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The Perfect Corporate Video
Depending on which research you believe, including video within your campaign can increase click through rates by 300%. If you want to correspond with a company’s senior executives, you had better include a video link as 60% of them prefer receiving video to text. Yet click through only generates traffic. In order to be successful you really need to convert this into sales. That means generating compelling content. Whilst I could write a book on the subject, let’s break it down into three steps.
To find out more on video statistics, watch this:
Step 1: Know your audience
This is your starting point; it steers the whole production in a single, clear direction informing not only how the video looks and sounds, but also how it’s filmed, edited and presented.
In broadcast media it’s standard practice to have a profile of a typical viewer or listener. We give them a name, we know how old they are, where they live, how many kids they have, what car they drive, the newspaper they read and what other programmes they are watching.
You may think being too specific could lose you business; it won’t. The more specific you are the greater the clarity of your production.
Step 2: Know what outcome you want
It doesn’t take long in business to realise that nearly every marketing message your company puts out must have a clearly defined objective. If the aim is to make a sale then everything you do should point the viewer in that direction. If it’s to raise awareness you’ll need a mechanism for measuring that too.
Step 3: Know how you are going to get a response from your video
Now we have to determine how we’re going to achieve the final step – the all-important conversion. This is where a significant number of people are lost. Imagine promoting a holiday destination with an enticing video of the hotel. The pool looks inviting and there are lots of happy people saying what a great time they’ve had. The video ends on a call to action to visit the website to book. That’s another hoop, more typing and more effort. To increase conversions include directions in the video to a simple tracking link included in the email. Autoresponders such as Aweber and GetResponse allow you to manage your campaign.
Even with a compelling video, the maxims of email marketing still hold true – a captivating subject header, personalisation, call to action and tracking.
Alan Coote’s career spans 35 Years in Creative and Digital Media including the BBC, BAE Systems and numerous Independent broadcasters. He is the MD of 5 Digital and broadcasts weekly on the national business radio programme Let’s Talk Business. Follow him on Twitter @TheAlanCoote
Disincorporation Relief – its not just for Window Cleaners
Discorporation Relief is new, it came in to effect from 1st April 2013 and is currently available until 31st March 2018.
HMRC estimate that 610,000 businesses are eligible to use the Disincorporation Relief.
Here is the HMRC example from the Consultation document:
Window Cleaners Ltd a one man company that incorporated on 1 April 2004 and the shareholder, Mr Smith, had previously carried on the business as a self employed individual before 1 April 2002. Turnover is below the VAT threshold. The business has an established repeat customer base. The only significant business assets are a van, equipment and goodwill. The van and equipment are worth around £3,000 and the goodwill is valued at £15,000, together worth £18,000. The goodwill was acquired from Mr Smith for £5,000 on 1 April 2004. The Capital Gains rules apply and Corporation Tax is payable @ 20 per cent.
Tax chargeable on goodwill:
If the assets are distributed back to the shareholder (Mr Smith) on 1 February 2012 the following charge would arise on the goodwill:
· Corporation Tax on goodwill gain £8,540 (£15,000 – £5,000 less indexation £1,460 (£5,000 x 0.292)) @ 20 per cent = £1,708
There is no Corporation Tax to pay on any gains made on the transfer of the van and equipment because these are chattels worth no more than £6,000.
Shareholder charges:
Mr Smith will also have to consider what tax he will have to pay on the value of the distributed assets of £18,000. The amount of charge will depend on whether the assets are treated as income or capital.
If distributed as capital, the actual amount of Capital Gains Tax that Mr Smith will have to pay will depend on a number of factors, including how much was paid for the shares, whether incorporation relief was claimed, whether Entrepreneurs’ Relief conditions are satisfied and availability of capital loss relief.
Assuming £100 was paid for the shares, that Mr Smith has no other gains in the tax year (and so the annual exempt amount of £10,600 can be used against the gain) and that he is entitled to Entrepreneurs’ Relief, then the amount of Capital Gains Tax to pay would be:
· (£18,000 – £100 – £10,600) x 10 per cent = £730
If the assets are distributed as income (i.e. a dividend) Mr Smith will only have to pay Income Tax if any part of the dividend is liable to Higher Rate Tax.
Criteria to qualify for disincorporation relief
Below is a basic summary of the main qualifying criteria:
- The company must have been operational for 12 months and the shareholders must have held their shares for 12 months
- The business must be transferred as a going concern to the existing company shareholders
- The transfer must become effective before 31st March 2018
- All assets, including goodwill, capital assets, trading stock and cash, must be included in the transfer. The value of those assets must be no greater than £100,000
- Recipients of the new “disincorporated” entity must either be individuals or partnership members (not members of an LLP)
Why would you want to disincorporate?
