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Research by Direct Line shows that 65% of Mums with children under the age of 10 are considering starting their own business, why?
1. Allow me to spend more time with my children 20%
2. Cost of child care if I worked away from home 16%
3. Flexibility of being my own boss 14%
4. Lifelong ambition to start my own business 12%
5. Don’t/didn’t like my current job 1%
Reasons according to Financial Reporter
New figures suggested that full-time annual childcare costs for two children are now at £11,702, with almost half (49 per cent) of mothers surveyed believing they would be better off financially to start a business from home and save on childcare fees.
Here are 20 business you could start:
- Get a lodger – Under rent-a-room a taxpayer can be exempt from Income Tax on profits from furnished accommodation in their only or main home if the gross receipts they get (that is, before expenses) are £4,250 or less
- Ironing and Laundry Services – Always popular and you can start with friends and family
- E Bay Trading – as E Bay say… The first task is to sort through those bulging drawers and messy cupboards, finding stuff to flog. Get a big eBay box to stash your wares in, and systematically clear out wardrobes, DVD and CD piles, the loft and garage. Use the easy 12-month rule of thumb to help you decide what to offload: Haven’t used it for a year? Flog it.
- Blogging – Blogging has taken off and many businesses are looking for people to write blogs for them
- Candle Making – You can sell the candles on line and its easy to buy the wax and things you need to make the candles
- Car Boot Sale – As with E Bay but without going on line
- Cake Making – Make sure everything is labelled correctly and you comply with Health & Safety issues
- Data Entry – The internet makes it easy to enter data from where ever you are
- Social Media – Similar to blogging, businesses need help to manage Twitter, Facebook and Linked In
- Website Design – If you have the expertise, go for it
- Sales Parties – Cosmetics to Ann Summers, there is a long list of opportunities
- Sewing and Clothes Alterations – Perfect before and after Christmas
- Jewellery – Making and selling jewellery is always popular and great for Christmas presents
- Car Repairs – Assuming you have the skills needed and comply with legal requirements
- Pet Care – Walking dogs or grooming is popular
- Virtual Assistant – Also personal organiser or personal shopper
- Wedding Planner – You could start by creating a blog about your expertise
- Direct Sales – For example http://www.direct-sales-opportunities.com/uk.htm
- Computer Repair – Great provided you have the skills
- Marketing – Telesales to leaflet design and freelance writing
If you’re thinking of starting a busines please ask us for help https://business-accountant.com/contact-us/
Limited Liability Partnerships came under closer scrutiny in the Budget 2013. The aim is to target LLPs which use the structure to hide the employment relationship of the partners and those with Corporate partners who divert business profits to the corporate partners in order to avoid tax.
Although the following measures come in to play from 6th April this year, the anti-avoidance measures make it effective from 5th December 2013. This is to prevent partnerships changing their arrangements in order to avoid the new rules.
The two main areas of focus are salaried or fixed profit share partners which is referred to as disguised employment, and profit and loss sharing arrangements within mixed partnerships.
LLP partners with fixed profit share
HMRC believe that many members of an LLP should be taxed as employees, because they don’t see them is true partners.
A new test has been brought in which has three conditions. Where the member tested meets all three conditions then he or she must be treated as an employed salaried member and be brought within the PAYE system with tax and class I NIC applied to any earnings, which had previously been Taxed as profit share.
This also means that if a vehicle is provided for the members use by the partnership this will be taxed as a benefit in kind. As such the member will have to pay tax and NIC and the LLP will have to pay Class 1a NIC on the benefit.
HMRC does actually accept that employment tax rules are imposed on the individual but that in fact the individual has no employment rights. This is because he is not actually an employee for employment law purposes.
The test is as follows. The provision is triggered when all conditions A to C are met:
Condition A: The Member is performing services for the LLP in his capacity as a member of the partnership and it’s reasonable to expect as a result of these arrangements that any amounts paid to him in respect of his services will be wholly or substantially wholly a disguised salary. In other words if his reward package is comparable to that received by an employee, either a fixed salary or a variable bonus based on performance rather than profit share.
Condition B: The Member doesn’t have significant influence over the affairs of the partnership.
Condition C: The Member’s capital contribution to the LLP is less than 25% of the total amount of his disguised salary which would be expected to be paid in the relevant tax year by the LLP in respect of the members performance of services as a member. Normally the relevant time would be the beginning of the new tax year.
These tests must be reviewed each tax year.
Corporate LLP Members
This applies to partnerships who have members which are not subject to UK income tax for example this might be a limited company. The problem here is that HMRC believes these structures are used to avoid tax on a very large scale. Where for example an individual member introduces his Ltd company as a corporate member, and which then receives a profit share that would otherwise have been paid to the individual member. If the Member then has the power to enjoy the fund which had been paid to his company then:
- The individual member will be treated as a salaried member.
