When you start a business you need to be aware of the risks you are taking. Government statistics show that 97% of new start-up businesses fail within 3 years. To prevent this from happening to your business you need to understand RISK. By understanding Risk you can apply yourself to the areas of the business which are really important for the survival of the business. Risk Management is a process of analysing what can go wrong with the business and what can be done to alleviate the problem in a cost-effective manner. Entrepreneurs need to be familiar with the likely occurrence of a risk and the consequences of such risks if they happen. Please see the diagram below: Quadrant 1 risks have the least impact and the least consequences to the business, whereas Quadrant 4 risks have the most damaging consequences and the highest likelihood of occurring. Therefore all risks need to be mitigated if the business is to be successful. Let’s discuss the four … [Read more...]
Budget 2018 – At a glance
Business Small retail businesses in England will see business rates reduced by a third. The annual investment allowance is to rise five-fold from £200,000 to £1 million for two years. Reforms to individuals working under IR35 are to be extended to the private sector by April 2020. Corporation Tax to remain at 19%. Personal The personal allowance is to rise to £12,500, higher-rate threshold up to £50,000. A 4.9% increase will set the national living wage at £8.21 an hour for over-25s. Stamp duty abolished for all first-time buyers of shared-ownership homes worth up to £500,000. Duties Fuel duty unchanged at 57.95p per litre of petrol, diesel, bio-diesel or bio-ethanol. Duties on beer, most ciders, and spirits remain unchanged for 2019/20. Cost of a bottle of wine duty to rise by 8p, in line with inflation, in February 2019. VAT The VAT-registration threshold is to stay at £85,000 until April 2022. The Government will revisit options … [Read more...]
Business Start Up – Getting it RIGHT First Time
Starting a business is not easy. Getting everything set up correctly can make the operation of your business run smoothly, especially when you need to be working on or in the business to make sure it survives. Last year 660,000 companies were established in the UK, which is up from 608,000 in 2015. That doesn’t include sole traders. But 97% of business startups fail in the first three years. So when you are firefighting to survive, if you have tackled the issues in the diagram below you will have a better chance of surviving because these issues have been tackled. The more of the issues you deal with before you start running your business the easier it will be to operate. The FIRST thing to do is a skills audit on yourself. Do you have the skills necessary to run a business? Which skills do you have and which ones should you learn and what can you delegate? What are the functions of a business and … [Read more...]
To Register for VAT or Not, that is the question
What is Value Added Tax? Value Added Tax was introduced to the UK in 1972 to replace Purchase tax and to conform to the European Common Market. The Definition of VAT is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution. For most businesses in the UK, VAT is added at 20%. However some things are exempt from VAT , eg most food goods, children’s clothes, postage stamps, financial and property transactions, printed books, magazines and newspapers. Some items are also charged at a reduced VAT rate of 5% e.g. energy and children’s car seats. When you are starting a new business when should you register for VAT? Reasons you should register immediately for VAT? Your new business is selling to other businesses. They will also be registered and will claim the VAT back as Input tax which reduces the amount they pay to HMRC. Your business is investing in capital items, … [Read more...]
The Value of MEASUREMENT
Knowing what to measure and how to measure it can make running your business easier. To make better decisions you need to gather the relevant data and format it into a report showing the essential information. Your decision makers can then be taught how to use that report to make sensible decisions or to recognise that they need additional information or instructions from you. For Measuring your Cash Flow you need to know: Who your debtors are, how much they owe you and when they are likely to pay. Who your creditors are, how much you owe them and when you need to pay them. What your regular outgoings are (rents, rates, salaries etc). Only when you have gathered the data can you then make a reasonably accurate Cash Flow Forecast. This will enable you to make decisions about who to chase for cash and who to pay in order to manage the cash in your business. When making a decision on buying a piece of Capital Equipment you … [Read more...]
The Value of Time to Your Business
We are all allocated the same amount of time but some people make more of their time than others. Knowing the value of your time is essential to getting the most out of your business. When you are in business you must treat TIME as an ASSET like CASH. You need to look at how you are SPENDING your time and then ensure you are getting the best return you can on the time you are spending ON or IN the business. You need to list the tasks and things you have to do and put value them. You can then prioritise the things you have to do based on their value to the business. This may mean that monitoring your Aged Debtor report on a regular basis could be one of the director’s most important tasks to ensure that cashflow, the life blood of the business, is running in the right direction. When allocating your time you should also take into consideration the URGENCY of the tasks that need to be achieved. … [Read more...]
GDPR Check List – Your 8 Step Plan For The New Legislation
You need to start your preparations for GDPR (General Data Protection Regulation) as the implementation date of 25th May 2018 is fast approaching. For most businesses and IT managers, preparation has not yet started despite the deadline being less than 6 months away. Ignorance of the Legislation will be no excuse and with the severe penalties planned, some businesses could be made bankrupt if they fail to comply. How would you deal with a fine of 4% of turnover? Please use this checklist to start you on the road to compliance. These are the key areas you should address. As you get into the detail of your own GDPR review, you will also uncover data considerations, which are particular to your own industry and business type. 1 Raise Awareness In Your Business GDPR will probably require you to make changes to the way you collect, store, use and process data. In particular data held on individuals. The new regulations extend the provisions in the Data … [Read more...]
