Category Archive Finance


HMRC Blunders and Mistakes

Can you afford to receive one of the now infamous mistake letters from HMRC? We are told that its all due to computer error and systems not talking to each other. Have you tried getting in touch with HMRC direct to sort out any issues with them?

A recent tv documentary highlighted the lack of knowledge in call centres and also that in fact you can wait upwards of an hour just to merely speak to someone, and when you do speak to them, can you be sure you are getting the correct information?

Once upon a time, when you rang up with a query, you were sure that they would also check all the details they hold for you and after giving your details the quick once over, might highlight to you any issues they could see, but with the lack of time they now have – this no longer happens, so mistakes just carry on happening.

So if you have concerns about your tax situation and would like help resolving it, or you have a tax return to fill in, and are now worried that you might find yourself in the letters trap sometime next year, then head over to the Tax Specialists and Tax Return Experts and make sure you are getting the correct forms filled in with the correct information.


8 Mistakes Small Business Owners make with their Bookkeeping

So proud and loud at the premier top spot has to be doing it all yourself, so then;

  • Either you or your spouse/parnter doing it all yourself with no previous knowledge, although you were good at maths, so think that this will help you do it all correctly.  Hang on though, didnt you start this business as you were good at doing something and could make some money from it? And was that bookkeeping?  Think you get my point!
  • So number two has to be buying things on your credit card or cash and forgetting to put them in the system – then sitting and trying to work out why your accounts cant be reconciled, which again is something that must be done on a regular basis so that you know what is in the business and what is not.
  • Number three – Employees – ok so they only worked for me for three weeks, I don’t need to bother with paperwork etc do I?  WRONG, keeping accurate records means keeping HMRC off your back – do it!!
  • Ok, so half way through then, number four – bank reconciliation – how many understand what this means? How many understand the importance of it?  I rest my case milord!
  • Backup sits at number five – do you keep backups of all your records? Does it cross your mind that if something was to happen, do you really want to sit at your machine for three days solid, inputting the information all over again – I mean it took you long enough last time to understand where everything went – do you think you will remember?  So backups backups and more backups!
  • Number six – yep nearly at the end now – bank accounts – do you have one for the business and one for you? No??!!! Heck, do you really want to have to provide the Revenue with explanations and copies of all the major purchases you have done personally, but show up on the account as you decided there was no harm in using your personal account – good luck!!
  • Penultimate one then has to be VAT – oopps, sorry did I swear then?? Are you on the right scheme for your business (at this point some glaze over as they aint got the foggiest that there were different schemes), do you understand what you can and cant claim for? The last one alone is a good enough reason to get someone else to do it for you.
  • Ok, so finally then, yep we made it to number eight – losing paperwork …. arrrggghhh I hear cries of, ring any bells?  Yep HMRC to be polite, request (ok more order really) that you keep all your reeipts and statements and anything basically that moves for a minimum of six years – yep, six years of boxes full of paper that can stretch to many boxes, oh and don’t go and store them where the mice live – they like tearing up pieces of paper and having babies in them – there is a simple solution to this though – did you know that the Rev will allow you to store it all electronically now?

Ok so here comes the shameless plug then – well you knew it was coming – are mighty fine bookkeepers or if you are merely looking to get your receipts scanned in and formatted in a pdf and excel spreadsheet, might I recommend and on that cheerful note, I will leave you to ponder on why you didnt think of these!


Bank Charges

Over the last few days there have been many cries about bank charges and how prohibitive they have now become, add this to the fact that many existing bank clients are having overdraft reduced and rates increased when renewal comes around, its no wonder bank are now being accussed of ripping off customers.

One big trend we have noticed is that banks don’t like Declining Trade, be it for overdraft extension, refinancing or even a new loan. This is one of the biggest causes of rejection of a bank application.

However, the very fact we have been in (and hopefully out of) a recession, means that many small businesses will have seen a downturn in trade, and now need finance more than ever to help them grow.