- The amount paid to the company will be treated as employment income paid to the individual member.
There are anti-avoidance rules are in place to catch anyone trying to put measures in place to counteract these new rules.
Economy in recovery
It now looks like the UK economy is in recovery. Even if this isn’t the case, when people think that times will get better they start to spend money again. With interest rates at historic low rates there is little incentive to stockpile cash in the bank for consumers and for entrepreneurs debt is relatively cheap to finance a new venture.
What’s your plan?
If you are starting a new business, it is important to work out what you will be selling, but to survive the early days of a start-up you will need good projections of your cash flow. As you grow you may need investment from banks or other third parties. Without good quality management accounts is it more difficult to persuade a potential investor to part with their cash.
Ask for help!
You can’t do everything on your own. Work out what your core activities are and how much time you need to do them. If you have time left over for ancillary activities then you are better completing these yourself too. The cost of hiring specialist help, whether it be an accountant, web designer or lawyer can seem to be too much for a nascent company to bear. However if you are spending so much time working out your accounts that you don’t have time for your customers you will cost yourself more in the long-term.
Business booming in Scotland
According to this article from the BBC more Scots are starting up their own business. Records from Companies House show that more than 340,000 companies were formed in Scotland last year. Glasgow and Edinburgh are at the forefront of the economic recovery in Scotland. If you have a good business idea, now could be the time to let that idea take form, especially if you have a service that supports other new businesses.
Give yourself a break
To give your business the best start, make sure you understand your finances. Don’t forget that if you registered a company you are obliged to file accounts with Companies House as well as HMRC. For more information on company formation see my blog here.
For support and advice on the finances of your business contact Alterledger or visit the website alterledger.com.
Business start-ups can take part in four free live tax webinars run by HM Revenue and Customs (HMRC) on 15 February
HMRC Start-up Saturday webinar programme, between 10am and 5pm, is aimed at new and prospective businesses. Each live webinar lasts an hour and gives the opportunity for questions.
The HMRC webinars are:
Self-Employment and HMRC – What You Need to Know
10am to 11am Saturday 15 February
This session concentrates on the information sole traders or partnerships need when they start. It covers registration, National Insurance, Self Assessment and record keeping.
Company Directors – Your Responsibilities to HMRC
12pm to 1pm Saturday 15 February
This webinar is aimed at businesses considering setting up as limited companies. It provides the basics on incorporation and registration with Companies House and HMRC. It also looks at when companies become an employer, and the timetable for paying Corporation Tax online.
Business Expenses for the Self-Employed
2pm to 4pm Saturday 15 February
Sole traders or partnerships need to know which day-to-day expenses they are able to claim for tax relief. They also need to start keeping records of these as soon as the business starts. This webinar provides an overview of the most common expenses, including motoring costs.
What is VAT?
4pm to 5pm Saturday 15 February
New businesses are often worried about VAT, what it is and when they need to register. This webinar answers these questions and explains in simple terms how VAT works.
Starting a new business is always a challenge but there are some common financial mistakes that all start ups should avoid.
- Lack of Planning – Businesses normally start with a great idea but you need to have business model that works and to at least have a basic business plan and cash flow.
- Over Trading – this happens when a business expands too quickly for its working capital, when you start a new business its tempting to accept every order without considering whether you can have the resources and the cash to deliver.
- Wasted Marketing and Advertising – new businesses are an easy target for marketing companies but its important to stick to the essentials to start with, having a website, e mail and business cards are essential, magazine advertising and other things can be done as the business grows, in the early stages you are experimenting and finding your market so if you spend too much too soon you might promote the wrong things at the wrong price.
- Wrong Business Structure – Before you start your business get some advice from your accountant, its important to choose the right structure not just for tax reasons but also for investment and ownership.
- Wrong Staff – Choosing the right team is critical for business success, choose staff that have the right skills, the right attitude and are dedicated to the success of the business.
- Over Ambitious – All too often businesses plans are over ambitious with sales growing rapidly, often they prove to be unrealistic, when preparing a sales forecast start with your order book and be cautious in your assumptions.
- Overheads – Many businesses over spend on overheads for example renting premises too early, work from home, if you can, to minimise costs.
- Stock Problems – Buying the wrong stock, under or over stocking are also issues for start ups, try to adopt a ‘just in time’ stock policy.
- Getting Paid – A sale is only a sale if you get paid, any one can give things away, make sure you manage your clients and get paid on time.
- Competition – Keep an eye on your competitors, they will be watching you and responding to maintain their market share.
