Do you use Interns? watch out for NMW
At the end of last year there was a clamp down on the Fashion Industry, the main target was companies that advertise for unpaid trainees (interns). Its likely this will lead to an even bigger campaign in 2014.
Current minimum wages rates are
21 Plus £6.31
18 to 20 £5.03
Under 18 £3.72
Apprentice £2.68
If you take on unpaid trainees without a contract you could be at risk of a £5,000 fine. The penalty can also apply if you are paying below the minimum wage.
If you find that you are paying below NMW you need to correct the rate of pay now and back date it to avoid the risk of a penalty.
steve@bicknells.net
The Risk-Based Approach – Risky business for SMEs? – Part I
HMRC (Photo credit: Images_of_Money)
The issue:
Risk-based approaches to manage Compliance Service delivery are undergoing a maturity model evolution.
This per se is not a negative issue, however, do risk-based approaches leave us exposed to more or less compliance risk?
We pose this question because a number of process advances, including technological drivers have over the past few years increased the incidence of the risk-based approach (r)evolution.
As an example, HMRC launched their risk based approach pilot scheme related to business record keeping called ‘Business Records Check‘ a few years ago (2011), only for the initiative to ‘go quiet’ and then suddenly to rear its head again late in 2013.
The facts:
From the HMRC web site, the following information was published:
By extrapolation, HMRC also publish within their background report the following table:
Next steps:
Related articles
Do you think it should be compulsory to pay into a pension?
A government think thank, Policy Exchange, have urged the government to make it compulsory that people save for their retirement. Their proposal the ‘Help to Save’ Scheme is aimed at avoiding 11 million people ending up in ‘Pension Poverty’. In a BBC article….
James Barty, author of the report, said the lack of people saving for their retirement was putting an “intolerable burden on the state” which “needs to be addressed sooner rather than later”.
He said: “With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education – an obligation that falls on everyone in society.
“‘Help to Save’ will prevent the state from having to pick up the tab for people who haven’t put aside enough money for later life.”
Under the plans, the opt-out in the Government’s auto-enrolment scheme would be removed making it obligatory for people to save for their retirement
Individual pension contributions would also increase as incomes rise over time.
According to the report, someone earning the average wage – £27,000 – will need to save over six and a half times more than they currently do to generate the Government’s recommended retirement income of £16,200.
The average pension pot is estimated to be just £36,800, which on current annuity rates is enough to generate a retirement income of £1,340.
The paper said that an average earner would need a pot of £240,000, assuming they receive the full single tier pension.
Are you saving enough for your retirement? should saving be compulsory?
steve@bicknells.net
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 (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.
Are you benefiting from the Online Sales Boom?
Just in case you haven’t been watching the BBC News….
A record amount of online shopping was done in December 2013, says the British Retail Consortium (BRC).
Close to one in five non-food items was bought online last month, according to the BRC survey.
There was also a 19.2% growth in internet purchases from a year earlier, the fastest increase in four years……..
The online retail boom was very much in evidence in late 2013, with many High Street chains expanding their internet offerings, and some shops reporting record figures for the amount customers purchased online around Christmas.
In a recent AccountingWEB survey on average survey respondents said more than 80% of their customers use a smartphones or a tablet and almost all expect this number to increase over the next 12 months.
Without an online presence your business is likely to be become invisible to your customers.
Its not just about having a website either, there needs to be something that will keep your customers visiting your website and you probably need an app….
steve@bicknells.net
On-line Professional Service – the elephant in the room?
The internet is the greatest social and educational breakthrough since the printing press. This is of course, debatable, but I think most would be hard pushed to argue the contrary. Naturally, where there is great social change there is someone trying to make money from it. How long do you think it took for the first advertising leaflet to be made on a printing press?
We live in a world of constant connection to, well, just about everything. Communities are created from across the globe as people share insights, knowledge and (importantly) goods. And yet every step of the progression has been met with scepticism and incredulity. It wasn’t that long ago when the idea of people selling cars on the internet seemed absurd. You would be just as baffled now if you couldn’t find a price for your car on your phone in a few seconds.
Despite this, there is an interesting omission in our global community trends. The traditional, professional, business to business service provider is still something that most people expect to find within their locality. There are certain situations where you require a service and it makes sense to find it nearby. If I need a mechanic I’ll happily search google for “mechanic Belfast”, because there is a physical transfer of tangible items (too big to post). But why should I search for a web designer, advertiser, accountant or lawyer in my city? There is no technical requirement for these professions to be in my proximity for them to provide their services. But this type of search and assumption happens every day.
This will change, slowly. As some businesses start the movement others will follow, because in many cases business owners simply haven’t considered it an option. What we’re finding out is that it’s not only feasible to remotely deliver these kinds of services, it’s also cost saving. Video conference calls are not a luxury for the mega corporations any more, most of us have the technology casually rattling around in our pockets already.
Technology is the key here. There is a sea of useful, productivity driven apps and online resources that make working remotely a breeze. The really astonishing thing is how you may not have heard of them yet. You’ll read the description of these tools and think “But of course that exists! It’s so simple. Why hasn’t it been in front of me for years?” This is the beauty of the situation: there’s still so much room for growth.
This isn’t the 90’s website bubble when the general public didn’t understand how someone could stand to make money from the internet never mind set up a website. The technology becomes more advanced but the tools to utilise it is becoming easier to use. Here at Baxterworld we’ve taken part in a government supported programme that trained one of our office members to create an API (Application programming interface) that allowed quick translation from Point One (POS system) to Xero (Cloud Accountancy System). These are both international big hitters in the software world now and it took our small firm in Belfast to find a way to link the two. Links like this will be a big plus in the near future.
