training (payroll is an area that is guaranteed to have annual changes – and that’s before whoever is sitting in No 11 decides to be imaginative (remember the computer incentive scheme!), not forgetting the cost of the payroll software, support and annual updates.

We know that different customers have different needs, which is why we offer both payroll outsourcing and payroll software, so take your time to work out what solution suits you and your business the best.

Alison Godwin, Sage Outsource

Gary Ging enjoying a well earned break

By the time you are reading this our new Payroll and HR 2010 products will have just been released and the R&D team will be all sitting around and relaxing with our feet up. Actually, that won’t be true because as soon as those products are released focus switches to our Payroll Year End project – there’s no time to rest for us…

But I digress, what I wanted to talk about was a couple of new features we’ve put into our 2010 products that I think a lot of people will benefit from.

One area we’ve looked at in our Payroll product is how you deal with the statutory payments for employees, such as sick pay, maternity and paternity pay. In Payroll 2010 it’s now a simple matter of entering one or two dates and the program will immediately tell you whether or not the employee is entitled to a payment, and if so, how much, and more importantly, if they aren’t entitled then why. Our Customer Services team say that processing statutory payments is a common theme on the helpline and they think that the improvements we have made will help a lot of our customers.

One of the many new features in HR 2010 is the ability to record employee holidays as a number of hours, as opposed to days. It’s a simple, straight forward, feature but this was the number one item on our customer wishlist and improves what, I think, is an already great product.

 We really do listen to and appreciate your feedback and suggestions and while there are a lot more great new features in both products please keep on telling us what you want to see in future versions, or, and this is just as important to me, what you don’t like in the current products – just because something is the way it is now doesn’t mean we can’t change it in the future if it means it will make better.