Have you ever found yourself at the end of a busy day just dropping your receipts and invoices onto the pile on your desk thinking "oh I'll catch up with those tomorrow or at the weekend"?
Yes you may know what’s in your bank account – but do you know how much of that belongs to you and how much to the taxman?
If so you’re not alone, in fact it’s surprising how many small business owners neglect this crucial area of their business figuring it can all be sorted ‘later’ or ‘the accountant will sort that out at year end’! Well yes, they will, but make no mistake you’ll pay for it. Higher fees for more work and often at the busiest time of their year!
How would you feel if you knew each week what your profit had been? If you knew exactly what your margins were and what mark-up to apply to any sale you make? Best of all it cost you nothing more than 15-30 mins of your time each working day? How many times I’ve seen a business think they doing really well until they have their actual net profit calculated with their yearend accounts and realised those jobs they thought were good have actually cost them money!
Get in control
By getting in control of your paperwork you can very effectively control your business instead of it being the other way around. Discipline is the key. Stick to a routine of paperwork entry, little and often – it’s not so boring and tedious then.
But by doing this it means you can see in real time exactly what your figures are, instead of not finding out for sure until 18 months down the line when your accounts have been prepared.
Get the basics right
Record keeping is a legal requirement for every business and on top of that you have to keep your records for six years and a day! (No I don’t know who at HMRC came up with a day either!)
The basics you should record are your sales, purchases and ideally a petty cash record. You then ideally want to check all these off against your bank statements.
For more information on book keeping or to read the full article visit www.real-price.co.uk
5 Key Reasons to Complete your Tax Return Now
It is estimated that 700,000 tax returns were thought to have been outstanding on 31st January 2014. Although you don’t have to file your tax return until 31st January 2015, we think these 5 reasons might make you want to file earlier:
1.Deadline to Pay Tax
It doesn’t matter what date you file your tax return, the due date for paying your tax liability will still be 31st January.
There is a common myth that your tax liability becomes due as soon as you file your tax return. This is simply untrue. You are under no obligation to pay your tax liability straight away, even if you file early.
2.You have time to plan for a tax liability
By filing your tax return and calculating any tax liability you might owe early, you won’t be caught by surprise. Filing early allows you time to budget for the tax and helps to manage cashflow.
Remember, making late payments will incur interest and even late payment penalties from HMRC. They also pass overdue debts to a 3rdparty debt collection agency these days.
3.Tax Refunds are accelerated
If HMRC owe you money, why wait until January to get your refund processed? It takes HMRC time to process refunds and the nearer to the deadline you file, the longer you will end up waiting.
4.Tax Liabilities through your Tax Code
If you struggle with cashflow or hate paying a large tax bill, then filing your tax return early can open up a great benefit for you. If your tax liability is less than £3,000 and you submit your return before 30th December 2014 you can opt to have your tax liability collected through your tax code.
This means if you are an employee or pensioner, it can be collected directly from your wages or pension throughout the year.
5.Not Missing the Deadline
It sounds obvious, but by filing early you eliminate the risk of missing the deadline. If you miss the deadline of 31st January you will be issued with a £100 filing penalty, increasing the longer you do not file. See the penalty structure below:
·Initial £100 penalty
·3 months late - £10 daily penalties, up to a maximum of £900
·6 months late - £300 or 5% of your tax due (whichever is higher)
12 months late – an additional £300 or 5% of your tax due (whichever is higher)
The above can total over £1,600 – don’t risk filing late!
Employing for the first time in a small business part 2
Any small business owner will tell you, finding the right people to employ can be difficult.
But it helps if you’re organised and plan ahead.What happens once you’ve advertised the role and you have some applications and CV’s sent in. What do you do next?
Once you have some applicants who have returned your questionnaires and CV’s (not all will) carefully filter through and read these. Choose who you would like to interview–book a date and time and email/write to them with a ‘reply by’ date.
Let the unsuccessful ones know immediately usually in writing or by email.
Prepare for the interview – plan out how it will go and what it will consist of and stick to the same process for each one. E.g. start by asking them to take you through their CV as this is an area they are familiar with.