- Reduced compliance – Company Accounts, Corporation Tax Returns, PAYE, Annual Returns
- Reduced Costs – Accountancy Fees
- Cash Based Accounting
steve@bicknells.net
Are you a Business Owner with No Private Pension?
You’re not alone its estimated that 1.3 million business owner have no private pension that’s approx one in two UK Business Owners (according to Prudential).
https://www.moneyadviceservice.org.uk/en/articles/uk-business-owners-lack-pension-savings
Nearly one in three business owners (or 792,000 people) say they will be entirely reliant on the State Pension when they come to retire, compared with twice as many people across all employment types retiring this year in the UK.
Other self-employed workers will supplement their retirement incomes with money from a mix of alternative sources:
- half will draw on other savings and investments
- one in four will use equity from their properties or plan to use their partners’ pensions, and
- one in five plan to use funds from the eventual sale of their businesses.
Most of us know we should be saving more for retirement and the government knows that we need to save more too. That’s why they give pensions tax breaks and employers are being forced to auto enrole staff into pension schemes and make payments.
But how many of us stand a chance of saving £400k into our pensions? it’s a huge amount of money and yet it only buys a modest pension. Work out your strategy now before its too late.
http://stevejbicknell.com/2012/07/29/what-is-the-minimum-pension-fund-you-will-need-to-retire-400k/
steve@bicknells.net
EMPLOYER’S £2,000 NIC ALLOWANCE
Why the Ostrich? Well I think she’s pretty!
This valuable allowance is due to start for all businesses on 6 April 2014, and simply exempts the employer from the normal employer NICs of 13.8% of the earnings paid.
The mechanics are that the allowance will be obtained via standard payroll software and HMRC’s RTI system. A facility will be added to the RTI Employer Payment Summary referring to the allowance in the form of a “yes/no” indicator, with payroll software providers doing the same. The employer then offsets the allowance against each monthly Class 1 secondary NICs payment until fully claimed or the tax year ends. For the following tax year the allowance is available against NICs as the liability arises during the year.
For a small company rewarding working shareholders by way of dividends, the current thinking is that from 6 April 2014 it will usually be best to receive remuneration of £10,000 per annum instead of limiting it to the NIC secondary threshold of (currently) £7,696 as is normally done. This is because earnings of £10,000 will fully utilise the new level of personal allowance, whereas dividends effectively waste the allowance.
fiona@grant-jonesaccountancy.com
Mind the GAAP
Thanks to http://www.freedigitalphotos.net
There are changes afoot and much is being made of ‘FRS 102’ and ‘new UK GAAP’, so in an effort to understand what all the fuss is about, and how it will impact on a small accounting practice with a client base firmly in the SME sector, I have dragged myself off to seminars and scoured t’Internet, and what follows is a brief summary of my understanding to date of these changes.
If you can put further flesh on these bones or correct misunderstanding then please feel free to comment.
First a little terminology:
- “IFRS Foundation”: an independent, not-for-profit private sector organisation.
- “IASB”: International Accounting Standards Board is the independent standard-setting body of the IFRS Foundation.
- “IFRS”: International Financial Reporting Standards which are designed to be global standard so that company accounts are understandable and comparable across international boundaries.
- “IFRIC”: International Financial Reporting Standards Interpretations are the official interpretations of IFRSs.
- “IAS”: International Accounting Standards are international financial reporting standards that were created by the predecessor body of the IASB and form part of the body of IFRS requirements.
- “SIC”: the official interpretations of the IASs.
- “IFRS for SMEs”: a self-contained standard of 230 pages, designed to meet the needs and capabilities of small and medium sized enterprises (SMEs) and includes simplified language and fewer disclosure requirements (expect to be aligned with FRS 102 in due course).
- “SMEIG”: SME Implementation Group is an advisory body to the IASB, is providing recommendations to the IASB in connection with IFRS for SMEs.
- “Small Company”: organisations with up to £6.5m turnover, £3.26m assets, and 50 employees (to be revised to £10m turnover etc. under new EU directive).
- “Micro Company”: companies with up to £632k turnover, £316k assets, and 10 employees.
- “UK GAAP”: Generally Accepted Accounting Practice in the UK is the overall body of regulation establishing how company accounts must be prepared in the United Kingdom.
- “ASB”: UK Accounting Standards Board which is the body responsible for publishing accounting standards and other guidance.
