For small businesses, the coronavirus pandemic has created an environment of severe uncertainty and financial hardship that is constantly changing.

The modern world has never faced a crisis like this before, nor one on this scale, making it difficult for businesses to know what to do to stay afloat. Luckily, there are a number of support options available for SMEs, and more support is being announced all the time.

At the time of writing, some of the most useful and wide-ranging support options are:

 

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme is a government initiative which has been set up in tandem with a number of the UK’s biggest banks and lenders. Under the scheme, businesses can apply directly to lenders for loans, overdrafts and other financial products, with a guarantee from the government to the tune of 80% of the cost of the loan in the event that the business cannot pay it back.

 

Key Features

  • Up to £5m facility. Businesses are able to borrow up to £5m under the scheme, on repayment terms of up to six years.
  • 80% guarantee. Although businesses are 100% liable for the debt, the government will guarantee up to 80% should they not be able to pay it back.
  • Limited fees. There is no guarantee fee for SMEs and lenders will pay a fee in order to access the scheme.
  • Interest and fees paid by the government for 12 months
  • No personal securityrequired. At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under.

 

Eligibility Criteria

To be eligible for the scheme, a business must:

  • Be UK-based with an annual turnover of less than £45m
  • Provide a borrowing proposal that would be considered viable by the lender if not for the coronavirus pandemic
  • Prove to the lender that the loan will help them to survive during the crisis

There are more than 40 accredited lenders signed up to the scheme so far, and businesses should apply to their own bank or lender first, before looking at other lenders.

 

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is designed to help UK employers who work under a PAYE system to access support that will enable them to pay workers wages. The idea behind the scheme is that employers will be able to retain staff that they otherwise would have had to make redundant due to the coronavirus crisis.

The scheme is designed to benefit employees who have been asked to stop working in order to stop the spread of the virus, but who remain on the payroll (otherwise known as ‘furloughed workers’). HMRC have agreed to pay 80% of an employee’s monthly wage costs, up to a maximum of £2,500 per month, and wages will be backdated to March 1st if applicable.

 

Eligibility Criteria

This scheme applies to all employers in the UK with a PAYE scheme that was started on or before 28 February 2020, including:

  • Businesses
  • Charities
  • Recruitment Agencies
  • Public Authorities

 

How To Apply

You need to work out which of your employees you want to retain and designate them ‘furloughed workers’. All employees should be notified of this change as soon as possible, and existing employment law still applies when changing the status of employees.

HMRC are still working on the online portal which will be used to set up and pay these grants. Once it is up and running, you can submit information about your furloughed employees and their earnings here, and HMRC expects the first payments to go out by the end of April.

 

Deferring VAT And Income Tax Payments

The government has agreed to support businesses during this time of financial hardship by deferring VAT payments. At the time of writing this support allows for any VAT payment to HMRC that would ordinarily have been due between 20 March 2020 and 30 June 2020 to be deferrable up until 31 March 2021.

For the self-employed, Income Tax payments due in July 2020 under the Self-Assessment system are now due in January 2021.

 

Eligibility Criteria

All UK businesses are eligible.

 

How To Apply

This is an automatic offer which means that there is nothing that you need to do in order to take advantage of it.

 

Small Business Grant Funding

The government has agreed to provide additional funding to Local Authorities so that they are able to support small businesses in their area. The businesses that will benefit are the smallest businesses, that already pay little or no business rates because of business rates relief, rural rate relief and tapered relief.

Local Authorities can use this funding to provide a one-off grant of £10,000 to eligible businesses to help them to continue to meet their business costs.

 

Eligibility Criteria

In order to access this grant, businesses must:

  • Be based in England
  • Be in receipt of small business rate relief or rural rate relief as of 11 March 2020
  • Be a business that occupies property

 

How To Apply

Your Local Authority will write to you if you are eligible for this grant, with details on how to claim it. If you have any questions about the grant, business rates relief or eligibility, you should contact your Local Authority directly.

 

Reclaim Statutory Sick Pay

Emergency legislation has been announced which offers small and medium-sized businesses the opportunity to reclaim Statutory Sick Pay (SSP) which has been paid out for sickness absence due to COVID-19

 

Eligibility Criteria

To benefit from this legislation, businesses must:

  • Have fewer than 250 employees as of 28 February 2020
  • Have a record of staff absences and payments of SSP. Employees are not required to provide a GP fit note in this instance
  • Eligible period commences the day after the regulations on the extension of SSP to those staying at home comes into force.

The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. At the time of writing, the scheme is still being developed, so it is worth keeping an eye on the HMRC website for further details of how to apply.

Whilst this is a difficult financial time for all businesses, the government is dedicated to providing as much support and advice as possible to help companies to stay afloat and ensure that businesses can bounce back after the pandemic.

 

Get in touch

We would encourage all businesses that are eligible to apply for the funding they are entitled too as soon as possible. Nobody knows how long this situation will continue so ensuring you have adequate funds in your business should certainly be a priority.

