Business stationery

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

• 

It is the ambition of many people to run their own business. Some may have been made redundant and find themselves with free time and financial resources.  Others simply wish to make more money! 

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

• 

The days of the big ledger books are long gone and actually nearly extinct. I dare say nearly because a few people still cannot simply let go. Record keeping has gone portable from manual to computerised accounting systems. These range from basic spreadsheets to more sophisticated accounting packages.

 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

•