There are minimum requirements for the contents of business stationery, both paper and electronic, which will depend on the type of business structure.

Books and records

All businesses need to keep records, they can be maintained by hand or may be computerised but should contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you are considering purchasing computer software to maintain your records, obtain professional advice.

Accounts

The books and records are used to produce the accounts, if the records are well kept it will be easier to put together the accounts.  Accounts must be prepared for HMRC and if a company is formed there are strict legal requirements as to their layout. The accounts and company tax return must now be submitted electronically to HMRC in a specific format.  A company and a LLP may need to have an audit and will need to make the accounts publicly available by filing them at Companies House within a strict time limit.

 Taxation

When starting in business, taxation aspects must be considered.

•• Taxation on profits

The type and rate of taxation will depend on the form of business structure. However, the taxable profit will normally differ from the profit shown in the accounts due to certain expenses which are not allowed for tax purposes and the timing of some tax allowances. Payment of corporation tax must be made online.

•• National insurance (NI)

The rates of NI contributions are generally lower for a sole trader or partnership than for a director of a company but the entitlements can also differ. In a company, it may be possible to avoid NI by paying dividends rather than salary.

 •• Value added tax (VAT)

Correctly accounting for VAT is an essential part of any business and neglect may result in a significant loss.  When starting a business you should consider the need to register for VAT. If the value of your taxable sales or services exceeds the registration limit you will be obliged to register.

 Employing others

For the business to get off the ground or to enable expansion, it may be necessary to employ staff.  It is the employer’s responsibility to deduct income tax and national insurance and to account for student loan deductions. The balance must then be paid over to HMRC. Payroll records should be

carefully maintained.  You will also need to be familiar with employment law.

Premises

There are many pitfalls to be avoided in choosing a property, consideration should be given to the following:

 •• suitability for the purpose

•• compliance with legal regulations

•• local by laws

•• physical restrictions such as access.

 Insurance

Comprehensive insurance for business motor vehicles and employer’s liability insurance are a legal requirement. Other types of insurance such as public liability, consequential loss, business assets, should also be considered.

 Pensions

Putting money into a pension scheme can be a way of saving for retirement because of the favourable tax rules. Many businesses have to provide access for their employees to a stakeholder pension.

How we can help

Whilst some generalisation can be made about starting up a business, it is always necessary to tailor the strategy to fit your situation.  Any plan must take account of your circumstances and aspirations.  Whilst business success can never be guaranteed, professional advice can help to avoid some of the problems which befall new businesses.

About the author: Gemma Petty is an assistant Client Manager at Adams & Moore Chartered Certified Accountants. For more information or to ask how we may be able to assist you, contact Gemma via email at gemma@adamsandmoore.co.uk

Initial considerations

Starting a new business can be a very scary time, consider the following when evaluating whether or not you can make it a success:

 •• commitment – starting a business is demanding, determination and enthusiasm are essential!

 •• skills – you will need managerial, financial, technical and marketing skills. If you do not have these skills personally, they can be found in a partner or employee, or acquired through training.

 •• your product or service should have a proven or tested market, but must not conflict with the patent or rights of an existing business.

 Write a business plan, if you need finance, no bank manager will lend money without a sensible plan.  Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results.

 There are three common types of business structure:

 •• Sole trader

This is the simplest form of business since it can be established without legal formality. However, the business of a sole trader is not distinguished from the proprietor’s personal affairs.

 •• Partnership

A partnership is similar in nature to a sole trader but because more people are involved it is advisable to draw up a written agreement and for all partners to be aware of the terms of the partnership. Again the business and personal affairs of the partners are not legally separate. A further possibility is to use what is known as a Limited Liability Partnership (LLP).

 •• Company

The business affairs are separate from the personal affairs of the owners, but there are legal regulations to comply with.  The appropriate structure will depend on a number of factors, including consideration of taxation implications, the legal entity, ownership and liability.

Having made the decision to be your own boss, it is important to decide the best legal and taxation structure for your enterprise.  The most suitable structure for you will depend on your personal situation and your future plans. The decision you make will have repercussions on the way you are taxed, your exposure to creditors and other matters.

Good luck!