Accessing the Coronavirus Business Interruption Loan Scheme (CBILS) does require a formal application, and depending on your circumstances you may be asked for various pieces of documentation such as business plans, financial forecasts, management account and the like.

The team at An Accounting Gem Limited can help you get this documentation ready for your application and assist you in putting your best foot forward to maximise your chances of success.

Please get in touch on 01473 744 700 or email us at contactus@aag-accountants.co.uk for more information.

By now, businesses are starting to understand the impact that coronavirus is going to have on our economy, and on various sectors. For some that impact is already being keenly felt, such as in the hospitality and leisure industries. For others, it is only a matter of time.

However, now is not the time for companies to bury their heads in the sand and wait for it all to be over. This is the perfect time to look at what you can do to minimise the damage likely to be caused by the pandemic and put some resources into place to keep your finances on the straight and narrow.

A recent package of government support measures, announced by Chancellor of the Exchequer Rishi Sunak, goes some way towards helping businesses stay afloat, and there are a number of other things that organisations are starting to do in order to bolster their profits for the coming months.

Whilst there will still be plenty of difficult decisions that need to be made in the coming weeks, now is the time to see what you can do to improve your cash position and make preparations for the hardships that are likely to occur later on.

Here are some of the most practical actions that small firms can take right now.

 

Delay Tax Payments

HMRC are willing in some cases to delay or defer tax payments in order to help small businesses to manage their cash flow. You can call 0800 0159559 to speak to HMRC today.

 

Get Debt Support

Most businesses will face a crisis in the form of debts in the coming months, as payments become due whilst business is slow. There are plenty of debt advice sites and phone lines available to support companies at this time, and your accountant or financial adviser can also provide you with solutions.

 

Look Into Loan

This is actually one of the easiest times to get a business loan, thanks to the Coronavirus Business Interruption Loan Scheme (CBILS). The scheme was recently launched as a way to help businesses to access a range of financial products, including loans and overdrafts, to ease their financial worries during the COVID-19 crisis.

Whilst the borrower is 100% liable for the debt, the government has promised to provide lenders with a guarantee of 80% on any lending in order to give banks and lenders more confidence in providing finance to smaller firms. It is important to note that there can be no requirement for director guarantees for loan amounts under £250,000.

 

Business Rates Relief

For High Street businesses in England, including all retail, leisure and hospitality businesses, there will be no business rates due in 2020-21. This will automatically be applied to your council tax bill in April 2020.

 

Apply For Job Retention Support

All UK employers are able to access grants from the government to cover part of their employee’s salaries during the crisis, in order to retain staff that otherwise would have had to be laid off. HMRC promises to reimburse 80% of furloughed workers wages, up to £2,500 per month

 

Head Online

For businesses who want to continue working and providing services throughout the pandemic, and whose work is conducive to an online environment, there may be ways to carry on some aspects of your business. Shops and restaurants may be able to provide an online delivery service, whilst others can provide services via email or video chat.

Some companies are even hosting events, setting them up online so that people can pay to watch and take part. There are plenty of apps and other technologies for this, including Facebook Live, Zoom, Microsoft Teams, Google Hangouts and IGTV on Instagram.

 

Prepare Your Cash Flow

One of the most critical measures that you need to take now is to prepare your cash flow so that you are fully aware of where you stand and are able to work out what package of support you might require in the future.

 

Address Your Financial Situation In Full

You need to look at the full picture of your business’s financial health, and make a report that demonstrates a clear understanding of your own finances. In order to obtain government or bank support and lending, you will need to provide records that show that you are in control of and understand your cash position.

 

Get Some Cash In The Bank

Whilst it is important under normal circumstances to have a good mix of cash and assets, in the current climate it makes sense to ensure that your bank accounts have sufficient liquidity to cope with the ensuing weeks and months.

Sell any unwanted assets in order to top up your bank accounts, and try to call in debts now, whilst other companies and organisations are still able to meet demands.

 

Keep Taking Orders

Whilst it is unfair to take money for services that you aren’t 100% certain that you can fulfill, you should still be taking orders that you know that you can see through, and take payments for existing customer orders that are already in process. Keep a close eye on your orders, though, and don’t allow yourself to get carried away if you are unsure at any point that you will be able to meet demand.

 

Capacity Checking

You may be one of the lucky businesses that is able to practice remote working, and is thus able to carry on somewhat in the same capacity as before, with a few minor changes. However, it is critical that you ensure that you put measures in place to ensure that staff have everything they need to do their jobs remotely (such as the right software and equipment).

You should also be monitoring your employees to see how they are managing workloads and working from home. This information will help you should you decide to use the Job Retention scheme.

 

Apply For Government Support Sooner Rather Than Later

In the current climate, it is fair to assume that a majority of businesses will be looking for some form of support from the government, to ease their financial worries. Once you have all of your information ready, make your application for government support as soon as you can, as it is likely there will be some backlog over time.

 

Not Sure Of Your Next Move?

These are unprecedented times for our country, with the Government being forced to “slam on the brakes” on the economy in order to tackle the current crisis.