- “FRS”: Financial Reporting Standard.
- “SSAP”: Statements of Standard Accounting Practice.
- “UITF”: Urgent Issues Task Force of the UK Accounting Standards Board (now disbanded).
- “SORP”: Statement of Recommended Practice for charity accounts and reports.
- “New UK GAAP”: new reporting standards applicable from 1st January 2015 (latest) comprising
- “FRS 100”: Application of Financial Reporting Requirements which sets out the overall reporting framework.
- “FRS 101”: Reduced Disclosure Framework which permits disclosure exemptions from the requirements of EU-adopted IFRSs for certain qualifying entities.
- “FRS 102”: the Financial Reporting Standard applicable in the UK and ROI which replaces all existing FRSs, SSAPs and UITF Abstracts.
- “FRS 103”: the Financial Reporting Standard for insurance companies.
- “FRSSE”: the Financial Reporting Standard for small company accounts includes reduced reporting requirements (anticipate this may be phased out in due course).
Phew! so which standard do I use?
Listed company consolidated accounts: must use IFRS
Listed company parent/ subsidiary accounts: either IFRS or UK GAAP (FRS 102)
Other companies: either IFRS or UK GAAP (FRS 102)
Small (& micro) companies: either above or IFRS for SMEs or FRSSE
Charities: must use UK GAAP (FRS 102 or FRSSE) and the new Charities SORP
So in particular, what is FRS 102?
- for medium and large companies is similar to IFRS but reduced disclosure requirements
- allows ‘amortised cost’ or ‘fair value’ methods of valuation except equities held which which must be at fair value
- investment properties should be valued at far value via the P&L where possible but depreciated costs allowable if fair value involves undue cost or effort
- allows goodwill to be amortised rather than applying impairment method
- no ‘indefinite life’ option for goodwill
- other intangibles to be recognised separately from goodwill
- greater regulation of hedge accounting such as forward currency contracts
- option to use IAS 39 (which outlines the requirements for the recognition and measurement of financial assets, financial liabilities, and some contracts to buy or sell non-financial items)
- deferred tax to be provided on revaluations
- government grants can be recognised immediately or accrued and matched with costs
- holiday pay entitlement must be accrued where holiday not taken
- disclosure of total lease commitment (i.e. note on operating lease liability)
- cash flow statement required
- reduced reporting for small companies which will no longer be required to include a director’s report, analysis of income
New EU Directive
From 1st September 2013 micro companies can report a greatly simplified balance sheet (and P&L) and are not required to provide notes and analysis on most balance sheet items, but must still include details of directors’ loans.
HM Revenue & Customs
All the above deal with reporting for public record; there are no changes on reporting requirements to HMRC at this time, so from a parochial point of view, is this going to make any real difference?
Paul Driscoll is a Chartered Management Accountant, a director of Central Accounting Limited, Cura Business Consulting Limited, Hudman Limited, and AJ Tensile Fabrications Limited, and is a board level adviser to a variety of other businesses.
Why Sage 50 will fall to the information revolution
At the heart of small and medium sized businesses up and down the UK lies Sage 50, the UK’s favourite accounting software. Like the Remington typewriter, it’s a great product, well designed and does what its designers intended very well.
Unfortunately, like the Remington typewriter, it is also designed with a 20th century mindset to fix a 20th century problem. And accountants and bookkeepers all over the country are using Sage 50 to make themselves indispensable to business owners in a way that holds their accounting back in the last century, reduces their effectiveness, reduces competitiveness and ultimately destroys value.
Here’s an example. Google “sage 50 year end” and you will see references to support with Year End, training on Year End, problems with Year End, questions about Year End, accountants asking each other for help with Sage year end processes. It is a process that is irreversible and therefore important to get right. A great deal of effort goes into getting it right. You might even need to get your accountant to do it for you.
But it is an utterly unnecessary process.
In the old days, when revenues and expenses were all kept on handwritten ledgers and added up throughout the year, they had to be written back to zero ready for the start of the financial year. The net total of all the year’s revenues and expenses was then added to retained profit. This was an important accounting procedure, and one that Sage 50 faithfully replicates.
Yet all transactions in an accounting system have a date. If you want to see a report for a date range, your accounting software should simply filter transactions outside that range (or, for a balance sheet or trial balance, treat the transaction appropriately according to the date of the report). More importantly, it should allow this to be done for whatever range is important for the business or period under review – regardless of whether it spans a year end – to identify performance, key trends, anomalies, and potential errors.