Finance though is still possible, but not with the big main lenders who are feeling the pain most, so if you need to know more get in touch and we can chat.

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Working Capital

Working Capital is the lifeblood of any business, be it for subsistence or expansion.

With the recession now officially being over, businesses NEED funding in order to profit from the upturn in orders and business.

However, the effect of the recession means that companies may have had cash-flow pressures over the last few years from reducing orders or increasing debts.

With a recent survey showing banks writing off over £5.6bn in 2009, banks are now being more cautious with risk and only lending to business they can be sure about. A business needing working capital, typically will not have strong books hence the reason they need to borrow the money on day one.

So where do you turn?

Come chat to us about a WORKING CAPITAL SECURED LOAN.

This loan is underwritten on a completely common sense approach, and we will seek to fully understand the deal, with the lending decision taken by a HUMAN rather than take a bland tick box approach.






Tax Returns

Tax return – is that a ‘dirty’ word to you?

Does it bring you out in a rash?

Or are you one of the organised and have already done it?

I know that from experience that a lot of people put their heads in the sand and leave it to the last moment, then suddenly drop everything on their accountant at the start of January, knowing they are pushing their luck, yet still expecting the miracle of everything being done and submitted for them.

Ok, so advantages to doing it early then?

Well, for starters, doing it early means you can budget for the amount you will possibly have to pay, as admit it, suddenly having to find a large sum in January is not ideal, as its usually a lean month for most. Also, did you realise that getting the information to your accountant or tax advisor early, means they would usually offer you a decent rate for their services, yet the nearer you get to the deadline, the more they can charge you.

After all, you left it so late, why shouldnt they charge you for spending all weekend pouring over your figures?

If you need help with your tax return, then head to FTZ Tax for your tax return help.


The Budget and Small Business

A few points to sumarise the main affects the budget will have on business in the forthcoming year.

The salient points then:

  • RBS and Lloyds are to provide a total £94 million in business loans, with half of that being lent to small businesses
  • Firms who wish to complain about receiving unfair treatment re being refused loans will now have access to a Credit Adjudicator who will hear all complaints.
  • The Goverment will set up UK Finance for Growth to help expand the finance sector.
  • 15% of Goverment contracts are now guaranteed to go to small businesses.
  • A 50p tax on landlines will be brought in to help fund the broadband roll out.
  • The annual investment allowance has now been doubled to £100,000
  • Business rates will be cut for one year, starting in October 2010.
  • The Goverment pledges to pay 80% of all invoices to small businesses within 5 days.
  • The Goverment will now offer help to the computer games industry similar to that offered to the film industry.

Limited Company or Sole Trader?

To incorporate or not?

This is the one question that constantly arises from traders, about whether or not they should operate their business as a soletradership, or as a limited company.

Like all decisions in life there are plusses and minuses, and NO right answer.

There are a myriad of issues in respect of commercial reality, tax mitigation, perception to customers and suppliers, and the feel good factor.

Some individuals wish to trade under the guise of a limited company to give an indication they are bigger than actual, others do it to protect themselves against a customer going “belly up”, some do it to control the amount of personal tax they pay, and others do it to offload income to their spouse (ie the spouse is merely a tax write off).
Always remember that if money is owed to the bank, the bank requires personal guarantees, so personal liability is still in place,  the only difference is the tax man and other suppliers can be told to “go and hoke” (subject to certain items such as employers national insurance etc)

The general rule is that you incorporate your business under the following circumstances:

1.    If you can be in a position to control your extractions from the company. E.g. pay yourself a smallish salary, and take the rest out as dividends, and pay no tax thereon (unless you reach high rate tax, even so you avoid Employers NIC)
2.    Actually have a supplier base, and customer base, that the company is seen as trading, and not just an individual offering his time as services (lok up IR35 on your favourite search engine)
3.    If you have a wish (under current legislation) to develop your business and then sell it in a few years. (to avail of 10% tax rate on disposal)
4.    If your net profit is over 50k per annum, and you are happy to live on less money, and pay tax at 20% instead of 40%
5.    If you may have a concentration of income on a customer  who may go belly up, and leave you with an inability to meet your debts
6.    If you wish to do something hookey, and if  caught, you can walk away from Revenue and Customs (false invoicing and fraud aside)

There is no correct answer, and bottom line is that if you speak to your accountant in the same way as you would speak to your doctor (ie openly and honestly), he/she can advise you on whether or not to incorporate.