Many companies have gone into enforced hibernation and are waiting to see how a post Covid-19 economy operates, before they take the risk of opening up and trading again in some capacity. With the protection of cash and assets being the current priority of most company owners, it is no surprise that trade has reduced dramatically.

The longer this uncertainty continues the more likely it is that more companies will need government assistance to survive. If you are not sure of the next move for your business and want some advice then please get in touch with An Accounting Gem Limited on 01473 744 700 or email us on contactus@aag-accountants.co.uk for further assistance.

Wage push inflation is an idea that economists and governments often use as a reason that it could be difficult to increase minimum wage in a country. But what does it actually mean?

Put simply, the term refers to a situation where a rapid increase in the wages of employees causes the rate of inflation to increase at the same time. It is explained by the fact that when workers’ incomes rise, they will have more disposable income to spend. Once their money enters the economy, the competition for goods increases, and prices rise over time.

 

Understanding Wage Push Inflation

The most common reason for a company to increase its wages is an increase to the national minimum wage, as decided by the government. Many companies also increase the minimum wage of their employees incrementally, meaning that to make back the profit they are losing on raising their wages across the entire company, they have to put up their prices at the same time.

If the government or a company decides to raise wages, this will naturally lead to a spike in consumer spending, as their employees have more money available to spend. A significant increase in the minimum wage could lead to higher growth, and contribute towards inflation due to two factors:

  • Higher costs for firms
  • More spending by workers

Industry factors may also play a part in wage increases. In industries that are experiencing growth, surging profits and higher demand for products/services, companies might decide to raise their wages in order to make jobs more competitive, and attract more skilled or talented workers. These factors often have a wage push inflation effect on the products and/or services that the company provides.

However, when it comes to growth and inflation, minimum wage, according to many, is the single biggest factor in driving inflation.

 

The Minimum Wage

A minimum wage is the lowest legal remuneration that any employer is allowed to pay their employees in a country. In the UK in 2019, the minimum wage was set at £8.21 per hour for workers over 25, £7.70 for workers aged between 21 and 24, and £6.15 for those aged 18 to 20.

When it comes to economic growth and inflation, the minimum wage has been proven to be a factor that affects both, although economists disagree on the significance of the minimum wage to either. Whilst many experts argue that a raise in the minimum wage will, through wage push inflation, naturally lead to significant economic growth and inflation, history shows that when the UK has seen above inflation increases in the minimum wage, there hasn’t been any negative impact on inflation or unemployment, and there has been almost no noticeable change to economic growth.

In theory, if all workers receive a pay increase, then there should be a rise in consumer spending across the board. Low income workers tend to spend a higher percentage of their extra pay than high earners, a multiplier effect (an increase in overall spending coming from a new injection of cash into the monthly income of a household) that should boost economic growth.

However, by the same token, when minimum wages are raised there is more competition for work, as companies are forced to pay more and hire less, and thus there should be more unemployment as a result. People who are unemployed will spend much less, thus balancing out the effect of rising wages amongst the low earners.

 

Does A Minimum Wage Raise Actually Cause Inflation?

The best way to assess the real threat of a minimum wage hike on inflation is to estimate how it would, by necessity, raise businesses’ costs.

Whilst many businesses will raise prices, it is important to note that there are other ways to adjust costs, such as raising employee productivity, or laying off unnecessary staff members. However, say a business were to simply raise the prices in response to a minimum wage hike. In this case research suggests that a 10% minimum wage hike will generate a cost increase of less than 1/10 of 1% of their sales revenue. This amount is worked out based on three factors:

  1. Mandated raises – the raise that employers must provide to all staff members to ensure that they are being paid the legal minimum wage
  2. ‘Ripple-effect’ raises – the raises that employers must give throughout the company to ensure the wage hierarchy is maintained for employees with already higher wages and authority
  3. Higher payroll taxes – a higher wage means paying more employer tax

The average business, wanting to cover the cost increase from a 10% minimum wage raise through higher prices, would only need to raise their wages by less than 0.1%. In real terms, this would take a £100 item up to £100.10

 

Is Wage Push Inflation A Myth?

Whilst some experts believe that higher wages lead to higher prices and thus inflation, economists are beginning to understand that this could well be a myth. In fact, many economists now argue that wage and price increases are actually a reflection of inflation, rather than the cause of it.

Whilst both wages and prices tend to rise at the same time, it is actually prices that lead wages, as opposed to the other way around

The best way to understand this is with an example.

Say an entrepreneur creates a new product. After a short time, word gets out about his company, and very soon his products are selling out faster than he and his small team of staff can make them.

He can’t keep making them on his own if he wants to keep up with demand, so what is his next port of call? The first step to take would be to raise his prices whilst he sells his (now limited) existing supply. This may mean that demand slows down and he can return to the way that things were, but he may also think about pushing his staff to increase their output, and accept that by paying overtime that productivity will increase enough to cover this extra cost. If demand is still too high, then he will have to think about adding staff members.

By contrast, if the world were to run as wage push inflation assumes that it does, the entrepreneur would respond to increased demand by paying workers more, in the hopes of attracting more workers, then raising the prices in order to balance profit margins.

 

Get In Touch

Are you thinking about increasing your wages in the hope of attracting a more talented and capable work force? Do you think this will boost your business profile and sales enough to compensate for the extra cost?

No course of action in business has a guaranteed end result, but by employing talented and experienced financial professionals to create accurate projections and forecasts, you can reduce the risk of failure and be in a position to make an informed decision on what are the best next steps for your business.

The team at An Accounting Gem can help you with this, as well as all your other accounting requirements, and can be reached by calling 01473 744 700 orvia email at contactus@aag-accountants.co.uk.

 

For new businesses, finding investment can be the most nerve-wracking part of getting set up. With thousands of start-ups springing up every year, investors receive dozens of pitches every day, and it will take something special to convince them that yours is the right company to choose.

It is not uncommon for entrepreneurs to meet with dozens of investors before they are able to secure any funding, which means that it is best to try to research as many different types of investor and types of funding as possible, to give yourself a better shot at finding the right fit for your business.

Some of the avenues you could consider include:

 

Angel Networks

An angel investor is a wealthy individual looking for small businesses to invest in, with the idea being that if they choose the right investment, they will be able to capitalise on the ‘next big thing’ right at the start.

An angel investor is a great option for small businesses, as they not only supply capital, but are also able to provide mentorship, business advice and access to their own business networks.

Finding an angel investor means putting in the time and effort, looking for the right type of individual who will fit with your business and take a real interest in what you are selling.

There are a number of angel networks online, with a couple of the best being the Angel Investment Network and the UK Business Angels Association. Both have thousands of angel investors available, with information available on the types of investment they are looking for.

 

SEIS/EIS

Securing investment means more than having a great idea and a strong business plan. One of the key factors in getting investment in the UK is your SEIS/EIS eligibility.

The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) are two programmes set up by the government to incentivise investment in small business through tax breaks. Your business will be a much better prospect for any investor if they are able to see a return on their investment right away.

  • SEIS is for the smallest businesses, still at a very early stage (or Seed stage). An investor is able to invest up to £100,000 every tax year under this scheme, to receive a 50% tax break. Start-ups and entrepreneurs are able to raise a maximum of £150,000 in SEIS funding.
  • EIS is more suited to businesses who are further along in their development, as investors are able to put up to £1m into the business per tax year, to receive a 30% tax break. Businesses can receive a maximum of £12m in EIS funding.

Under these schemes, investors also benefit from not having to pay any inheritance tax on shares owned, for a minimum of two years. If a loss is registered on shares sold at any point, the investor is able to offset these against their capital gains tax burden.

The HMRC website provides an exhaustive list to help you to decide whether or not you are eligible to apply for either scheme.

 

Crowdfunding

Whilst crowdfunding has gotten something of a bad reputation in recent years, with a proliferation of crowdfunding websites and causes springing up at once, it is still a promising idea for start-ups and entrepreneurs.

Because you come to a crowdfunding platform with your own marketing and community, it provides investors with a better idea of how successful your business is likely to be. To make your crowdfunding project more likely to be successful, it helps to:

  • Bring your own crowd. With investment from your own supporters and community, investors are able to see that you already have an interested crowd, making investment in your company appear less risky.
  • Take time to market yourself. You want to provide proof that you are dedicated and business-savvy, and are able to create a buzz on your own before an investor has even gotten involved.
  • Stand out from the crowd. Work out what your USP is and capitalise on it. Make sure that you have a brand that can’t be ignored.

 

Friends And Family

According to research, 38% of funds raised by start-ups comes from friends and family. These are the people that are likely to care the most about your success, who will have the most trust in you and won’t charge you significant interest or want to take huge shares. For start-ups, this can be the least stressful way of securing funding.

Bear in mind, though, that although your friends and family are unlikely to ask difficult questions about financial projections and business valuations, they will want to see that their money is being used well. In some cases, the pressure to achieve can be even more when the money tied in with the business belongs to the people closest to you.

You must also be sensible and ensure that you work with a lawyer when it comes to drafting up your venture deal, so that they can explain the risks and benefits and make sure you have a solid agreement put in place.

 

Venture Capital

Venture capital funding is one of the trickiest and most difficult forms of funding to obtain. Most start-ups will never get it and many argue that they should never even try to!

Most businesses who look to venture capital funding are those who have already been around for some time and have proven their worth and market value. It is at this point that they’ll look into venture capital to give them the extra funding they need to expand.

Venture capital companies are looking for businesses who can offer real proof of their value, as well as a firm understanding of the exact route they need to take to expand. They don’t want to take a supporting role, simply capitalise on what is already there by providing the funding necessary. It is also true that this type of investment often means giving up a lot of control, which businesses can find it hard to take.

As mentioned previously, it is an option, and one which many companies have taken up successfully, but there are arguably better options when you are first trying to score investment.

 

Next Steps

Seeking investment is your business is a complex process, and to ensure success you need to have a convincing “pitch”. Without one of these, then your chances of finding funding are greatly diminished.