About the author: Gemma Petty is an assistant Client Manager at Adams & Moore Chartered Certified Accountants. For more information or to ask how we may be able to assist you, contact Gemma via email at gemma@adamsandmoore.co.uk

 Many small businesses have often grown to the point where spreadsheets just don’t do it anymore. You need an accounting software package that does what it says on the tin (account!) and more without breaking the bank.

 What can you expect from your accounting software package?

• Value for money
• User friendly
• Flexibility
• Compliant
• Track and highlight important changes in your business
• Useful reports

 Value for Money

In these times of economic recession most small business owners consider the price of the software the most important factor in choosing software. But, it is even more important that the software provides value for money. Investing in a cheap software that is not up to the job will prove to be very costly to your business in the end.

User friendly

The hallmark of a good accounting software is one that has a user friendly interface and does not require an advanced accounting knowledge to operate. It should provide an audit trail of postings and allows for corrections to be made easily without compromising on the internal controls of the system.

 You’ll probably require an induction or introductory training to get started. An in-depth knowledge of the software is always built up through extensive use. If you can’t use it, then it’s of no use to you.

Flexibility

A good software should integrate with other programs such word and excel. This allows for information to be imported to and exported out of the system saving valuable time. Flexibility also allows you to customise reports and features of the system to suit the business.

Compliant

The business environment is in constant and perpetual change. Tax laws and accounting rules are changing more frequently than ever before. You’ll need software that responds to these changes with regular updates and technical support available for when things go wrong.

Track and highlight important changes in your business

 A useful software is able to track important indices and helps you keep an eye on the key success factors for your business. It should alert you to things like when debtors and creditors are due which are key for managing cash flow for your business. It gives you the competitive advantage with the tools to manage the business better.

 Useful reports

In this difficult economic environment for all business, it is absolutely crucial for survival that you have your finger on the pulse of what is happening to the business. You need the right information to be able to take the strategic decisions that manage the risks the business is exposed to. With a few clicks of a button, a good software will give you management reports which are important tools for decision making.

 These are the basic functionalities you need for a small business. Most software on the market can give you more than the basic. The possibilities are limitless but the more common ones are;

1. Invoicing
2. Database
3. VAT
4. Payroll
5. Online filing
6. Stock management
7. Budgets, forecasting and cash flow reports
8. Departments or class tracking

The decision as to what software to choose should therefore ultimately depend on what you need from the system. If you find one that meets your expectations and budget, it will be helpful if you let your accountant run the rule over it to ensure it is fit for purpose.

 It is proven that a good software is an important investment that pays for itself many times over. “Technology is a gift of God. After the gift of life it is perhaps the greatest of God’s gifts. It is the mother of civilizations, of arts and of sciences.” –  
Freeman Dyson

 Get investing!!

 About the author: Daniel Tabiri ACCA is an Accountant at Adams and Moore. For more information or to make an enquiry contact Daniel@adamsandmoore.co.uk

Think about the image you want to see when searching for someone or something. Whether consciously done or not, everyone has a perception of what they expect from a person or company.

There are surely many occasions where you have researched somebody or something online and perhaps been greeted by the complete opposite of what you expected.  Perhaps sometimes this is a good thing, but what about when it isn’t always for the positive, does it make you think you wouldn’t use this person or their services, or does it make you think this is the kind of person I would like to do business with? This is also the thinking of your customers or clients.     

What about your telephone manner? Do you answer your phone to a client or customer like you would a friend or relative? (Probably not!) And whilst this may work with some people in some professions, you don’t always know who is at the end of the phone; therefore a polite relevant telephone manner is always useful.   

When writing a letter, you are not writing a story or a quick note. Letters should be to the point and only contain as much information as necessary. 9 times out of 10 people will only skim through to the part they are interested in anyway. It is always a good idea to have someone proof read any letter before it is sent, to correct (if any) spelling or grammatical mistakes and to also ensure that the message you want to convey is clear to a 3^rd party. Ask yourself, would you want to take up work with someone who had written down your name incorrectly, whose letter makes no sense, isn’t relevant, or is covered in grammatical errors??  The answer is, you’d be more likely to give your work to someone who didn’t make those mistakes.               

Just remember the next time you want to upload that funny (funny probably to you and those who attended the same event) drunken picture of yourself onto your Facebook profile, or the next time you rant on Twitter about your awful day! A potential client could see this and perhaps instantly come to the conclusion you’re an aggressive alcoholic!