A recent practical example were two people in the same industry (electrical installation), where one clients customer base was domestic, the other was commercial.

Both businesses were making the same level of profits, but :

1.    One business owner had his mortgage paid off, the other was working to pay his mortgage.
2.    One business owner  was mid twenties, the other was early fifties.
3.    One business had top 25 customers of £20k per annum each, the other had turnover customers of £400 each
4.    One was married, the other was divorced
5.    One had children, the other had suspicions
6.    One business owned their premises the other had a 10 year lease without break clauses
7.    One had an attitude like Del Boy, the other was a saint

The above are merely 7 differences in two identical businesses, so for the mathematically oriented there are 2 to the power of 7 permutations, ie 128 different answers whether or not to incorporate.

In this example I have restricted the options to seven to make a point.  In  real life, the number of possible differences is exponentially greater,  and hence it is important for the accountant to “know thy client”, both in current terms, and in aspirations.

There is one downside.  Tax laws are constantly changing.  4 years ago,. It was possible for a person to earn 30k per annum, and personally pay NO tax, and NO national insurance personally, but for their company to pay around 3 ½ k to Her Majesty Revenue.  Ie a tax rate of under 12%, but the chancellor realised he was a silly boy, and changed the rules. Its just a pity the government have no sense of humour.  They’d be a lot more popular.


The Business Plan Banks Like to Read

If you are a start up or an existing business, getting the money right is the difference between success and failure. One of the main reasons a business fails is due to poor or inadequate funding.

When you go into business, one of your aims is to grow and be a success and getting the right finance in place is all part of that. The first step then is preparing a business plan that the bank will like and get all the relevant information from. Your business plan should map out the direction you intend heading in and how you are going to make it happen.

Most plans should include a summary of your business and have a cv included in it that explains your experience in that particular field. So point one then is a summary of your qualifications and experience. Point two, competition, who they are, what they are doing and how you will fit into this market and make more money than them, or how you will be different from them. Point three is the old marketing plan, and don’t worry it’s not a dirty word, there is lots of information stored on this thing called the internet, which helps you to write a corker of one. You need to list achievable targets, pie in the sky will be seen through and the lenders will stop reading it at this point, and point four, the financials.

Ok so what in particular do they want to read about money wise. Well if you are a start up it’s a good idea to make your cashflow forecast for a minimum of three years as this shows your commitment to the business and gives them confidence that you believe in yourself. You also need to show that the loan you are seeking, can be repaid and when it can be repaid by. After all, when you lend money to people, you do so on the understanding of when and how you are getting it back. The lender will also like to know about already existing outlays finance wise, ie do you have any other loans personal or otherwise, how much for and how long is left to pay on them. It’s a mistake to think you don’t have to disclose this information, hide something from them and again lenders will switch off from your plan.

You also need to show them how the money will be used and what difference it will make to your company. And don’t forget, the lenders/banks, like to see some commitment from you. After all, if you don’t believe in your business why should they? You need to show that not only do you put time and effort in to it, but also your own money. You will score big brownie points if you can do this.

Now the bit that worries some, the disclosure of personal credit history. If you have no issues with it, brilliant, enjoy, but if you have some blots on your record, tell them before they find out. Explain to them what happened and why it happened, better this way than them feeling you are hiding something from them.

So then in summary, keep it simple, don’t go overboard on the presentation, and most importantly of all, be honest and be realistic.

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