You need to demonstrate you have a firm understanding of where you are now, and where you want to be. Being able to show a firm grasp on the marketplace and a deep knowledge of your finances, with a costed and comprehensive business plan, goes a very long way in convincing someone that an investment in you is going to succeed for both parties.

An Accounting Gem can work alongside you in getting your business plan and financial projection to the standards required. Our expert team have extensive experience in helping businesses large and small with this process and would welcome the opportunity to work with you.

Call today on 01473 744 700 or email us at contactus@aag-accountants.co.uk to see how we can help you and your business.

An exit strategy is the preparation made by a business owner to leave their company on a permanent or semi-permanent basis. Departure from a business is normally followed by succession (passing the business onto a family member), a disposal (through a sale or a merger), or the permanent closure of the company.

 

Succession Planning And The Protection Of Value

A succession-focused exit strategy is about the protection of value. After working on your business for many years, maintaining the value and the viability of the company you’ve built up is important for both financial and personal reasons.

Many businesses are family-owned and -managed businesses. The hope for many exiting entrepreneurs is that the younger members of their family will lead the company eventually.

Once you have resolved that you do want to pass your business on to family members, you then need to plan how to do it. You can never start to soon in your preparation but we would advice that a handover period takes a minimum of 18 months to complete.

You need to consider your own role in the business – if you want one. If you want to no longer be involved in the decision-making process, you need to plan which family member will do what and provide them with the appropriate training and mentorship on their new responsibilities.

If you still want to be involved but at an arm’s length, you and other family members need to know whether your pronouncements are either advisory or binding on the company. In other words, are you going to be a backseat passenger reading out the directions the driver has given you or are you going to insist that your own route is taken regardless of the feelings and knowledge of the driver?

You’ll also need to consider whether you still wish to draw an income from the business and how much. If you take out too much, this could bring about negative consequences for both your company cash flow and your successors’ ability to pay themselves more in the future. If you take out too little, what has the point been in working for so many decades only to be a poor retiree?

Other aspects to consider could include:

  • leaving your company on your own schedule
  • choosing a strategic direction for your company before you leave
  • removing entirely or mitigating any capital gains tax liability
  • inheritance tax considerations
  • ensuring jobs to your current employees

In many ways, succession planning is the most complicated and emotionally-fraught exit you can choose because of the need to preserve the valuable relationships you have with the people who will in charge of the company you’ve worked so hard to build.

 

How To Exit A Business By Selling

There are two main ways to exit via the transfer of company shares, namely:

  • mergers – a merger usually brings your company and another together within one new organisation (a NewCo). You’ll have to negotiate your level of active involvement in the NewCo, any ongoing income you can drawdown, and consideration for the value of the shares you’ll be “selling”.
  • acquisition – your business is sold to another company, potentially a private equity firm or to another firm, and you receive a pay-out for the sale of the issued shares in the company.

The sale of a company is ferociously complicated and that complexity only increases for higher-turnover businesses. You should start the preparation you need to take your company to market at least 12 months before you start inviting others to bid for ownership.

You should ensure that, during both the negotiation and buying stages, that the following information is kept up to date:

  • financial accounts
  • legal issues and contracts
  • litigation and employee disputes
  • utilised debt

Once the initial negotiation is complete and a price has been agreed, expect the buyers and their solicitors to take every opportunity to denigrate as many aspects of your business as possible in order to secure a price discount. While you may be on friendly terms with your buyers, their solicitors are paid to secure your buyer the best possible deal so do not expect your interactions with them to be particularly cordial.

In addition to engaging us during and after the sale to provide financial information to your buyer and their solicitors, you’ll also need to take advice on taxation following disposal – please contact us for more.

Once the negotiations have concluded, you should budget 4-6 months for due diligence and the drawing up of the final sales and purchase agreement to occur.

 

Exit Strategy Support At Accounting Gem

Taking the decision to leave your business is an emotional decision. How you leave your business is a big financial decision whose consequences will dictate the quality of your life after you’re no longer a (major) part of the business you’ve created, nurtured, and grown.

Therefore, you need to have access to accountants and solicitors who are experienced in the sale of businesses or the handover of businesses to the next generation during this time. This is especially so if you wish to retire permanently and live off either the proceeds of the sale or the drawings from the company from which you’ve stepped back.

Your Accounting Gem partner is here to guide you through the entire process of exiting your business but please remember that it’s important to start your exit planning as soon as possible. Whichever method you choose to exit, the likelihood is that you’ll still be in situ for the next two years and you have to maintain the health and profitability of your business in the face of the multiple distractions that exit planning will present to you. Get in touch with us on 01473 744 700 or email us on contactus@aag-accountants.co.uk.

Broadly speaking, you can define an entrepreneur as someone who sets up and runs businesses in potentially lucrative unexploited or under exploited niches. The money needed to launch the business will be drawn from their own finances or finance they have raised from other sources. Entrepreneurs are notable because they have ambition in abundance, they want to get things done as quickly as possible, and they take big risks.

