Business Accountant

Home » Start Ups (Page 2)

Category Archives: Start Ups

Top 5 reasons why Mums are starting businesses

Busy mother with her baby

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:

  1. 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
  2. Ironing and Laundry Services – Always popular and you can start with friends and family
  3. 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.
  4. Blogging – Blogging has taken off and many businesses are looking for people to write blogs for them
  5. Candle Making – You can sell the candles on line and its easy to buy the wax and things you need to make the candles
  6. Car Boot Sale – As with E Bay but without going on line
  7. Cake Making – Make sure everything is labelled correctly and you comply with Health & Safety issues
  8. Data Entry – The internet makes it easy to enter data from where ever you are
  9. Social Media – Similar to blogging, businesses need help to manage Twitter, Facebook and Linked In
  10. Website Design – If you have the expertise, go for it
  11. Sales Parties –  Cosmetics to Ann Summers, there is a long list of opportunities
  12. Sewing and Clothes Alterations – Perfect before and after Christmas
  13. Jewellery – Making and selling jewellery is always popular and great for Christmas presents
  14. Car Repairs – Assuming you have the skills needed and comply with legal requirements
  15. Pet Care – Walking dogs or grooming is popular
  16. Virtual Assistant – Also personal organiser or personal shopper
  17. Wedding Planner – You could start by creating a blog about your expertise
  18. Direct Sales – For example http://www.direct-sales-opportunities.com/uk.htm
  19. Computer Repair – Great provided you have the skills
  20. 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/

steve@bicknells.net

Limited Liability Partnerships

Cropped Leaves

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.

fiona@grant-jonesaccountancy.com

http://www.grant-jonesaccountancy.com

Should you start your own business?

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.

No Change for Currency

No Change for Currency (Photo credit: Wikipedia)

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.

 

HMRC’s Start-up Saturday event

Entrepreneur startup business model

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.

Register for Self-Employment webinar external link

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.

Register for Company Directors webinar   external link

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.

Register for Business Expenses webinar external link

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.

Register for ‘What is VAT’ webinar external link

re-blogged from https://business.wales.gov.uk/news-events/news/hmrc%E2%80%99s-start-saturday-event

steve@bicknells.net

10 financial mistakes all new business should avoid

Stress business woman

Starting a new business is always a challenge but there are some common financial mistakes that all start ups should avoid.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. Overheads – Many businesses over spend on overheads for example renting premises too early, work from home, if you can, to minimise costs.
  8. 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.
  9. 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.
  10. Competition – Keep an eye on your competitors, they will be watching you and responding to maintain their market share.

steve@bicknells.net

Why start ups need a CIMA Non Exec

Entrepreneur startup business model

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:

  1. Creating the Business Model and Business Plan
  2. Obtaining Loans, Finance and Investment
  3. Business Structure, Shares and Shareholder Agreements
  4. Choosing Accounting and Business Software and Systems
  5. Creating a Cash Flow Forecast
  6. Understanding your legal duties

Then when you start trading……

  1. Tax Compliance – PAYE, NI, VAT, Corporation Tax
  2. Pensions – Auto Enrolment
  3. Managing relationships with Banks and Investors
  4. Budgeting and Forecasting
  5. Product Pricing and Tendering

Once the business has become established……

  1. Growth Strategies
  2. Funding Growth
  3. Research and Development
  4. Decisions on whether to buy or rent new equipments and premises
  5. 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/

steve@bicknells.net

Have you filed your Self Assessment Return?

sa-monthly-online-figures-2011-12

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!

steve@bicknells.net

 

VAT Simplified Invoices

 

man looking at invoice

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 HMRC and Companies House

Red button spam with icon envelope, internet concept.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.

Why

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).

Advice

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:

http://www.hmrc.gov.uk/security/examples.htm

http://www.companieshouse.gov.uk/securityAdvice/index.shtml

Self Employed Tax Allowances

junge frau lernt für eine prüfung

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

 

http://www.hmrc.gov.uk/incometax/relief-household.htm

 

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’

 

http://www.hmrc.gov.uk/manuals/eimanual/eim32712.htm

 

steve@bicknells.net

 

%d bloggers like this: