Get paid faster with PayPal SortMyBooks Integration.

We have been working hard behind the scenes to bring you this wonderful new feature for you not only to get paid faster, but also to have payments you receive from your customers automatically logged into your SortMyBooks accounts, updating your Vat, your P&L and your Debtors.

Enabling this feature within SortMyBooks will add a ‘Pay Now’ link to any invoices you email out to your customers.

When your customer receives your invoice via email, they can click the ‘Pay Now’ button. This will give them the option to pay you via credit card or, if they have a PayPal account, they can pay using that.

Do I need a merchant account to use this?

Absolutely Not!  All you need is a PayPal account, and if you don’t have one, setting it up is easy and free. PayPal will withhold a percentage of your payment, just as a merchant account would, but unlike a merchant account, there is no fixed monthly fee. You only get charged when you receive money. Your customers do NOT need a PayPal account in order to pay you. They can pay by credit card by clicking the link in the invoice you email to them.

How to enable this feature in SortMyBooks:

If you already have a PayPal account:

Check your PayPal account settings first to confirm the “Primary” Email Address. To do this, login to your PayPal account and click on the “Profile” button on the top menu bar. You will see your primary Paypal invoice ticked there.

Now go to SortMyBooks, click Settings and Accounting, and simply enter your primary paypal account email where shown. That’s it!

Now when you email your invoices from within SortMyBooks, the ‘Pay Now’ button will display for your customers to pay you by credit card or using their own paypal account, whichever they prefer.

Once your customer has paid you, your SortMyBooks accounts will immediately be updated with the payment information. Magic!

I don’t yet have a Paypal account, how do I sign up?

Signing up is easy and FREE!

To avail of this new feature, you will have to set up your own PayPal business account, if you don’t already have one.

Click on this link to get started:

Should you have any questions at all about PayPal, contact:

Tom Hipwell  / Merchant Services
Direct Dial Ire : 01 4369206
thipwell@paypal.com

Tell them you are a SortMyBooks customer, we have been working very hard with Tom and PayPal to get this feature ready for you.

Once you are all set up with PayPal, follow the ‘How do I enable this feature in SortMyBooks’ steps above to start sending out your invoices with PayNow buttons attached!

Click here for a more detailed instructions on the feature from our knowledge base.

Here’s to Getting Paid Faster in 2012!

If you are VAT Registered and selling exclusively to businesses

Anything you have been selling at 21% is going to go up because you now need to charge 23%.
If you usually quote VAT exclusive prices then all you need to do is start charging VAT on your sales invoices at 23% from 1st January 2012.

If you are VAT Registered and selling to consumers

You are going to have the most work to do because you have to raise your prices now in time for 1st January 2012. Everything that you sell currently at 21% is going to have to be increased to include 23% VAT.

The spreadsheet below is a quick calc to help you figure out exactly what to raise your prices to.
Click EDIT to change the blue figures to your numbers or else download it to excel.
If for some reason you cannot see the spreadsheet embedded below, click here: .

1.    Christmas bonuses are in short supply for most of us. But you don’t have to be a total scrooge. Once in each payroll tax year (eg. Jan to Dec) you are allowed to give your employees a non-cash gift to the value of 250 euro without them having to pay any tax or you having to pay Employer’s PRSI on it. You can buy them something you know they want or give them a gift voucher from their favourite shop.

2.    If, like most small business owners, you put your long suffering spouse to work on a regular basis helping you out with the accounts, then it makes sense to pay them. The lower your salary the less tax you pay so instead of you having a larger salary and your spouse having no salary pay them for the work they are dong in the business. This only works if your spouse isn’t employed elsewhere. If they already have a job then they are probably using up all their tax credits unless they are only part-time in their other job.

3.    If you run your business out of your home you may be able to claim a portion of your home broadband, telephone, gas and electricity expenses. I do have a huge warning on this though…before doing it you really should ask your Accountant or a Tax Consultant. The reason is that classifying part of your family home as a business could result in a capital gains tax bill if you sell your house. Eg. If you say that 20% of your house is used for business and you sell your house then the Revenue may ask for capital gains on 20% of the profit.

