Showing posts with label startup. Show all posts
Showing posts with label startup. Show all posts

Friday, December 5, 2014

Surprise changes on incorporation relief

Earlier this week, George Osborne announced during the Autumn Statement some major changes to the tax reliefs available when an unincorporated business transfers into a related company (e.g. a sole trader transferring their business into a Limited company that they also own).

It has been common practice in the past to start a new business as a sole trader business and then incorporate at a later date. The benefits were multiple. First, because a sole trader business can carry back losses, if one creates a business with high startup costs, tax relief can be carried back and offset against tax paid in previous years, including tax payed on employment earnings. For someone leaving the corporate world that's a nice incentive and this has not changed.

What has changed however is the relief available when changing the status from sole trader to limited company. Indeed once the losses have been offset against past earnings, using a limited company is much more tax efficient especially because it's possible to avoid national insurance to a large extent. In the past the incorporation process would have generated 2 significant reliefs. They are now gone.

Tuesday, May 14, 2013

The 10,000 Small Businesses Programme

One often says that there is no such thing as a free lunch. It might not be the case with the Goldman Sachs sponsored 10,000 small businesses programme.

The programme modelled after a US programme of the same name aims to stimulate employment creation and economic growth and has a broad regional coverage, including many areas of relative economic disadvantage. It was first piloted in Yorkshire in 2010, followed by expansion to North West England, the Midlands and London. As of April 2013 almost 500 small business leaders across the country have participated, and approximately 250 new participants join the programme each year.

The programme is designed specifically for the leaders of established small businesses who have the ambition and the potential to generate substantial growth in their enterprises. Participation is by competitive entry and is fully funded by the Goldman Sachs Foundation for successful candidates. Businesses need to be established (at least one year of trading), have between 5 to 20 employees and have growth ambitions. While the programme is competitive, the last cohort in London had 25 successful applicants for slightly more than 100 applications. So it is within reach.

Thursday, October 18, 2012

Keeping your accounts in a Spreadsheet: 5 reasons why it's a bad idea

Spreadsheets are very powerful tools. They were the main reason the PC revolution got started in the first place. While most people have forgotten Visicalc or Lotus 123, their successor Excel -- or even Google Docs --  is now so powerful that some businesses run their entire operations on spreadsheets.

But is it wise to do keep your books on a spreadsheet? I would argue that it's not and for the following reasons:

1. Getting the right functionality is hard

Out of the box, a spreadsheet will not provide the functionality you need to keep track of revenue, expenses, VAT, bank accounts etc... It can be done but it does require some work. You can find ready-made spreadsheets that will provide some of that functionality (and as a matter of fact we do provide such a template to our clients) but the functionality will never be as good as what a dedicated bookkeeping package can offer.

Sunday, October 9, 2011

EIS Changes approved by the EU

The European Commission has approved for State aid purposes the increase in the Enterprise Investment Scheme (EIS) income tax relief rate to 30 per cent in respect of investments made in EIS qualifying companies on or after 6 April 2011. It has also approved the individual investment limit from £500,000 to £1 million in respect of investments made on or after 6 April 2012. Both changes were announced in Budget 2011 and the rate increase was included in Finance Act 2011. The intention is to include the increase in the individual investment limit in Finance Bill 2012.

Sunday, February 13, 2011

How to choose the right accountant

Choosing the right accountant is more difficult than choosing the right camera. You don't have reviews you can refer to. And what works for some companies will not work for others. So here are 10 tips to get you on the right track.

1. Ask around

This is not necessarily different than with anything else. While past performance is no guarantee of future results, happy clients is always a good sign. Beware however that asking friends or family is not the same as hiring them. Because someone if your wife's nephew, it is no guarantee that you will get great service. And if things go wrong, your personal life will be impacted as well. Not a good idea!

2. Check qualifications

There are a number of valid accounting qualifications: ACA, ACCA, CIMA, ICAEW etc... But don't discount experience. Someone who went to Cambridge, with past CFO experience but without a formal accounting qualification will definitely be a better option than someone fresh out of school! Also remember that not everyone in a practice will have the same qualifications and that most probably the junior staff doing your work won't be qualified at all. Also look at specific business knowledge. Do they have clients in your line of business?

Tuesday, February 8, 2011

SMEs face potential penalties on accuracy of records

HMRC are planning a programme of checks that will review the adequacy and accuracy of records kept by small and medium-sized enterprises. The programme will use existing law regarding both record-keeping requirements and penalties for failure to comply, with sanctions imposed for significant failures. The Revenue says it conducted a random enquiry programme that indicated poor record-keeping is a problem for 40% of SMEs. The department has issued the consultation document Business Records Checks to discuss the implementation of a new programme. The campaign would begin in the second half of 2011, with around 200,000 small businesses being selected for one of the new checks. HMRC expect to raise £600 million over its first four years.

Thursday, January 27, 2011

Getting grants in the UK

The UK government has set aside more than two billion pounds in funding programmes (grants and loans) for financing small businesses. Free government grants are available to help you start-up, expand or improve your business, if you are eligible. Unfortunately finding the right grant can be extremely tedious as there is no official repository of all available grants and reliefs available. They are many kinds of financial aids available:
Grants and Subsidies
When you receive this money, you don't have to pay it back. It's yours to use under the terms of the grant. The national and regional governments know that it's tough for small businesses to bring new products to market, make your company more efficient, or hire employees. So they provide billions of pounds a year to aid UK product innovation and grow small businesses.
The national and regional governments also recognise that some regions and business sectors need more economic development support than others. Businesses across the country are eligible for some of the billions of pounds in funding allotted for this development. Small businesses accessing grant programmes enjoy a bonus benefit: once you've successfully received funding, you're more likely to get additional grants from the same agency because you meet their program requirements.