Precisely because of the Year End process in Sage 50, data for prior years has to be accessed in a very different way. But year ends are relevant only for statutory reporting and tax purposes. Customers, staff, and suppliers do not behave differently in a new financial year. Trends are no less relevant or important just because they span a financial year end.
So not only is it an unnecessary process – it also reduces accessibility and usefulness of information.
Of course, once the accounts are finalised for a year, it is important that the transactions are not changed thereafter. But for some companies that is important on a quarterly basis (so VAT returns are not out of sync) or even on a monthly basis (so that published monthly accounts are not adjusted). A simple restriction on all but the “Admin” user making changes before a certain date is all that is required. Not an irreversible process that permanently eliminates access to data.
That’s not all. Sage 50 costs £700 for two users, and whilst it is a powerful system it is, to all intents and purposes, closed to all outside the finance team or book-keeper. Business owners, managers, and forward-thinking accountants are waking up to the fact that with today’s cloud technology financial information can be accessed anywhere, instantaneously. Owners and managers want information now, not when the book-keeper is next in or when the accountants have examined the files at the end of the year. They are realising that it is possible to access scanned copies of supplier invoices just by clicking on their management reports and wondering why they are still telephoning their accountant and paying them to look up the information on Sage. They are wondering why they are paying over £700 for a 2-user licence to Sage 50 when solutions like Xero will allow access at different levels to many users within the company for less than half the cost.
It won’t be a quick death. Traditional accountants will resist this change. They will focus on the dangers of allowing too many people to change or view information without proper training; on the dangers of looking at information without the benefit of their annual adjustments or their considered interpretation; and on the risk of fraud without a full visible audit trail of any change made to any transaction anywhere in the system. These are all valid concerns. Accounting systems and good financial information are vital to the successful operation of any business.
Ultimately, however, our job as modern accountants – and as management accountants – is to properly evaluate the risks and benefits of precisely these kind of changes, and to help business owners get the benefits of the new technologies whilst at the same time ensuring that the information stored and produced is meaningful and secure. And the benefits of up to date, accurate information, accessible instantly and on the move, are huge.
Typewriter manufacturers may have correctly pointed out that with a word processor you could lose the entire document with an untrained accidental press of the wrong button. But ultimately the benefits far outweighed the risks. Sage 50 will go the same way.
Do you accept Bitcoins? you could be missing out
Bitcoins (BTC) are a digital currency that can be bought and sold for cash.
Watch this Video which explains how Bitcoins work
Here is a link to a UK Bitcoin Exchange
According to Bitcoin the current market price is $109.74 and currently 50,000 transactions are done per day using bitcoins.
These rules are enforced collectively by the Bitcoin network.
- Hard limit of about 21 million bitcoins.
- Bitcoins are divisible to 8 decimal places, yielding a total of approximately 21×1014 currency units.
- Transactions are cheap and mostly free.
Before you dismiss it as another crazy idea, both the BBC and Institute of Directors have commented on Bitcoins, in this months (June 2013) Director Magazine, page 17, 60 Second Expert, the IoD gave an excellent summary of key points including this comment on system safety:
US security expert Dan Kaminsky referred to the system as an ‘alien technology’ written to a standard of quality you don’t see in most software.
Bitcoin transactions are secured by military grade cryptography. Nobody can make a payment on your behalf or charge you money without having a copy of your wallet.
Mobile payments can be made too…
Bitcoin on mobiles allows you to pay with a simple two step scan-and-pay. No need to swipe your card, type a PIN, or sign anything. And all you need to do to receive Bitcoin payments is to display the QR code in your Bitcoin wallet app and let your friend scan your mobile, or touch the two phones together (using NFC radio technology).
International payments are quick…
Bitcoins can be transferred from Africa to Canada in 10 minutes. There is no bank to slow down the process, level outrageous fees, or freeze the transfer. You can pay your neighbors the same way as you can pay a member of your family in another country.
So should you accept payment by bitcoins?
steve@bicknells.net
Cash Accounting has arrived, but will it reduce your tax bill?
You can use the cash basis for Self Assessment Tax Returns (starting from 6th April 2013) if you:
- are a small self-employed businesses (sole traders and partnerships but not Limited Liability Partnerships)
- have an income of £79,000 or less a year (this is the threshold when you have to register for VAT)
You can choose to record your business income and expenses over the tax year in 1 of the following ways:
- using cash basis – record money when it actually comes in and goes out of your business (all money counts – cash, card payments, cheque, any other method)
- using traditional accounting (accruals basis) – record income and expenses when you invoice your customers or receive a bill
Cash basis might suit smaller businesses because, at the end of the tax year, you won’t have to pay Income Tax on money you haven’t received yet.
