Cloud Accounting: Client Case Study

View from the Cloud: Client Case Study

Background:

• Recent startup business
• Set up through a limited company by 2 friends in June 2016
• Beauty salon offering a range of services in the salon or off-site for weddings and events
• 3 employed therapists
• Rent-a-chair for self-employed stylists in excess salon space
• Also, sell beauty products

Kerry and Michelle met at college and remained friends and were both employed until 2016 when they decided to set up their own salon. They researched the competition, did their market research and drew up their business plan. They both had savings which they introduced as directors’ loans to buy some equipment, pay other set-up costs and give them some working capital. They wanted an accounting software package that allowed them both to devote their valuable time to promoting and growing the business, but which still gave them the financial information they needed when they needed it.

Xero was perfect for them in lots of ways including:

• The direct feed from their bank account means bank transactions flow seamlessly into Xero, reducing manual admin work and the risk of data entry errors. The bank can be easily reconciled daily by either Kerry or Michelle using the mobile app wherever they are. Bank rules make this even easier by suggesting transactions based on previous activity.
• The stock control system in Xero gives them an up-to-date view on what their bestselling product lines are, see how much profit they’re making, and use this information to make the right decisions about what to order and how to price it. The simple tracking software is great for independent retailers and wholesalers, or service providers who sell retail items.
• Using Xero payroll and giving their employees self-service access from any device makes it easy for employees to view their payslips, submit their timesheets and apply for leave.

With our access to Xero we are working on the exact same data and are able to help Michelle and Kerry review their figures throughout the year which enables us to:

• Advise on the level of salary and dividends Kerry and Michelle can take throughout the year and before 5 April for tax year-end planning.
• Give estimates of the likely tax liabilities based on the results throughout the year so they can plan for this and there are no shocks.
• See which areas of the business; retail sales, beauty treatments, chair rentals, are generating the most profit so they can make decisions based on valuable up to date information
• Monitor their turnover so that they knew when the need to register for VAT was approaching and could deal with this and also get Xero ready to be able to deal with their VAT returns.

These concepts are not new and we have been providing these services to our clients for a number of years, but Xero and other Cloud accounting software makes it easier and more accessible to more businesses. Kerry and Michelle’s business continues to grow and prosper and we will continue to report their progress and further advances into the digital world.