Tag: small business

Will the Small Business Commissioner help your business?

At the start of October the Government announced

The appointment of the father-of-three from Birmingham marks an important step toward ensuring small businesses have the support they need to thrive and grow – a central tenet of the Government’s Industrial Strategy.

As Commissioner, Mr Uppal will lead an independent office tasked with empowering small businesses. The role will be crucial to supporting small businesses resolve disputes with larger businesses and will help drive a culture change in payment practices.

Mr Uppal and his team will provide general advice and information to small businesses on matters such as resolving disputes, including signposting small businesses to existing support and dispute resolution services, which will be delivered through the commissioner’s website. His priorities will reflect his 20-year experience as a small business owner in the real estate sector, where he saw how even sound businesses could struggle when faced with a culture of late payment by customers.

Mr Uppal said:

“Running your own business can be a very lonely experience and my priority will be ensuring small firms feel supported as well as helping to create an overall impression that business isn’t necessarily cut throat.

“In fact, successful businesses are built on integrity, entrepreneurial spirit and trusting relationships and I want to highlight that Britain can be the best place in the world for new entrepreneurs to establish and grow their own businesses.”

Many small business are overwhelmed by red tape and paperwork, worried about the economic climate and brexit and need support, will the new commissioner come to their rescue?

steve@bicknells.net

Does your business qualify for Business Rates Relief?

A donut store, bakery, fish and chips store and a pet shop

You can get small business rate relief if:

  • you only use one property
  • your property’s rateable value is less than £12,000

What you get

You’ll get 100% relief (doubled from the usual rate of 50%) until 31 March 2017 for properties with a rateable value of £6,000 or less. This means you won’t pay business rates on properties with a rateable value of £6,000 or less.

The rate of relief will gradually decrease from 100% to 0% for properties with a rateable value between £6,001 and £12,000.

You have more than one property

You can get small business rate relief if the rateable value of each of your other properties is less than £2,600.

The rateable values of the properties are added together and the relief applied to the main property.

You’ll keep getting any existing relief for one year when you get a second property.

You’re a small business but don’t qualify for relief

If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re considered a small business.

Even if you don’t qualify for small business rate relief, your business rates will be calculated using the small business multiplier instead of the standard one. This is the case even if you have multiple occupied properties.

The multiplier shows the percentage (pence in the pound) of the rateable value that you pay in business rates. You can see a list of current multipliers on the Valuation Office Agency (VOA) website.

https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

steve@bicknells.net

10 things a new business must do to pay less tax

Entrepreneur startup business model

A record breaking 581,173 businesses were registered with Companies House in 2014 showing an accelerated increase on previous years with 526,447 and 484,224 recorded in 2013 and 2012 respectively.

In 2014 the UK had the fastest growth in Self Employed workers in Western Europe!

So what should start ups do to pay less tax?

  1. Choose the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay more tax than company structuresComparison Calculator
  2. Choose the best VAT Scheme you might be better off with Flat Rate or Cash AccountingFlat Rate Calculator 2
  3. Get an Accountant and use accounting software – the penalties and fines for getting your tax wrong can be huge!
  4. Employ your family – Children can legally work from the age of 13 which means they can perform activities which are relevant and justifiable in your business. Each member of your family has a tax free allowance of £10,600 (2015/16).
  5. Avoid earning more than £100,000 – For all ages, the personal allowance reduces where taxable income is above £100,000 – by £1 for every £2 of income above this limit, so that the personal allowance is lost once taxable income exceeds £121,200 (2015/16).
  6. Pay into your Pension – Currently you can pay £40,000 per year into to your pension
  7. Pay Dividends – Generally directors will take a low directors fee and the rest of their income in Dividends
  8. Claim Expenses – You may well have an office at home and use your car for business
  9. Use Company Assets – Sometime the Benefit in Kind Tax works in your favour, so you could get the business to buy the assets for you to use for example a commercial vehicle or computer equipment
  10. Buy Assets – You should be able to buy assets with a loan or on credit but you will get the tax relief as soon as you take ownership

steve@bicknells.net

Contact Us

Will you be supporting Small Business Saturday?

Small Business Saturday Chalk board Sign

Small Business Saturday will be on Saturday 6th December 2014.

Over 99% of Business are Small or Medium Sized! and 47% of employees work for those businesses.

https://smallbusinesssaturdayuk.com/#small-biz-100

We want all kinds of small businesses to get involved, so know that whether you are a family business, local shop, online business, wholesaler or small manufacturer, Small Business Saturday is supporting you!

Research carried out by American Express following last year’s event found that 43 per cent of consumers chose to visit small businesses as a direct result of Small Business Saturday.