 The next step therefore is the starting capital which could be from almost nothing to quite substantial depending on the nature of the business. Most people do not have savings to fall back on so the next available option is to approach the bank for a loan. A lot of clients will then turn to their accountant to prepare a business plan to support the loan application. For most businesses this ends the life cycle of the business plan.

 Is the business plan only useful to support a loan application?

 Essentially, a business plan is intended to chart the course of a business through the potential difficulties in the business environment. In particular it is aimed at making four points:

1. The business is viable and will succeed for many years in the future backed up by various forecasts and assumptions.
2. The business has or will have the resources and core competencies at its disposal to drive the key success factors to its advantage.
3. Management has identified and is aware of the risks peculiar to this business and general risks facing all businesses.
4. How it plans to manage this risks to ensure that the business is successful in the face of all the difficulties.

 Every business is unique in its own special way. A good business plan is one that is the product of extensive research in the business area. Running a business is about managing risks on a daily basis. The decisions you take today affects the position of the business tomorrow.

 The most successful businesses are the ones that can see the hazards ahead and devise strategies to avoid or minimize the impact of the danger. Being prepared softens the blow and preparation stems from planning. It is therefore a very useful tool to any business (in particular new ones).

Critiques against planning argue that nobody knows for certain what will happen in the future and therefore it is better to react to situations as they change. They also argue that planning is restrictive and does not allow for flexibility and stifles innovation. Their view is that business is fraught with many risks and rewards for the ‘brave’.

 In the most uncertain economic environment since the 1930’s can anyone afford not to plan? A good plan is one that is flexible and adapts to changes in the dynamics of the business. Rigid plans are of no use to anybody but not having any strategic direction and focus is reckless in a recession.

 “Success always comes when preparation meets opportunity”…….Henry Hartman.

 About the author: Daniel Tabiri ACCA is an Accountant at Adams and Moore. For more information or to make an enquiry contact Daniel@adamsandmoore.co.uk

Whilst it is important for companies to generate profits, it is vital for the business’ to have sufficient cash in order for them to settle their day to day running costs. Cash is often referred to the lifeblood of an organisation and can often determine between success and failure.

In the current economic climate to maintain positive cash balances has become even more challenging for companies due to the recession that we are facing. However there are ways to maintain positive cash balance as explained below:

 Factoring trade debtors

This is where you sell you trade debtors (amounts owing to you) to a finance company and you would receive immediate cash by the outright purchases of those debtors discounted by the factoring company.  

 Reward program

This involves encouraging the customer to settle their invoices before the specified credit period. The incentive offered to the customer for early settlement of invoices is by offering a discount on the full invoice value i.e. 3%.

 Flexibility

Offer the customer the flexibility when it comes to paying. For instance ensure that you accept all forms of payments including cheques, cash, online telephone etc.

 Early billing

You should consider billing for work completed as soon as possible so you can chase for payment. Delaying to raise the sales invoice will also delay the payment for those invoices.

 Tightening stock levels

Cash should not be tied up in stock. You should consider maintaining a buffer stock so that only orders are placed when levels are low.

Delay payments to suppliers

This implies not settling the invoices received from the creditors before the invoices are due for payment.

 Overtrading

Avoid overtrading as this can cause companies to go into liquidation. Overtrading is often referred to expanding too quickly without having the necessary funds to do so.

 Good negotiation

Always consider negotiating the price and get the best deals in the market. Often companies use price comparison websites to establish who offers the best value for products you are considering to buy.

 All the above are some of the measures that you can take to ensure company maintains healthy cash position. After all cash is vital to the business’ survival both in the short and long term. However you should try and build large cash reserves as this is not good either as resources (cash) is not fully being utilised.

About the author: Ismail Abukon BA (Hons)  is an Accountant at Adams and Moore. For more information or to make an enquiry contact ismail@adamsandmoore.co.uk

“It is now time for the decision makers to explain more clearly to freelancers and the public why the risk to the exchequer would be simply too great if IR35 was abolished or suspended,” Brazier added.
As directed in the Budget this year, the administration of IR35 is being reviewed and it is hoped that the government will address the issue later in the year.

