Posts Tagged ‘self employment’

HMRC visits: Trouble in store?

Posted on: May 24th, 2012 by LeightonReed No Comments

 

Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Many businesses dread a visit from HMRC.  There is always the worry that something may come out results in paying more tax but there is also an understandable sense of dread at the potential disruption it could cause in the run up to the visit, during the visit and even following the visit.   However, there are a number of things you can do to make the experience far less stressful.

Preparation    

  • Most HMRC visits are pre arranged either by telephone or letter – If the appointment is made by telephone, ask the officer to confirm in writing the details of the visit – not only date and time but the expected length of the visit.
  • Ask for confirmation of who will be coming, what their roles are in the enquiry overall and exactly what records if any they want to see.
  • Ask at the outset are there any particular risk areas they have identified in selecting you for an inspection.
  • Have all of the requested records ready for the visit.
  • If they are to be left in a room make sure it is clean and only has the information requested in it.
  • Of course it may not be possible to prepare in advance if HMRC don’t give warning of a visit.

(more…)

Employing people for the first time? Here's how to get it right…

Posted on: October 27th, 2010 by SarahCase

Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander


MHA Broomfield Alexander publishes a series of articles focusing on business advice and information. This article appeared in the Business Advice column, Western Mail, 27 October 2010

Is your businesses up and running and doing well? Are all those fundamental, financial back office things you started off doing yourself now becoming a burden? Are they detracting from your ability to get up front to lead and develop the business further?

Sound familiar? You’re not alone. Many small businesses find that, as things take off, delivering the product or service becomes more time consuming, and running the finances – possibly not your forte anyway – becomes commensurately more complicated. One of the first needs of a growing company is often for someone who can get on top of record keeping, book keeping, invoicing and so on, quickly and efficiently. It’s a key appointment – get it wrong and you could be in trouble, but get it right and the smooth running of your accounts department will pay dividends, literally and figuratively, for your company.

You’ll probably have used your accountant to complete the bookkeeping for you and prepare the VAT and monthly management accounts, but once you get to a position where credit control and administration issues overcome you, you’re going to need more assistance by creating a full time finance role. The good news is that dealing with this issue doesn’t mean going for a highly-paid Financial Director from Day 1.

Your best bet will probably be to begin with an accounts assistant who will be capable of handling all the routine bookkeeping and some admin functions. Make sure you involve your solicitors to cover off any HR issues and ensure contracts are fit for purpose.

However, you will also want to use your accountant a little bit more, continuing to work closely with them to provide support at a higher level – to fine tune the management accounts so that there are no surprises at the year end, to advise on issues such as depreciation and loan interest, and to assist with analysis and discussion on how the business is doing, and subsequent business planning. You will almost certainly also prefer to ask your accountant to handle payroll to ensure both accuracy and also discretion within the business.

Ultimately, should your business become really successful, you may need to consider bringing in an FD. Again, don’t be put off by potential cost issues, or by a perceived need to offer equity shares to attract the right people.

Whether an FD or any other Board or senior management position, there are HMRC approved share option schemes available which mean you as the business owner don’t necessarily need to offer shares – which would be subject to income tax and possibly national insurance.

One such scheme, the Enterprise Management Incentive scheme (EMI) gives staff the opportunity to acquire shares at a future date with no income tax and NIC arising – they simply pay capital gains tax on any subsequent gain over the annual exemption. Typically, you would set aside 5% or 10% of the share capital to be allocated, and decide which employees will be invited to participate and to what extent.

Whilst there are administrative rules to establishing these types of schemes, they can be effective in establishing your strategic objective of attracting, retaining and motivating key staff, reducing or removing the need to pay annual bonuses and usually resulting in a payback within two years.

For more information on setting up a new business in Wales, please contact Sarah Case

You have considered setting up in business for a number of years, but now you want to take the plunge. What do you need to do?

Posted on: September 29th, 2010 by MarkJones

Broomfield & Alexander publishes a series of articles focusing on business advice and information. This article appeared in the Business Advice column, Western Mail, 29 September 2010

With so many jobs being lost at the moment, people are increasingly looking at self-employment – and, in fact, this may be a good time to set up in business.

The first Coalition Government is certainly encouraging – and incentivising – it. Since the last budget, new businesses starting up outside London and the South East will not have to pay national insurance contributions for their first 10 employees, subject to certain conditions.

But beware, setting up your own business may not be as easy as you imagine. To begin with, it’s important that you have done your homework to ensure that your business idea is a sound one. You should prepare a written business plan and financial projections to show you can make a profit, and will have enough cash to make your business work.

This leads neatly into the funding of your business. Perhaps you have had savings which you are going to use to purchase the necessary assets, and to provide the initial cash flow. Or you might need to approach a bank for a loan or to finance assets on leases or hire purchase, or raise equity or share capital for your business, through friends, family or third party “business angels”.

Before reaching this point, you should appoint an accountant, an expert in new business starts, who can advise on the most suitable business vehicle to trade under, all of which have differing tax treatments and varying levels of exposure to risk. You can trade as yourself, in partnership with others, form limited liability partnership or most commonly, form a company limited by share capital.

Next, you need a bank account and to consider registering for VAT. The current turnover threshold at which you must register is £70,000 pa, but you may choose to register before reaching this limit. Once registered, you can account either on a “cash received and paid” or “invoice” basis and taking advice on this point would certainly be wise.

You have to register with HM Revenue & Customs within three months of starting to trade, or face an automatic penalty. The accounting function of your business is a vital one, and it is important to choose the correct accounting software for the scale of your business. You should be producing regular monthly accounts to monitor performance, and you may need the assistance of an accountant to produce them or to provide external comment. If you have borrowed money from the bank, they may well make it a condition that you provide such information monthly or quarterly.

If your business involves employing people, seek advice. Employment law is extremely technical and it’s easy to make mistakes which can be extremely costly in the long run.

Finally, you should take out an appropriate level of insurance cover for the type of business and, again, you would be well advised to consult a qualified insurance broker.

There is a lot involved in starting a new business, and sometimes the sheer the weight of dealing with compliance matters and regulations can make people feel very weary. It’s therefore vital that you have a great passion for the business you want to start – only that will create a commitment to see it through any difficult times.

For more information on setting up a new business in Wales, please contact Mark Jones