The way we do business is finding its next logical extreme, and right now that seems to be cloud computing. Many aspects of day to day business life have become electronic, it’s almost an inconvenience to receive a printed invoice these days. With so many services based in the cloud, location specific offices are becoming unnecessary. It’s incredible that businesses can function with each member of the “office” tagging in from across continent, while Joe Blogs searches for a web designer who lives within his bus route. We have an astonishing capability to work more quickly and efficiently with emerging technologies, but how long will it take people to spot the Elephant?
This article is from the Baxterworld office. We are an accountancy and admin practice based in Belfast and serving Ireland, the UK, Germany and South Africa.
HMRC’s Start-up Saturday event
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 
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
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
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
re-blogged from https://business.wales.gov.uk/news-events/news/hmrc%E2%80%99s-start-saturday-event
steve@bicknells.net
RTI non-filing notice?
If your business has a payroll then you may, like me, have received an RTI non-filing notice from HMRC. “Rubbish” is a polite version of my reaction. RTI should be the most straight-forward part of the payroll. The hard part is often calculating who is owed what if you have many non-salaried staff. So it would be fair to say that I was a bit miffed.
OK, so what is the consequence? Well until April, nothing. But, after April, possibly a fine from HMRC. So I phoned HMRC. Their assumption was that I had not filed a return, hence the RTI non-filing notice. More worrying was that they could not tell me specifically why I had received the notice. My theory is that it was caused by correctly filing a return on Feb 6th for a Feb 7th payroll which is after the HMRC PAYE month-end of Feb 5th.
I can only hope that HMRC get their act together with the RTI system. A quick look on the web revealed a tidal wave of RTI non-filing notices this week.
Of course if you really haven’t kept on top of things then you need to take a deep breath and file your RTI returns. And get some help from a Chartered Management Accountant if you need to.
Helen Alexander
Millbrook Financial Management Ltd
The Parent Subsidiary Directive
The EU puts out its Directives and not much notice is taken until an issue drives it out for debate and scrutiny. This Directive was intended to prevent same-group enitities based in different states from being taxed twice or even thrice, yet it has been turned on its head and ignited furious debates and streams of hysterical wailing and gnashing of teeth by politicians who signed us up to the Directive, nodded all its gold-plated UK provisons through and now find it is not doing what they thought it would do.
Trade Union chieftains routinely accuse global companies of dodging taxes by trading across legal jurisdictions in exact accordance with the provisions and various national statutes based on the Parent-Subsidiary Directive. These same blockheads didn’t utter a single word of caution or advice when their political comrades devised, gold-plated, kept secret and craftily nodded through the mother of all Parliaments in the good old days when Antony Blair of that ilk ruled in conjunction with the Marxist Scotsman economist-of-note Gordon Brown, also of that ilk.
Just why the Unions should hold the present Government responsible for cross jurisdictional tax avoidance, when it is in accordance with statutes which they helped put in place, is not clear. Perhaps big Bob Crow or wee Len MaCluskie could explain their turncoat tactics in time for the Euro elections in May. If there are people in politics, the Church and high places who resent the big corporations and how they pay tax, they should have the guts and honesty to own up to their own stupidity and complicity in accepting the Directives that underpin it to this day!
Directives are issued in various formats. It is usually instructive to consult the versions issued in French and which are adopted for French domestic use. These are more likely to indicate the original true and fair intention and actual content of the Directives. It is well established that the British versions of Directives often end up almost totally different to those that are adopted by the French in their simplified format as proper working statutes and discussion documents designed to help and facilitate compliance and effect rather than to baffle, confuse and destablilise the issues they are intended to clarify and improve.
Lawyers do well out of the British Directives, Regulations and Interpretations that dog so many of our industries, commercial undertakings and ordinary people who get caught up in their toils and misrepresentations. It is time to take stock.
Cash is King!
Cash is king! and managing it properly is one of the best ways of ensuring your business flourishes. However, many small business owners find it a real challenge to chase customers who are late paying – even though not doing so leaves them in a really tight situation with the bank.
A phrase we hear often is, “They’re a really good customer, so I don’t want to annoy them by chasing for payment”. Let’s just analyse that sentence for a minute. Why are these customers good for your business? Because they allow you to do lots of work for free? Surely, a good customer is one who appreciates your efforts and is happy to pay because they value you. If you have done the work you agreed with your customer, to the level they expected, why should they not pay the agreed price in the agreed time period?
So don’t be shy about collecting YOUR money.
Other problems we see regularly are:
– Not setting payment terms up front
If you have not agreed when the customer should pay BEFORE the work is done, you will struggle to collect the money in a reasonable time frame. Make sure your terms of engagement/purchase confirmation clearly state when you expect to be paid.
– Setting unnecessarily long payment terms
Don’t assume that you have to offer customers 30 or 60 day payment terms. Start from a position of offering zero payment terms and only offer extended terms if there is a commercial advantage in doing so. Bear in mind that even if you offer 30 day terms you will most probably be paid later than that. As you don’t know the financial position of all your customers the only safe money is the money in your bank account.
– Not sending invoices out promptly
If you do not send out your invoices as soon as the work is complete, you automatically build a lag before you receive payment. Invoicing is a chore, but regular invoicing is vital to achieving financial stability.
The most common reason small businesses fail is because they run out of cash.
The most common reason they run out of cash is because they do not collect the money they are owed quickly enough, or allow debts to go bad.
Make sure you business succeeds by being cash collection savvy.
Fiona 🙂
Business Accountant 