Before you have even started trading, getting advice from an CIMA accountant can be critical here are some key areas where advice can really help:
- Creating the Business Model and Business Plan
- Obtaining Loans, Finance and Investment
- Business Structure, Shares and Shareholder Agreements
- Choosing Accounting and Business Software and Systems
- Creating a Cash Flow Forecast
- Understanding your legal duties
Then when you start trading……
- Tax Compliance – PAYE, NI, VAT, Corporation Tax
- Pensions – Auto Enrolment
- Managing relationships with Banks and Investors
- Budgeting and Forecasting
- Product Pricing and Tendering
Once the business has become established……
- Growth Strategies
- Funding Growth
- Research and Development
- Decisions on whether to buy or rent new equipments and premises
- Managing the Cash Cycle
CIMA Accountants have worked in business, they understand from the inside what running a business is really like and how to make a business successful.
You can also get some useful tips from HMRC http://www.hmrc.gov.uk/startingup/
Last year, while millions of people were exchanging presents, feasting on turkey, and nodding off in front of the television, 1,548 people decided to take time out from the yuletide festivities and do their tax return online – a 40 per cent increase on Christmas Day 2011, when 1,100 people filed online.
The penalties for late Self Assessment returns are:
- an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
- after three months, additional daily penalties of £10 per day, up to a maximum of £900;
- after six months, a further penalty of 5 per cent of the tax due or £300, whichever is greater; and
- after 12 months, another 5 per cent or £300 charge, whichever is greater.
There are also additional penalties for paying late of 5 per cent of the tax unpaid at: 30 days; six months; and 12 months.
Make sure you get yours done before the end of January!
HMRC have released an update this month to their notice on Keeping VAT records. One of these changes relates to VAT simplified invoices which were introduced earlier this year as part of the simplification and harmonisation of VAT rules in the EU. Previously only retailers were exempt from providing full VAT invoices to unregistered businesses.
However the changes mean that any business issuing VAT invoices for £250 or less (including VAT) can issue simplified invoices.
What to include in a simplified invoice:
Your name, address and VAT registration number
The time of supply (date)
A description which identifies the goods or services supplied
The each VAT rate charged, the amount of VAT charged.
How does a simplified invoice differ from a full VAT invoice:
In addition, a full VAT invoice must include:
A sequential number based on one or more series which uniquely identify the document
The date of issue (if different from the time of supply)
The name and address of the person to whom the goods or services are supplied
For each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in any currency
The gross total amount payable, excluding VAT, expressed in any currency
The rate of any cash discount offered
The total amount of VAT chargeable, expressed in sterling
The unit price
The reason for any zero rate of exemption.
VAT invoices over £250
If issuing VAT invoices over £250, a full invoice must still be issued or a modified VAT invoice showing VAT inclusive rather VAT exclusive values.
Rebecca Taylor ACMA
Fake email alerts from Companies House and HMRC have become increasingly sophisticated. There was a time when it was relatively easy to spot a fake email alert but even accountants have been caught out by recent fake email alerts. And it isn’t just Companies House and HMRC. Be careful of emails from banks, other institutions, postal services, voicemail services and even Skype. Previously harmful emails have tried to direct you to a fake website to steal your personal details but these recent emails have attachments which could harm your computer.
What to look for
These fake email alertss have an attachment which appears to support details in the email message. For example, it could claim to be a customer complaint from Companies House, a missed delivery or a bank transaction. The email address could give you a clue that it is a fake email alert but many now look like they have come from a genuine email address. Some fake emails have footers which have been obviously copied from another email. If you are not expecting an email from the sender, think twice before opening any attachments, particularly .zip files.
These emails are all trying to get you to do one thing: open the attachment. The attachment invariably contains malware or a virus and will either damage your computer, steal your details or even demand a ransom (see an article from the National Crime Agency on Cryptolocker).
The National Crime Agency provides this advice:
This is a case where prevention is better than cure.
- The public should be aware not to click on any such attachment.
- Antivirus software should be updated, as should operating systems.
- User created files should be backed up routinely and preserved off the network.
- Where a computer becomes infected it should be disconnected from the network, and professional assistance should be sought to clean the computer.
- Various antivirus companies offer remedial software solutions (though they will not restore encrypted files).
Example of fake emails
Follow the links for some examples of fake emails:
Basically when you are self employed you spend money on 3 types of expense:
1. Capital Expenditure – Equipment & Vehicles
2. Business Expenditure – stock, wages, premises
3. Private Expenditure – day to day living expenses – mostly not allowed but some types of cost may still count as business expenses
In general its types 1 and 3 where sole traders and partnerships miss out on tax allowances.
For example, you could claim capital allowances on your car, if you use your car partly for private and partly for business you simply disallow a % for private use.
On other assets there is an Annual Investment Allowance which is currently £250,000 per year from January 2013.
For most business that will cover all their capital expenditure, but there are further allowances available too.
With regard to private expenditure, there are tax reliefs available for working from home
If you have to spend money on tools or specialist clothing for your job you may be entitled to either:
- tax relief for the actual amounts you spend
- a ‘flat rate deduction’