In this article, we will look at:

  • the main differences between being an entrepreneur and a small business owner
  • what key skills and character traits you need to succeed as an entrepreneur
  • how technology has enabled entrepreneurs to triumph
  • how entrepreneurs finance their fledging business ideas
  • what steps you need to take to become an entrepreneur in today’s marketplace

 

What Is The Difference Between Being An Entrepreneur And A Small Business Owner?

Owning your own business does not necessarily mean you are an entrepreneur. Typically, an entrepreneur will introduce a new product or service to market or amend an existing product or service. The idea they have, if it gains traction, could become very big very quickly if scaled up correctly and skillfully.

Very often, entrepreneurs will have delegated the management of their product or service to experts in that particular field as early as possible. This means the company can easily be managed by others and the entrepreneur can focus on further business development and fund raising.

Here at Accounting Gem, we have also noticed a recent trend in that entrepreneurs are now more likely to be involved in creating sustainable businesses – sustainability could be defined as either a donation of profits to charity or a commitment to zero carbon emissions.

Alternative to this, small business owners are more likely to be involved in running a more standard type of company like a local garage or bakery. They are generally lower risk as the market is already there for the products and services they offer. They are focused on building the business for themselves to create a reliable personal income stream more so than planning to scale it and sell it on.

It’s not uncommon for small business owners to be much more heavily involved in the day-to-day running of the service than an entrepreneur. This means the company relies massively on their input and attendance.

 

What Key Skills Or Characteristics Do Entrepreneurs Need To Have To Succeed?

You need business acumen and a wider vision to succeed as an entrepreneur. Being highly organised, having self-belief, being creative, and making use of sector-specific and in-depth knowledge are the building blocks to consolidation and growth.

What makes an entrepreneur stand out are the qualities that push you above and beyond the rest:

  • be a visionary– you need to have a dream but also the vision to see how it will work in reality
  • take the risk– be prepared to take calculated risks such as sacrificing short-term income for long-term gain
  • maximise your resources– use what you’ve got, who’ve you’ve got around you, and know how to create opportunities out of nothing
  • harness your passion– a genuine love of what you are doing will get you a long way
  • be flexible– you need to be able to do everything like sales, recruitment, marketing, and product development
  • innovative is the key word– you need to think outside the box to create better, each and every time
  • believe in your confidence– you need to have the resilience and decisiveness to push your idea forward and against numerous stumbling blocks
  • have persistence– as above, you will come across problems, but you need to get back up each time. foster the tenacity needed and it will stand you in great stead.

 

How Has Technology Evolved And Enabled Entrepreneurs?

By connecting people and by providing deeper financial and operational information allowing further fundraising, technology has helped significantly in the creation and success of today’s entrepreneurs.

Platforms such as Quickbooks has allowed for easy accounting while Kickstarter has helped with seed funding giving entrepreneurs the money they need to start their companies. Canva has helped businesses develop their image and branding and keep both consistent while iZettle allows you to take payments seamlessly.

Dropbox has allowed individuals to share large files easily (remember the old ISDN days prior to the internet?) whilst Shopify has made it quick and easy to sell products and services online without learning how to code.

There is an abundance of platforms available to you to make the journey as an entrepreneur smooth and consistent.

 

How Entrepreneurs Fund Their Businesses And Run Them In The First Few Months

No matter which business, its launch and early days need to be funded. Investors (and financiers) always want to see an entrepreneur make their own investment into their business whether cash, sweat equity, or a mixture of the two.

Initially, entrepreneurs can expect to work extremely long hours with very little (or no) recompense. For their first few ventures, entrepreneurs need to learn quickly about the more mundane aspects of running a business in the early days so that they are better able to understand the skills needed in people they appoint to take those responsibilities away from them later on.

 

Services For Entrepreneurs At Accounting Gem

Accounting Gem works with small business owners and entrepreneurs – for entrepreneurs, we’ve developed a more specialised group of business start-up services designed to help you get to your end goal quicker.

Key to finding early funding is a credible business plan backed up by 3-5 years of believable financial forecasts. Share with us your idea in full and we’ll translate your idea into a fully costed business plan showing growth milestones and the key performance indicators investors or financiers can use to track your progress.

After the launch of your business, we’re also able to provide you with bookkeeping and management accounting services so that you and your investors/financiers are working from the latest financial information.

Your Accounting Gem partner is here to help you at all stages of the business cycle from start-up to expansion to exit. Get in touch with us on 01473 744 700 or email us on contactus@aag-accountants.co.uk.

If you’re a business in the UK, hiring staff can be a big decision. Before taking on employees – whether on a full-time, part-time or self-employed basis – it’s important you have a good reason for adding to your workforce and understand the legal responsibilities that comes with employing new members of staff.

 

What Are The Different Types Of UK Employment Contracts?

With the time, costs and legal obligations that comes with it, taking on a new member of staff can be a big commitment. However, there are a number of different ways to employ a new worker – and hiring someone doesn’t necessarily mean offering a full-time, permanent contract.