4.    If you have a limited company and you use your own private car for business journeys then make sure you are claiming all your business mileage. Every time you get in the car record the miles and the purpose of the trip. There are great apps for this if you’ve got a smart phone. Most of us remember to record the big trips but we forget about things like driving to the bank, visiting your accountant, going on sales calls to potential customers, meeting with suppliers or attending networking meetings. The rate varies depending on your cars engine size but click on this link to see the rates.

http://www.revenue.ie/en/tax/it/leaflets/it51.html

The second part of this tip involves subsistence – again this is only if you have a limited company. Whenever you have to be away from your normal place of work you can claim for subsistence as follows:

a. 5 hours or more – 13.71

b. 10 hours or more – 33.61

c. Overnight – 108.99

See Revenue’s leaflet for full details

http://www.revenue.ie/en/tax/it/leaflets/it54.html

5. One of the most obvious ways to legitimately reduce your tax bill is to properly record all of your business expenses.  If you are slapdash with receipts and think it is too much hassle to track them all then you’ll lose money.
 You are taxed on profits. So if your profits are high because you forgot to include all your costs, then for every receipt you lose, you can plan on adding up to 50% to the cost of your item because that’s what you might end up paying in additional tax on it. 
Add another 21% if there was VAT on it. Especially if you often pay for things out of your own pocket instead of your business bank account, those extra costs may never come to light.

Anne Hannan, CEO www.sortmybooks.com. Anne designs easy to use, jargon free, online accounting software that helps small business owners really get what their finances are trying to tell them.

Click here for the TodayFM Sunday Business Show

Nothing hard there right? Let’s rearrange them a bit.

Everyday things

1. Sales – that’s our favourite part let’s leave them here on their own.
2. Expenses- Lump the everyday  spending together here. Advertising. Wages. Rent. Insurance. Travel.

Let’s get two more groups going over here with the rest:

Good Things

1. People who owe me money
2. My bank balance
3. My new truck

Bad Things

1. People I owe money to
2. My credit union Loan

Now comes the smoke and mirrors part; let’s how investors, banks and accountants see our  business.

Everyday things – Profit or Loss

1. Sales
2. Expenses:  Advertising. Wages. Rent. Insurance. Travel.

Subtracting your everyday expenses from your sales is what gives your profit or loss. See? Not that hard. And your profit is what you get taxed on. Sales minus expenses = Profit

All the other stuff forms the balance sheet.  No don’t run away – look its easy!

Balance Sheet

Good Things – Assets

1. People who owe me money – Debtors
2. My bank balance – Current Asset
3. My Truck – Fixed Asset

Bad Things – Liabilities

1. People I owe money to  – Creditors
2. My Credit Union Loan – Long Term Liability

But why do they need to do that and why do I care?

This is the only language your bank understands. Just look at what they do with it to pass judgement on you!

Liquidity Ratio

It sounds interesting, but it simply means how much more you have than you owe.

Divide your good things above (assets) by your bad things (liabilities) and  put a :1 after it.
So  if your assets add up to 100,000, and your liabilities add up to 50,000 divide 100,000 by 50,000 getting 2. Your liquidity ratio is 2:1. You have twice as much as you owe.  Do you see? Remember, all your own information.  Nothing scary or confusing after all, is there?

Debtor Days

So one of those things that you ‘have’ is people who owe you money. You don’t physically have it cause it’s in your customers pockets, but make no mistake, it’s yours. What the bank will want to figure out, is how long those people owe you the money, because as you already know, the longer they owe you the less likely it is you will get paid. They basically want to test the likelihood of that potential asset becoming actual. How can they possibly do that without ringing up your customers?