Chris Bryce, PCG chairman and IR35 Forum member, added: “He [the Chancellor] has a great opportunity in the November statement to release businesses from this ridiculous burden and free up HMRC resource to work on better things.”
IR35 status enquiries: 6 April 2006 to 5 April 2011
HMRC confirmed that the number of reviews opened in the last five years, where the Intermediaries Legislation (IR35) was identified as a risk, was:
• 6 April 2006 to 5 April 2007: 158
• 6 April 2007 to 5 April 2008: 104
• 6 April 2008 to 5 April 2009: 25
• 6 April 2009 to 5 April 2010: 12
• 6 April 2010 to 5 April 2011: 23
The Revenue also provided the tax yield received for the requested years:
• 6 April 2006 to 5 April 2007 = £1,906,619
• 6 April 2007 to 5 April 2008 = £1,730,640
• 6 April 2008 to 5 April 2009 = £1,430,358
• 6 April 2009 to 5 April 2010 = £155,502
• 6 April 2010 to 5 April 2011 = £219,180
HMRC is expected to continue investigations but possibly taking a more targeted approach, focusing on ‘high risk’ areas.

About the author: Richard Jepson ACCA is the Tax Manager at Adams and Moore. For more information or to make an enquiry contact Richard@adamsandmoore.co.uk

Company annual returns
Companies House will adopt the 2007 version of the UK SIC codes. The latest version will introduce five-digit codes to classify company business activities, rather than the existing four digits. All companies filing an annual return on or after 1 October will need to use the new codes, which will be asked of you when filing in your annual return via WebFiling. If you use the new codes prior to 1 October, Companies House will automatically convert the code, but this is not encouraged.

Aside from the Annual Return, other forms that will be using the SIC 2007 version after 1 October are: SE FM01, SE FM02, SE FM03, SE FM04, SE FM05, SE TR02, and SE TR03. The new regulations also contain changes to shareholder details required on the annual return. Unlisted companies must ‘provide a full list of all shareholders on the first annual return following incorporation and on every third annual return thereafter. Any details of transfers of shares that have taken place during the year will be required for intervening annual returns. Listed companies must provide name and address details of shareholders who hold 5% or more of the company’s share capital.

Agency worker rights
After some last minute posturing, agency workers will indeed see their benefit rights extended from 1 October. Once agency staff have completed 12 continuous weeks of service, they will gain similar rights to permanent staff including pay, overtime, shift allowances, maternity rights, holiday pay and individual performance-bonuses. However, agency workers will still not be able to enjoy benefits such as occupational sick pay, redundancy pay and health insurance. It was the talks between the TUC and the government that led to the benefit extension. The Agency Workers Regulations apply to hirers and companies involved in the supply of temporary agency workers, either directly or indirectly in England, Wales and Scotland.

National Minimum Wage
Adding to the employment regulation changes will be a change in the National Minimum Wage, applicable to all in the UK. The following rates will be effective from October 1:
• £6.08 an hour for workers aged 21 and over
• £4.98 an hour for workers aged 18-20
• £3.68 an hour for workers aged below 18 who are no longer of compulsory school age
For apprentices, £2.60 per hour must be paid to apprentices who are under the age of 19, or for those over 19 or over and in the first 12 months of their apprenticeship.

Abolition of default retirement age
With effect from 1 October, the default retirement age (DPA) of 65 was repealed by the Employment Equality (Age) Regulations that prohibit age discrimination in the workplace. Further guidance can be found on the BIS website and in the ACAS guide.

Carrier Bag levy
A 5p charge is being introduced by the Welsh Assembly on single-use carrier bags for customers in Wales. The charge is compulsory and is also applicable to retailers outside Wales who deliver to customers in Wales when using single carrier bags. BusinessZone reported that business groups have reacted angrily to the new regulations. Non Rhys, Wales Policy Manager at FSB, told the BBC: “Not all retail businesses will have had the packs from the Welsh Government because there’s not a list of all the retailers in Wales, so we have been trying to contact as many businesses as possible. But there will be some small businesses that do not know.”

About the author: Richard Jepson ACCA is the Tax Manager at Adams and Moore. For more information or to make an enquiry contact Richard@adamsandmoore.co.uk

This relatively new craze is starting to take over with people from all walks of life documenting their day to day routine, their religion, what’s important to them or in our case at Adams & Moore topics we feel would be beneficial to our clients.