Thursday, December 16, 2010

What tax relief for use of home?

This is a common question and unfortunately, it's a bit more complex than most people think.

Depending on your legal setup, the steps to take to recover some of your personal expenses on use of home are different. For a sole trader, the process is quite straightforward but for a limited company there is a bit more work and paperwork required:

You are a sole trader

You can just deduct a portion of the home cost. The calculation is done as a two step process. First you calculate the total running cost of your home:
  • Utilities (Water, Gas, Electricity)
  • Insurance
  • Rent or Mortgage Interest
  • Council Tax
  • Maintenance
  • Internet and Phone

Tuesday, December 7, 2010

What about the director's loan account?

In most small businesses, a director will often spend money on behalf of his company or conversely have the company pay for personal items. While in theory it would be better to not do that, it does happen and when it does it's important to record those transactions properly in the accounts.

That's what the director's loan account is for. It's also sometimes called an expense account or a director's current account. Its role is to record money due to or due by the director. Typically, if a director uses cash or his personal credit card to buy items for the company, that account would be credited by the corresponding amount. Conversely, should  he buy some personal items using the company credit card, that account would be debited. In that case the net effect is that the company would have lent him some money. This is where the name comes from.

Sunday, November 14, 2010

Top 10 tips for better time management

Another top 10. It's not because I can only count to that! But I feel that summarizing and ranking issues on a given subject makes it easier for a blog reader to glance at and decide if it's worth going into the details.

Today's top 10 is on a subject that is only remotely connected to tax or accounts but that is so critical when you start up your own business that I thought it deserved some attention. It's about time management and because entrepreneurs are known to have way more daily work than a day can fit in,  it's critical that they do everything they can to optimize their day.

So here is the list:
  1. Plan. If you fail to plan then it usually means that you plan to fail! You probably have a business plan. How often do you review it? Have you set long term goals, short term deliverables, how do you measure your progress against those? Everyone is different, every business has specificities but it is critical to setup goals and measure yourself against them, readjusting along the way. Your long-term objectives need to be split into short-term deliverables, all the way to the daily todo list. And you need to make sure that the objectives are specific and measurable, realistic and yet challenging. 

Saturday, October 9, 2010

Calculating your UK taxes

We have just written a small spreadsheet using Google Spreadsheets and Google Apps Scripting to allow you to compute your UK taxes for most simple cases. If that can help, feel free to use it but beware that we have not debugged it properly. It's a good planning tool, and you can you customise it to your needs but you should not rely on the results "in production" as testing has only been done casually.

The spreadsheet will compute tax due, and all types of national insurance liabilities as well. It can deal with some of the more complex tax issues like non ordinarily-residence but we suggest talking to your accountant if your tax situation is not straightforward.

Friday, September 10, 2010

The 10 key steps to creating your business - part II

I wrote in a previous post about what you should do when starting a business. That post talked about what you need to do before or right at the start of your new venture. This post now discusses what you should do right after that and picks up where the previous article left off:
  1. Get an address and a phone. For the office there are a lot of brokers out there that will be happy to find the right office for you. Some people start from home, and use serviced offices when and as required. Regus has some very flexible plans that allow you to use their premises when needed for business meetings. Another option is to check some of the self-storage companies such as Access Storage that also provide offices for rent at very competitive rates. You can also share an office with an existing business. Gumtree is a good place to start if this is what you are looking for. As for the phone, having just a mobile number on your business card is not a good idea. Fortunately, most VOIP vendors can provide you with local numbers (including fax lines forwarding faxes to your email) that you can easily use wherever you have a broadband connection. Be careful though as some vendors can lock you in since there is no automatic number portability for fixed line numbers. Some brokers can help find the right solution at not cost for you and you should use them. Skype is also a viable solution, even though it is not based on open standards like SIP.

Monday, September 6, 2010

10 tips to improve your Credit Control

We all know that there is only one way to go bust: lack of cash. Cash-flow management is therefore just as important as profit monitoring when it comes to manage your business. And the best way to do that is to keep a close eye on what accountants call the Aged Debtors list: those clients who have been billed but have not paid yet.

So how do you do it? Here are 10 tips you should follow to become a pro at managing your cash-flows:
  1. Don't extend credit. This one is obvious: if you can avoid offering credit, you don't have a problem to solve any more. Unfortunately there are very few businesses that can afford to not offer credit. In most cases you will have to offer some level of credit. If that's the case, read on.
  2. Do not invoice manually. With many systems to choose from, some for as low as £10/month, you should not invoice clients using Microsoft Word. Whether it's Kashflow, FreeAgent, Xero or Sage, all allow you to specify your standard terms and will alert you when a bill is overdue. They will also produce the Aged Debtors automatically. Lastly they will allow you to keep notes so that you know why the bill has not been paid next time you call to follow up.

Sunday, July 18, 2010

The 10 key steps to creating your business - part I

You have decided to start up a new business. It's a lot easier to do in the UK than in some other Europeans countries. Yes I am thinking of France and its famous red tape. However, while it's easy to start a new business it's also easy to make the common mistakes that cause 1 in 3 start-up businesses to fail in the UK.

So if you don't want to be in that 30% bucket, what are the top 10 things you should do as soon as possible when you create your own business?
  1. Choose a name for your business and protect it. If you intend to build your brand you need to trademark it. The name does not have to be the same as the one of your company. As a matter of fact, if you are a sole trader, your legal name would be "John Doe trading as Amazing Widgets" for example. 
  2. Decide on the legal structure. Sole Trader, Partnerships or Limited Companies all have benefits and drawbacks. Make sure you understand all the implications (and costs) before you decide on a given structure. Most accountants will be happy to provide a free consultation to help you out. We at TaxAssist Accountants certainly do.