You must keep records of:
- business income received
- business expenses paid
Depending on what you use simplified expenses for, you need to record business miles for vehicles, hours you work at home and how many people live on your business premises over the year.
Sounds simpler so far, doesn’t it.
But what about …..
- Suppliers – if you have trade accounts with suppliers then you will have creditors, many small businesses get paid quickly for example a shop or a window cleaner, they don’t have debtors, so the cash basis may not be the best option
- Capital Allowances – many small businesses will claim capital allowances for their car (and claim most of the running costs too), with the cash basis you can only claim a set mileage allowance https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-
- Equipment Finance – Under cash accounting money you owe isn’t counted until you pay it (unlike traditional capital allowances) and interest and charges are limited to £500 https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis
Cash accounting may be simpler but will it reduce your tax bill?
steve@bicknells.net
Employing the self-employed – time to stop burying your head in the sand
Do you run a small business charity or non-profit organisation?
If you have employees then by now you should be filing on-line payroll returns every time you pay your employees. From 6 April 2013 employers started reporting PAYE information to HM Revenue & Customs (HMRC) in real time. You may see this referred to as Real Time Information – or RTI. This means that employers (or their accountant or bookkeeper) have to:
- send details to HMRC every time they pay an employee, at the time they pay them
- use payroll software to send this information electronically as part of their routine payroll process
But we don’t have any employees!
Really? Are you sure?
Think very carefully about all of the people you make payments to. Are you really sure that they are self-employed?
Now that I have planted a seed a doubt in your mind take a look at the Employment Status Indicator on the HMRC website. http://www.hmrc.gov.uk/payerti/employee-starting/status.htm
By answering a number of questions you can check whether that “helper” you make a payment to would be classed as an employee. Can you satisfy yourself that every person you pay would be classed as self-employed?
So that’s all clear then!
Well, unfortunately not quite so clear and a recent example has come to light in the instance of church organists. A phone call to the general HMRC helpline yielded the answer that an organist might be employed or self-employed depending on circumstances. Further probing however yielded a very different answer.
Following an Employment Tribunal decision, wherein an Organist was declared to be an employee, it has been the Law since 2007/8 that he/she should have been put on a payroll and been subject to the usual tax rules. Two further Tribunals have decided in similar manner, that an organist is an employee.
An HMRC Employment Status Officer has advised that Church of England Organists:
- Are engaged under Canon Law (which is correct);
- Play what the Incumbent authorises (according to that Law);
- Cannot substitute anyone else without the Incumbent’s express permission;
- Any substitute would be under his (the Organist’s) control (another employee) otherwise the Organist could not determine the substitution;
- Must play the required music on set days and at set times determined by the Incumbent;
- Does not provide his own “tools”, i.e. the organ;
- Have full employment rights under EU Law.
This is a very specific example that illustrates the need to check employment status carefully.
Company Filing Requirements Consultation
Red Tape Challenge.
As part of the UK Government’s intention to make regulations more relevant to the world we live in there is a consultation on the filing requirements for UK companies. The pdf document can be downloaded from the gov.uk website. Included in the consultation are suggestions to reduce the burden of form-filling for small businesses including scrapping the annual return and reducing the need to hold duplicate information at your registered office and Companies House.
The consultation document goes into great detail on the costs and benefits of each change being proposed. The cost saving to companies in not having to complete the annual return is assessed at £1.60, but this ignores any fines incurred by people who have missed their deadlines for filing.
Have your say.
The last consultation from Companies House only received a few hundred responses (according to my source) so if you have strong feelings on bureaucracy imposed on you, your response will have some impact. If you are uncertain of your filing requirements you can ask an accountant who will be able to advise on anything you need to do.
Checking the record.
If you are company you can check your details on the Companies House website, or at the following link replacing the last eight characters with your own company registration:
http://data.companieshouse.gov.uk/doc/company/SC433814
If your company registration has fewer than eight characters add leading zeros to make it the correct length. Of course you don’t have to limit yourself to checking your own details – whenever you are considering a new customer or supplier who is a limited company / limited liability partnership etc. it is a good idea to check their entry on the companies house register to get more information on them including names of directors.
Useful links
| Companies House WebCHeck | http://wck2.companieshouse.gov.uk//wcframe?name=accessCompanyInfo |
| Red Tape Challenge | http://www.redtapechallenge.cabinetoffice.gov.uk/home/index/ |
| GOV.UK public consultations | https://www.gov.uk/government/publications?publication_filter_option=consultations |
Business Accountant 