First find out your average daily sales, by dividing your sales figure for the year by 365. Thendivide your ‘people who owe you money’ or Debtors figure by that. The answer will be how many days on average it takes you to collect your money.  This is scarily accurate. Try it!  Sales 36,500= average sales of 100, If Debtors =6,000 Debtors days = 60. Obviously the lower the number the better.

Knowledge is Power . Go for that loan or investment knowing exactly how the other party is evaluating you. It gives you clarity and negotiating power.

Did this help prove accounting IS easy?

Let’s start with the purpose of the deadline. What’s it for? It is for you as a sole trader to pay the income tax you owe for your latest accounting period. For example, if your tax year is January to December, then on October 31st, 2009, you need to pay tax on the income you earned between January 2008 and December 2008.

What exactly is considered my income?

This is actually a very simple formula. You need to know what you sold during that period, and what your business costs were during that period. Sales minus business costs equals income. This income is what gets taxed at the 20% or 41% rates. We’ll discuss the calculation later. Let’s deal with how to gather the sales and costs information first. This is where you can make things as easy or as difficult as you like, depending on what you did with your paper during the year.

How do I figure out my sales?

It’s important to note that right now we are talking exclusively about sales. What did you charge your customers? “I charged €2,000 plus VAT to wire a house.” Well, €2000 is your sales (drop the VAT, you don’t get to keep it). “But I had to buy cabling to do that, and I needed to repair my drill.” Exactly, there are costs involved in sales. But that is handled in the next section. Right now, just figure out the total of what you charged to people in 2009. You might have a set of docket books that you used, or just a notebook, an excel spreadsheet, a printout from a software package, something that somehow recorded your sales. Now get a total for the year, without the VAT. Remember, if you have a revenue inspection, you will have to be able to explain that figure and back it up with paperwork.

How do I figure out my business costs?

Your business costs are simply goods or services you bought for the expressed purpose of doing business. For example, paper and ink cartridges for your office printer are considered business costs and can be subtracted from your sales to determine your income. Same with accounting software and accountant’s fees. As with the sales, you don’t include the VAT amount.

Wages paid to employees, and PRSI paid to the Revenue on their behalf are also deductible.

I am hoping you have a box or a lever arch file with all your purchases together. Better still if you have them typed up in a spreadsheet or in an accounts package. Or even written up in one of the famous red ledgers accountants are so fond of handing out (but why I ask). Ultimately you want a total for the year, that you can explain and tie back to the paperwork if you have a Revenue inspection. For the few things that you won’t have receipts for, like wages paid out, you will have to find these amounts in your checkbook or on your credit card or bank statement.

What is not a business cost?

Anything you didn’t spend to do business. School clothes for the kids. Food and other personal living expenses. Holidays, unless it’s a business trip. And before you ask, not business suits either. Yes I know you wouldn’t wear them expect for business. I didn’t say it was fair. The mortgage on your private home. Entertaining or even feeding business guests doesn’t count either, as unfair as it seems. Neither do wages paid to yourself count. Ignore them for the purposes of this calculation.

“Aileen, I bought a van for the business. Sure there won’t be any profit to tax after that?”

This is where it gets a bit tricky. If you bought any assets for your business, such as a Van or a special equipment, you need to spread out the cost over a few years. So instead of calling the whole price of the van a business cost in the first year you bought it, instead you will calculate what is called a Capital Allowance each year for as long as what the Revenue considers to be the life of the van. Confusing? Call the Revenue or your accountant for a longer explanation. But don’t get bogged down and give up. These kinds of items are about 5% of your job. The other 95% are very straightforward.

“Aileen, what if I didn’t keep any records?” Oh boy. Had you read theRevenue Guide IT48 you would have noticed that it says, “Q. What happens if I fail to keep proper records? A. Failure to keep proper records or failure to keep them for the necessary six years, where you are chargeable to tax, is a Revenue offence. If you are convicted of a Revenue offence you face a heavy fine and/or imprisonment.” For this year, your best bet is to try and find a good bookkeeper or accountant who will help you figure out what you owe up to now. Skip ahead to the part that says “How do I make this easier for next year?”