Depending on the type and size of your business – as well as your recruitment requirements – there are a variety of ways you can hire members of staff. If you’re an office-based business offering services to clients around the clock then recruiting a worker on a full-time basis may be the most cost-effective option, whereas if you run a seasonal photography studio and require extra workers on a project-by-project basis, then working with a freelancer will likely suit you better.

Before deciding on which type of employment contract to offer any new member of staff, make sure you think carefully about the role of the worker, what they’ll be doing for your business and how often you’ll require their services – you don’t want to be left struggling to meet deadlines with too few employees, or paying over the odds for workers who aren’t really needed.

 

Fixed-Term Contract Employees

A worker who is on a fixed-term contract – for example, if they’re working for a set amount of time until a specific project is completed – has the same rights as a permanent member of staff. The main advantage of hiring an employee on a fixed-term basis is your obligations to them only last as long as the length of the contract, meaning you can hire workers as and when you need them.

You may take on an employee on a fixed-term basis to cover a seasonal spike in business or if you’re launching a new product or service and require an extra pair of hands.

 

Permanent Employees

A permanent employee can be hired on either a part-time or full-time basis. As an employer you are required to adhere to a full range of legal obligations to your workers, including sick pay and holiday entitlement.

Permanent employees are usually hired on an ongoing employment contract, and the advantages of hiring them includes predictability, loyalty and regularity in the workforce. The disadvantages of entering into a permanent contract for an employer includes increased management time, the strict adherence to legal obligations and a lack of flexibility.

 

Zero Hours Contract Employees

The main advantage of hiring a zero hours contract employee is the flexibility involved. A zero hours contract means that you can call on your workers as and when you need them, without meeting the legal obligations or costs associated with a permanent employee contract.

However, while a zero hours contract may be more cost-effective, it’s a two-way street, meaning the employee is not obliged to work a set number of hours per week. Depending on the type of industry you’re working in, zero hours contract employees can provide a flexible solution to your staffing needs.

 

Temporary Agency Staff

A large number of start-up businesses begin their recruitment process by hiring temporary staff supplied by an employment agency. As these type of workers are often available at short notice and you don’t have a great deal of legal obligations to them, temporary agency staff offer a relatively low-risk way of bolstering your workforce.

However, as you’ll be paying commission and fees to an employment agency, it is a more expensive option that hiring full or part-time workers directly. Although things such as National Insurance Contributions will typically be handled by the agency, you are still obliged to provide things such as a basic level of pay, an appropriate amount of rest breaks and a safe work environment for your workers.

 

Freelancers, Contractors and Consultants

With an estimated 2 million workers, the freelance economy makes up a significant part of the UK workforce. As an employer, many businesses use freelancers, contractors and consultants to help complete specific projects as and when they’re needed. Professional service companies, meanwhile, typically call on consultants to help meet client needs on a seasonal basis. As the freelancer, contractor or consultant is self-employed, your legal obligations as a business are minimal.

However, in order to meet HMRC requirements, it’s important to check the legal status of any freelance worker you go into business with. The definition of ‘self-employed’ usually relies on the work that the freelancer is doing for you and where they carry out the work. As a responsible employer, you should check the employment status of anyone who works for you and we’d recommended drafting a contract with any self-employed staff you hire.

 

How To Resolve Workplace Disputes

A healthy and positive working environment is crucial for any productive and successful business. If problems within the workforce are not resolved in a timely manner, disputes can quickly escalate. As a business owner, make sure that you have suitable procedures and policies in place to resolve any workplace issues. For more information on how to maintain a healthy working environment visit Acas (Advisory, Conciliation and Arbitration Service).

 

Are You Considering Hiring Staff For Your UK Business?

An Accounting Gem can guide you through the process – including the pros and cons – of staff recruitment.

We pride ourselves on our open door policy. If you have a problem – we’ll make you our priority until it’s fixed! We work with individuals, sole traders and limited companies in Ipswich, Suffolk and Essex.

Speak with our friendly and knowledgeable team today by calling 01473 744 700 or email us at contactus@aag-accountants.co.uk and we’ll be in touch.

There are many reasons that you, as a business owner, might decide to sell your business. The business might be failing, or you could be tired of running it. You might have a new opportunity you want to pursue or have other life changes that make it impossible for you to keep your business running successfully in the meantime.

Whatever your reasons, there are a number of factors involved in selling your business, that you need to be aware of so that you can sell your business for what it is worth and make the best return on your investment.

The reason that you want to sell will affect the way in which you sell. For example:

 

If your business is performing badly

A declining business will mean that you might have to take a lower price on your company. If you are in debt then selling the company could mean that you end up out of pocket after a sale. In this case it is worth thinking about whether it is possible for you to rejuvenate the business and rebuild a bit before you sell, in order to get a better price.

 

If your business is running at a sustained level, but with varied profits

You will want to base your sale price on the previous three to five years’ worth of profits, rather than just on where your company is now. You will have to be transparent with buyers about how the business is performing overall and will want to get all of your accounts in order so that you can prove your company’s viability.

In this case it is still important to put your all into the running of the company so that it does not stagnate while you focus on finding a buyer.