Blogging has been around since the mid 1990’s and recorded blogs hit an all-time high in February 2011 with over 156 million public blogs in existence. That’s a lot of people writing and a lot more reading.

When in business blogging is a great part of networking, many post their thoughts and ideas on sites such as Twitter or again in our case as part of our website.

Why all businesses should be a part of the trend….

o Search Engine Marketing

Search engines such as Google love websites that are regularly updated with fresh, well written, keyword-rich content. People will be able to find your website more easily (because Google will list more pages), Google will re-index your site more frequently (meaning new pages you put online will appear in the search results more quickly) and it will also give your rankings a boost.

o Direct Communications

Over time you will begin to build up a readership of people who have subscribed to receive updates to your blog because they are interested in what you have to say. Every time you publish a new article it gets pushed out to all your readers giving you the ability to communicate directly with your target audience. For example at Adams & Moore we are passionate about our clients and therefore our blogs are designed to further explain Tax and Accountancy points and assist with the development of business, new or existing.

o Brand Building

A blog is a great way to get your brand in front of thousands of people who otherwise would never know you existed.

o Competitive Differentiation

Blogging is a great way to let potential clients know what makes you different from the other businesses within your sector. You can show them how you work, what sets you apart and how your solution to their challenges is unique.

o Social Media Marketing

Community sites such as Facebook and Twitter, and social bookmarking sites like Stumbleupon can produce amazing results. If you are lucky enough to have one of your blog articles go ‘viral’ on one of these sites you should brace yourself for a surge of new website visitors and possibly some high quality inbound links.

o Position Yourself as an Expert

Are you an expert in your field? Well tell the world on your blog. If you really know what you are talking about people will pay attention and before you know it you will have a dedicated following of readers.

o Low Cost

Setting up a blog doesn’t cost very much and maintaining one costs practically nothing.

In my opinion, give it a go it’s working for us!
About the author: Gemma Petty is an assistant Client Manager at Adams & Moore Chartered Certified Accountants. For more information or to ask how we may be able to assist you, contact Gemma via email at gemma@adamsandmoore.co.uk

The HMRC is planned a programme of checking business records and issued consultation notice on how to go about this. The consultation document Business Record Checks which was published on 17 December last year and the deadline for responding was 28 February 2011. I am not sure what the responses were but so far as to say that these checks are on the way.

HMRC says that these business records checks will review both the adequacy and accuracy of business records within the SME sector: apparently, some 2 million small and medium sized entities have records which currently fall below standard. HMRC is not proposing any new legislation as the programme will use existing law regarding both record-keeping requirements and penalties for failure to comply with those requirements.

Using the powers of Schedule 36, Finance Act 2008, HMRC plans to check business records in up to 50,000 cases annually, beginning in the second half of this year. There will be penalties for ‘significant’ record-keeping failures, and the aim is to bring about an improvement in record-keeping across these entities and thereby reduce tax losses that result from poor business records.

HMRC will select cases for a business records check on the basis of risk assessment, “focusing on businesses that have features associated with poor record-keeping”. Checks will be arranged in advance.

The consultation document makes clear that HMRC is not setting out to prescribe exactly what records a business should keep, but to check whether the record-keeping is good enough to produce an accurate tax return.

One important issue is what will constitute a ‘significant’ record-keeping failure? HMRC suggests that a failure to record an amount of business ‘money in’ (or out) above value £x, or repeated failures (of x number of times) to record amounts of whatever value, will be deemed significant. The consultation did invites views and suggestions.

The consultation notes that the vast majority of small and medium sized entities are represented by tax agents, and that agents can play a key role in conveying the message about good record-keeping.

As accountants we are always thinking of legal ways of reducing our clients’ taxes and with good record keeping we are able to provide clients with adequate tax planning opportunities. Perhaps as accountants we should shoulder some of the blame for clients’ bad record keeping through not educating our clients about the advantages of good record keeping.

About the Author: Egbert Johnson FCCA is responsible for Audit and Accounts at Adams and Moore Chartered Certified Accountants.  For further enquiries or to ask how we may be able to assist you contact Egbert at Egbert@adamsandmoore.co.uk