For those still here read on… Ok, now I know my income now, what is my tax going to be? Say you have figured your sales minus your costs to be 45,000 (we are making it even for simplicity’s sake.) “Good God, I haven’t that much in the bank” Yes, that’s the difference between paying tax as you earn it (PAYE) and paying later. It can kind of build up on you. So what’s the tax on €45,000? Well let’s say you are single, or you are married but your spouse also works. We need to use the 2008 rates, cause that’s when the income we are talking about was earned. Well, up to €35,400 will be taxed at 20%. So that’s €7,080 right there. That leaves 9,600 at 41%. That’s another €3,936. We are up to €11,066 now. But hey you get a discount, in the form of tax credits! As a self-employed person you get to take all of €1,830 off the €11,016 leaving you with a tax bill of €9,186 “What? Nearly Ten grand??” I’m sorry, I am not finished. I am afraid you will also have to hand over 5% of your gross income to the Department of Social Welfare for PRSI and Health Levy. That’s an additional €2,250 giving you a grand total of €11,436 that you owe to the taxman. Hopefully you paid enough preliminary tax last October to cover most of it.

Check it out yourself here: SortMyBooks Quick Self Employed Tax Calculator

“What’s Preliminary Tax?” It’s kind of like a deposit that you make this October on the tax that you will you owe next October. “A deposit? Like 5%? or 20%?” Sorry, I am afraid it is actually 90%. “And what if my deposit wasn’t enough?” Well chances are you will have to pay interest on the balance, unless it’s your first year of business. You don’t have to pay preliminary tax in your first year of business, but it only means you will have to pay double tax in your second year. For a longer explanation, see the IT48 section on Preliminary tax.

“Aaargh, you’re killing me – is there anything I can do to reduce my tax?” Well the first thing people usually to is scrabble around to make sure they didn’t forget about some really big business thing they bought and forgot to include in their accounts (I was that soldier). But failing that, the best way I know of to reduce your tax bill is to go get a good pension. If you have hit the high tax bracket, then for every hundred euros you put into your pension, that’s 41 euros off your tax bill, and another 5 off your PRSI. Which means your 100 euros of pension only cost you 54 euros. Wouldn’t you rather put it towards 65 year old you’s pina coladas on the beach than give it to the Revenue? Check out the Pensions Board website to learn more about this. It has a handy calculator.

“Aileen, I don’t want to go through this again. How do I make this easier for next year?”

Separate, separate, separate. As you may have noticed, you had to find out what money came in from your business, and what money went out for the purpose of your business, as opposed to personal expense. Wouldn’t this be a whole lot easier if you had a separate bank account just for your business transactions? Another good idea is a credit card that you keep just for business purchases. At least if you lose a receipt, there is a record of the expense. If you lose a receipt that you used cash to pay for, chances are it never gets included as a business expense, and you’ve just paid another 46% more for that item that you didn’t have to. Also, set up a preliminary tax direct debit with the Revenue. This will help with the end of year shock.

Learn – Knowledge is key. Get the Revenue Guide IT48 www.revenue.ie/leaflets/it48.pdf, from the Revenue On-Line website, it is fairly easy to understand.

Take a business class to help you set up an easy to use (preferably computerised) bookkeeping system to avoid the Halloween nightmare. I say computerised because it’s a way of killing several birds with one stone. Use it to keep track of who owes you money, how much VAT you owe and what your profits are. You will have those figures anytime you need them rather than just at the end of the year. Ask your Enterprise board or local VEC about classes. Know your own business. Learn to set up an organised system and spend just one hour a week on it, and you will never have a Halloween nightmare again.

I ought to know, I am a reformed sloppy record keeper, and I have the sherrif’s letters to prove it.

SortMyBooks one day workshops are being run in Kerry, Cork and Dublin to help business owners stay out of trouble with the Revenue and keep track of their VAT, Profit, Customers and Suppliers on an ongoing basis. Click here for course details.