by Pi Accountancy | Oct 3, 2024 | Frequently Asked Questions
What is a Liability? A liability is a debt or obligation a company must settle. This can be in the form of money, goods, or services. You should record liabilities on the right side of the balance sheet; which includes loans, accounts payable, mortgages, deferred...
by Pi Accountancy | Oct 1, 2024 | Frequently Asked Questions
What are Current Assets? Current Assets (CA) are short-term resources that a business owns and expects to convert to cash or use up within one year. Current assets appear first on a company’s balance sheet under the Assets section and support the daily...
by Pi Accountancy | Sep 26, 2024 | Frequently Asked Questions
What is Cash Accounting? Cash accounting, also called cash-basis, is a method of recording income and expenses based on when money actually enters or leaves your business account. This means you record a payment only when you receive it, and an expense only when you...
by Pi Accountancy | Sep 25, 2024 | Frequently Asked Questions
What is Accrual Accounting? Accrual accounting is a method of recording financial transactions when they happen, rather than when money changes hands. This approach helps businesses gain a more accurate picture of their financial health by tracking income and expenses...
by Pi Accountancy | Sep 19, 2024 | Advisory and Resources, Frequently Asked Questions, Self-Employment and SMEs, Taxes
Income Tax is a tax you pay on the money you earn. The government collects this tax through HMRC. The money collected supports public services such as the NHS and education. However, not all income is taxable. What Counts as Taxable Income? You pay Income Tax on a...
by Pi Accountancy | Sep 18, 2024 | Frequently Asked Questions
Inheritance Tax is a tax on the estate of someone who has passed away. An estate includes property, money and possessions. The tax applies to the potion of an estate that exceeds the tax-free threshold, which currently stands at £325,000. If the total estate value is...
by Pi Accountancy | Sep 17, 2024 | Advisory and Resources, Business, Frequently Asked Questions, Taxes
Capital Gains Tax (CGT) applies when you make a profit after you sell or dispose of an asset. However, CGT only applies to the gain, not the total amount you receive. For example: You buy a painting for £5,000. Later you sell it for £25,000. You have made a £20,000...
by Pi Accountancy | Sep 5, 2024 | Frequently Asked Questions
What are HMRC Penalties? HMRC imposes penalties on taxpayers who fail to comply with their tax obligations. Consequently, these penalties serve as a deterrent to non-compliance and encourage everyone to adhere to tax laws. If you don’t file your tax return on...
by Pi Accountancy | Aug 28, 2024 | Frequently Asked Questions
What is a Cash Flow Statement? A Cash Flow Statement outlines the inflows and outflows of cash and cash equivalents in your business. It provides insights into your company’s liquidity by covering debts and operating expenses without additional financing. Unlike...
by Pi Accountancy | Aug 28, 2024 | Frequently Asked Questions
What is an Income Statement? An Income Statement, also known as a Profit and Loss Statement (P&L), summarises a company’s income and expenses over a specific period. It provides a snapshot of a business’s financial performance and is essential for...
by Pi Accountancy | Aug 27, 2024 | Frequently Asked Questions
What is a Balance Sheet? The Balance Sheet provides a snapshot of a company’s assets, liabilities and equity at a given point in time. This enables stakeholders to assess the financial health and operational results of the business. Moreover, a Balance Sheet is...
by Pi Accountancy | Aug 22, 2024 | Frequently Asked Questions
What is a P45? A P45 document records details about your income and the tax you’ve paid while working for a particular employer. The form ensures that your tax records are accurate and up-to-date, both for you and for HMRC. You will receive a P45 when you leave...
by Pi Accountancy | Aug 21, 2024 | Frequently Asked Questions
What is a P60? Your employer issues a P60 at the end of each tax year, summarising your income and tax deductions from April 6th to April 5th of the following year. This form provides a clear record of what you earned and the taxes you paid over the year. What...
by Pi Accountancy | Aug 20, 2024 | Frequently Asked Questions
What is a P30? Employers use a P30 form to report their National Insurance Contributions (NICs) to HMRC. In the UK, employers are responsible for deducting NICs from their employees’ wages or salaries. These deductions help fund essential social services like...
by Pi Accountancy | Aug 15, 2024 | Frequently Asked Questions
What is an Accounting Journal? An accounting journal is a record where businesses document their financial transactions in chronological order. This process is the first step in the accounting cycle and is crucial for accurate financial reporting. Accountants and...
by Pi Accountancy | Aug 14, 2024 | Frequently Asked Questions
What is an Accounting Ledger? An accounting ledger records all financial transactions organised by account. This ledger records every financial move made by the business, providing a comprehensive view of its financial health. Think of it as the backbone of a...
by Pi Accountancy | Aug 13, 2024 | Frequently Asked Questions
What is an Accounting Period? An accounting period is a specific timeframe for which a business prepares its financial statements and reports. The purpose of an accounting period is to provide a consistent basis for measuring and reporting financial performance. This...
by Pi Accountancy | Aug 7, 2024 | The Budget
The Bank of England Cuts the Base Rate to 5% On the 1st August 2024, the Bank of England cut the base rate from 5.25% to 5% – marking the first base rate cut in over four years! The Bank of England (BoE) uses the base rate to control inflation, which also...
by Pi Accountancy | Aug 6, 2024 | Frequently Asked Questions
What is a Business Bank Account? A business bank account specifically manages the finances of a business. Unlike personal bank accounts, business bank accounts offer features tailored to business needs, helping you to manage income, expenses, and financial...
by Pi Accountancy | Aug 1, 2024 | Advisory and Resources, CIS, Regulations and Schemes, Self-Employment and SMEs
Contractors under the Construction Industry Scheme (CIS), must deduct tax from payments made to subcontractors. CIS Statements are the actual documents which detail how much the contractor paid and deducted. Additionally, each statement covers one tax month and...
by Pi Accountancy | Jul 31, 2024 | Frequently Asked Questions
PAYE, or Pay As You Earn, is the system HMRC uses to collect Income Tax and National Insurance Contributions from employees. Employers deduct these taxes from wages before they reach employees, ensuring they pay taxes throughout the year rather than in 1 lump sum. Fun...
by Pi Accountancy | Jul 30, 2024 | Frequently Asked Questions
National Insurance, or NI for short, is a tax on earnings that funds various State Benefits. Employees, the self-employed and employers all contribute based on income levels. Unlike Income Tax, NI directly supports benefits that people may need throughout their lives,...
by Pi Accountancy | Jul 25, 2024 | Business
The Cycle to Work Scheme is a government-backed initiative that helps employees save money on bicycles and cycling gear. It aims to promote healthier and more sustainable commuting habits while reducing traffic congestion and air pollution. Since its introduction in...
by Pi Accountancy | Jul 23, 2024 | Advisory and Resources, National Insurance, Payroll and Employment, Pension, Regulations and Schemes
National Insurance funds the State Pension and several contributory benefits. However, not every worker pays National Insurance from their first pound of earnings. Instead, the system uses a series of thresholds, one of these being the Lower Earnings Limit (LEL). What...