Is your business ready for new GDPR legislation on Data Protection?
This article outlines the key themes of the new General Data Protection Regulation (GDPR) to help businesses understand their corporate responsibilities and the challenges of this new legal framework. Key facts about GDPR A data protection regulation to protect the data businesses hold on individuals. It is legislation with large fines for non-compliance It makes organisations much more accountable for the data they hold. Applies equally in all EU member states and to those offering goods or services to individuals within the EU Stricter stipulations apply to firms with over 250 employees Also applies to SMEs with under 250 employees when data processing carried out is likely to result in risk to the rights and freedoms of data subjects, the processing is not occasional or the processing includes special categories of data as defined in GPDR Article 9 It will be enforced across Europe from 25th May 2018 Overview of … [Read more...]
How To Turn A Hobby Into A Business Process
Part 1 How do you take a hobby or interest and turn it into a business? In this blog, I’d like to share a simple but effective process I use with my clients to take their hobby or interest and turn it into a viable business plan. This process can be used for any start up business. IDEA We start with the IDEA. Your idea for a business may be totally unique to you or it could be providing a service that others already provide like a McDonald’s restaurant. Once you have decided on what your business is going to be then you need to do your Market Research. Market Research Researching your market is an essential process. The research you do is to ensure that there is a demand for the product or service you are offering. Here are some of the things you should find out during the research phase: Place – where is an appropriate place to sell your product … [Read more...]
Small Business, Enterprise and Employment Act 2015 (SBEE Act)
New legislation will require company owners to provide additional information to Companies House. The Small Business, Enterprise and Employment Act 2015 introduces the Register of Beneficial Owners, which requires companies to submit details of all individuals who have at least 25% control. The register comes into effect on the 1 April 2016. As with the Annual Return, there will be a yearly requirement to update the document; however, changes should be updated when they arise. The legislation requires submission of details of owners with 25% control, but the process for determining control is complex. It addresses direct and indirect control, as well as dilution of control, which is particularly relevant if the UK Company is part of a global group. The public register will contain the following details: Name, country, nationality and date of birth Service address, residential address Date the individual became required to register Nature of his/her control and … [Read more...]
Using the right VAT number when invoicing EU customers?
Since the rules on charging and reporting VAT changed in 2010, HMRC has taken a lenient approach to errors in EC Sales Lists. But there are signs that it is now toughening its stance. When you send an invoice without VAT to a customer in another EU territory, you have to display the customer's EU VAT number and report the transaction on an EC Sales List. It is all too easy to obtain their VAT number, set up the customer account and use that number for all future invoices. If the VAT number is no longer valid, you should NOT zero-rate your sale of goods to that customer. HMRC are checking customer VAT numbers for the sale of goods to customers in other EU countries. It is looking at zero-rated cross-border sales and is raising VAT assessments if the numbers are no longer valid. It is also asking for evidence that goods have been sent out of the UK. So far it has only focused on goods, but we are expecting a similar change with regard to the supply of services. Regardless of whether … [Read more...]
A quick guide to Credit Control
'Credit control' is the system used by a business to make certain that it gives credit only to customers who are able to pay, and that customers pay on time. Credit control is part of the Financial Controls that are employed by businesses to ensure that once sales are made they are realised as cash or liquid resources. Crisis Credit control is usually an afterthought when an invoice has gone unpaid or a customer’s account exceeds a set credit limit. Follow your bad debt procedure: Gather your evidence, invoice, proof of delivery, contract terms. Send a Statement to your customer with a letter asking for the money (Letter 1) If you get no response in the time frame set out in the letter, send Letter 2, send by post and email attachment. Call the customer to check they received the letter. If they still do not pay you, then send Letter 3 detailing the Interest and costs they will incur if the debt is not settled. Two days later file the claim on the Government … [Read more...]
What do the new accounting standards mean for you?
In the next year your accountant will start talking to you about the changes in accounting standards in FRS 102. This new standard is about moving the UK Accounting standards closer to the International Accounting Standards. The main difference will be an increase in costs and these will come in two parts. In the year that you convert to the new standards there will be extra costs because your previous year’s accounts will have to be converted to the new standards. There will then be higher costs because there are extra reporting requirements. Here are some of the new requirements: There will be new accruals for items such as Holiday pay. You will have to declare any foreign currency transactions you have set up but not actioned. You will need to make declarations about Fixed Assets, Intangible Assets such as intellectual property and Goodwill. What can you do to minimise these costs. Be prepared. Find out from your accountant which of these changes affect you … [Read more...]
Forensic Accounting
Forensic Accounting is a branch of accounting that describes the work of an accountant who investigates and reports on the financial activities of a business or individual with the aim of producing information for the settlement of disputes. Forensic means “suitable for use in a Court of Law.” Some of the uses of Forensic Accounting information are:- Economic damages calculations, losses suffered from a tort or breach of contract. Post Acquisition disputes such as earnouts or breaches of warranties Bankruptcy, insolvency and reorganisations Fraud Business Valuation – Going and gone concern. Computer forensics and discovery. Family disputes for the valuations for divorce etc. A forensic accountant will: Collect all the data. Data preparation and processing Analysis of the information to produce information. Reporting the findings of the investigation. An example of forensic analytics would be to review … [Read more...]