Avoid vague questions such as where do you see yourself in 5 years – you’ll almost always get the stock answer along the lines of; ‘having progressed to being a manager within this company’, as this is what they think you want to hear. Instead how about, ‘what type of management style suits you best? How do you prefer to work?’ this demand a much more considered response and will tell you if they’ll fit into your team.
Give a specific time frame in which you’ll get back to them. Let them know exactly what will happen next and when e.g. we will let you know if we want you back in for a 2nd interview by Friday. If not we will inform you. And stick to it. Don’t leave them hanging.
Having set processes in place will massively reduce recruitment mistakes, but they still will happen. This is where you need the right contracts and outsourcing these to a HR firm can be well worth the money. Make sure there is always a probationary period from both sides.
Don’t be put off though, getting the right staff can take time but it’s an investment worth making. Also see our blog on Apprentices.
To read the full article or for more help on employing people in a small business visit www.real-price.co.uk.
Employing for the first time in a small business part 1
Choosing your employees is a minefield and so easy to get wrong.
Because how can you possibly tell in a maximum of 3 x15 minute interviews how someone is going to fit in with you and/or any other employees you already have?
But as any small business owner will tell you, employing people is the single hardest but also one of the most rewarding things about running your own business!
Some tips for recruiting;
Define the role you are looking to fill. What is the actual job on offer? Write down everything from the title and working hours to what duties are expected and how you expect the candidate to progress over time, e.g. more training etc. If you aren’t clear about what you want then it won’t be clear what you’ll get.
Think carefully about where to advertise – who is it you want to attract and where are they likely to look for a job?
Research the going rate for the equivalent job and the next step up, everything from salary to bonuses and opportunities – what’s available out there?
Once you have all the information put together your package – what is you want to offer as a minimum starting package through to what they can hope to achieve within the next couple of years. You need to have a realistic starting salary but also have something attainable they can hope to achieve so the right candidate can see they won’t be stuck at one level forever.
Ask all applicants to complete a form as well as supply their CV. Put questions on it that are important to you including real work scenarios and ask how they would handle it. This can often give you a bigger insight in to their personality than any list of qualifications. E.g. from how motivated they are (did they write a couple of words full of over used clichés e.g. I would be a team player to achieve a satisfactory outcome, an essay detailing their life story, or a short paragraph with a synopsis of what they would do and why) Be careful on the questions you ask – some lines of questioning are illegal, there are some good articles on what you can and can’t ask here;
To read the full article or for more help on employing people in a small business visit www.real-price.co.uk .
Starting a business – Get an Accountant
With a business start-up often the things you thought were extremely important at the beginning when viewed a year or two down the line make you wonder ‘what was I thinking?’
After speaking over the years to businesses up and down the country, and particularly the Battersea, Wandsworth and Putney areas we have found a number of similarities regardless of trade type or area. This is part 6 in the series covering what points a lot of small businesses had in common.
Accounts and Advice
Another key point new start ups mention regularly is to get a good accountant from the start.
Because it’s all well and good thinking you can save money by doing it yourself, but is it a false economy?
Now whilst we’re not by any means saying you should spend a fortune on exorbitant fees, there are some areas where an accountant can save you their fees as a minimum but generally a lot more. There are some things you should ideally look to do yourself, particularly in the early days, such as book keeping. After all it will benefit you to know all your income and outgoings anyway, so unless it’s a really good fee and you’re only paying for the lines of data actually used, as opposed to an hourly basis, then have a go yourself. Your accountant can support you with this by giving you free spreadsheets; you don’t need to immediately buy expensive software.
Then the accounts themselves; A good accountant will be able to not only prepare your accounts but point out what’s missing and what’s not been included. They can guide you through what you can and can’t claim for as a business expense, as well as through the minefield of HMRC and Companies house.
There are regular horror stories where a business owner has thought ‘how hard can it be?’ and then 2 years on, with missing paperwork, errors, HMRC investigations and total mayhem in the accounts they’ve found out!
Your accountant can not only help you with your statutory obligations but also help you with advice and be a sounding board for your business ideas and the implications of these. They can check you’ve carried out everything you need to do from the start rather than trying to tidy things up (if they can) after the event.
To read the full article or for more information on Accounts and business start-ups visit www.real-price.co.uk