Secretary of State for Business Innovation and Skills Vince Cable confirmed: “The Government is fully behind the Small Business Saturday campaign, which gives people the opportunity to trumpet the valuable contribution they make, not just to the economy but to their local communities.”

steve@bicknells.net

Top 15 points in the Small Business Bill

Business teamwork for success

The Small Business, Enterprise and Employment Bill is going through parliment now

The Bill will open up new opportunities for small businesses to:

  • compete
  • get finance to create jobs
  • grow
  • innovate
  • export

Here are my top 15 key points:

  1. For every piece of legislative brought in two pieces will be removed
  2. Prompt Payment
  3. Changes to Childcare Early Years and Child Minder Registrations
  4. Cheque imaging from smart phones (Presentment of Cheques)
  5. Banks will share data on Small Businesses with other Lenders
  6. Invalidating restrictive terms in business contracts to increase access to Invoice Discounting
  7. Company Transparency – Register of People with Significant Control
  8. Accelerated Strike Off
  9. Company filing changes
  10. Directors Disqualification – tougher rules
  11. Schools, Colleges, Higher Education to track students into the labour force
  12. Penalties for employers who fail to pay an Employment Tribunal award
  13. Penalties for non compliance with National Minimum Wage increased to 100% or upto £20,000
  14. Improved access to alternative finance
  15. Streamlined Company Registration

These are major changes that will affect us all!

steve@bicknells.net

Is your accountant qualified?

Accounting Standards

The ACCA issued a warning in May after research from cloud accounting software provider ClearBooks showed just 8 per cent of small businesses considered an accountant’s qualifications when choosing one. There is no law preventing anyone from calling themselves an accountant, and that as a result small businesses could be unknowingly paying someone without the necessary skills to handle their finances and help their business grow, who isn’t regulated or insured against risk.

CIMA (Chartered Institute of Management Accountants) Members in Practice are monitored by CIMA for:

  1. Continuous Professional Development
  2. Anti Money Laundering Compliance
  3. Professional Indemnity Insurance
  4. Continuity Agreements
  5. Letters of engagement
  6. Ethical conduct

CIMA operates a Masters degree standard scheme of qualifying examinations for prospective members. It is active in promoting local education, training and management development operations, the promotion of new techniques through its research foundation and the dissemination of management accounting practices through publications and other media related activities. WIKIPEDIA

You can find out more at www.business-accountant.com and www.cimaglobal.com

Why is it that small businesses do not check that their accountant is qualified?

steve@bicknells.net

Micro Entity Accounts – who can file them?

Micro Entity

Micro-entity accounts are a new type of accounts that can be submitted to Companies House from 1 December 2013. They will provide the smallest companies with the opportunity to prepare and publish simplified financial statements (profit & loss account; and balance sheet) if they wish.

A micro-entity is defined as meeting two of the following criteria:

  • Balance sheet total: £316,000
  • Net turnover: £632,000
  • Average number of employees during the financial year: 10 (or fewer)

Micro Entities are exempt from filing their profit and loss with Companies House.

Business Minister Jo Swinson said:

“Thriving micro-businesses are a vital ingredient for a stronger economy. However, because of their size they don’t always have dedicated finance teams behind them. We therefore need to make sure that they can focus on growing their business – rather than completing unnecessarily detailed paperwork.”

There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.

I don’t think this is going to help much? Micro Businesses still need to file corporation tax returns, deal with PAYE, RTI, VAT, minimum wage, Auto Enrolment Pensions, and a wide range of other requirements

steve@bicknells.net

Disincorporation Relief – its not just for Window Cleaners

A donut store, bakery, fish and chips store and a pet shop

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

Do you use an HMRC suggested record keeping phone app?

Now we have started a new tax year why not use a phone application to keep track of income and receipts? HMRC suggest the following:

Software supplier Product Platform
Forbes Computer Systems Ltd (Opens new window) Forbes Receipt Keeper Android
FreeAgent Central Ltd (Opens new window) Earnest iPhone, iPod touch, iPad
Immagini Ltd (Opens new window) ZipZipBooks Android
Intuit (Opens new window) MyBizTracker iOS (iPhone, iPod touch)
Mr Tax Software Ltd (Opens new window) Text 2 Save Tax Android.
Quick File Ltd (Opens new window) Quick File All – free web-based application
Sage (Opens new window) Sage Record Keeper iPhone, iPad iOS
123 Tax (Opens new window) 123 Tax application Windows Phone

I have been trying out the Sage Record Keeper Mobile on my iPhone, its pretty good for free, here is an overview:

  • Record cash in and cash out
  • See your balances at a glance and track CIS deductions – Standard or Higher Rate
  • You can even take photos of your receipts – no longer worry about losing them- multiple photos if needed
  • Estimate the current year’s tax and refer back to previous ones (up to 6 years)
  • Quick links to record income and expenses in seconds
  • Enter details, specify type of payment used and add notes
  • Add and customise tags for transactions to group them into categories
  • Add several tags to each transaction
  • Search and filter by category, supplier / customer, amounts or other details
  • Backup your information using iCloud

For use outside of the app you can export all or just a selection of transactions and photos as CSV and image files. They’re automatically attached to an email for sharing with anyone.

So no excuses, use your phone and stay organised.

SA 2012-13 Jan Outdoor poster 1

 

steve@bicknells.net