 

Preparing to sell your business

Even if you are ready to make a quick sale, chances are it will take some time to complete a sale. The average time for a small business to sell is around 6-8 months, depending on the deal you wish to secure and the industry that you are in. During this time it is possible that your business’s fortunes could change dramatically.

Before you even think about putting your business on the market you need to:

  1. Prepare full and comprehensive accounts for your last accounting period, and have full management accounts for every month after this
  2. Make sure that you have tied up loose ends such as legal issues, leases and contracts
  3. Settle any ongoing litigation and disputes with employees
  4. Reduce your personal expenses and bring your cash flow down to the bottom line
  5. Speak with professional advisers in order to put together the best possible deal
  6. Increase the responsibilities of your management and decrease owner responsibilities

 

Valuation

This can be a hard one for business owners, as you are likely to have given years of your life to the company and feel that it is worth everything that you have put into it. In this case you need to clear your mind of your own emotional bias towards the company and look at it objectively so that you are asking for a price that is better suited to what the company actually has to offer a prospective buyer.

Although it is important that you make a comprehensive pre-sale valuation of the company so that you know what you are marketing it for, don’t be too rigid on this. As the sales process goes on you will find out a lot more about the market that will help you to understand what your company is worth. You can look at what similar businesses are selling for, but again be prepared to look realistically at what your company has to offer.

 

Creating A Sales Profile

A simple, one-page sales profile offers potential buyers everything they need to know about the business without being too in-depth. All you need to include in this is the most basic information about your company, such as:

  1. What you do
  2. Where you do it
  3. Your reason for selling
  4. The company’s potential for future growth
  5. Differences between you and your competitors (your USP)
  6. Basic financial details (annual turnover, GP, EBITDA)
  7. Contact details

 

Negotiation

Once you have had your business up for sale for a little while and started receiving offers, you should have a much better idea of how your business is going to perform on the market. This allows you to finesse your negotiation process so that you can get the best possible price and make a decent return on your company.

Ask yourself:

  • What is a good price or deal for your business? Are the prices being offered acceptable, or are you being lowballed by potential buyers? You can start putting together evidence of why you think this in order to formulate a counter-offer to make to any serious buyers.
  • How many buyers do you really have? Try to work out who is serious and who wants to grab a bargain in order to sell it. Of the buyers that are left, you can start negotiating with them for a price that you are all happy with, or potentially start a bidding war.
  • If you say no to a buyer, will someone else come up? This is a tough one because you have to be honest with yourself about the viability of your business on the current market. If you feel that you are not being offered a fair price, but there are also no other options and no potential buyers on the horizon, you might just have to take the hit and sell for less than you want. You can still negotiate with the buyer to create a deal that bridges the price gap, such as a cash payment.

 

Due Diligence

Once you have a buyer and are ready to make the sale, due diligence is the part where most business owners trip up or lose the sale. This is the area where the more hidden aspects of your business come to light, and the buyer can back out at any time if they don’t like what they see.

In order to maintain buyer confidence and ensure that the sale goes through, ensure complete transparency, but be prepared to offer justifications and possibilities to get over potential roadblocks.

 

Protect Yourself

You can download sale and purchase agreements online that will walk you through the sales process, but it is a good idea to bring a solicitor on board at this stage, if you haven’t already. They can make sure that you have crossed all your ‘t’s and dotted your ‘i’s so that the agreement is solid and both parties get what they want.

 

Want to find out more?

If you would like any help in selling your company, then we are here to help. Get in touch with An Accounting Gem Limited on 01473 744 700 or email us on contactus@aag-accountants.co.uk to find out more.

Mental health issues in the workplace can cause employees to suffer from feelings of nervousness, unease and anxiety, leading to a significant impact on their ability to work effectively. As an employer, mental ill health within your workforce can lead to lower productivity levels, increased absences and potentially staff conflict. As a result, raising awareness of mental health at work should be one of your priorities as a UK business.

In the UK, one in four people suffer from a mental health condition. Work-related stress is increasingly cited as a cause of anxiety and depression – leading to both physical and psychological damage and affecting how we think, feel and behave.

Regardless of whether work is causing mental health issues or employees are predisposed to a condition, employers in the UK have a legal responsibility to their employees.

What Is The Impact Of Mental Health In The Workplace?

According to official government statistics, the cost of mental ill health to UK employers is between £33 billion and £42 billion each year. 15% of workers consider themselves to have a mental health problem, with this figure rising to 27% in staff under the age of 18.

Nearly half of workers suffering from mental health problems have indicated that they have considered resigning from a job because it has had an adverse effect on their mental wellbeing, while almost 40% of sufferers are more likely to enter a conflict with their teammates.

In 2019, research by the Chartered Institute of Personnel and Development study found that mental ill health in the workplace has an even bigger impact on UK businesses, with their findings indicating that:

  • 80% of workers suffering from mental health issues find it difficult to concentrate
  • 50% are less patient with customers and clients
  • 60% take a longer amount of time to complete tasks
  • 57% find it more difficult to multitask

Encouraging positive mental health among your workforce is therefore vitally important for any business looking to improve productivity levels in the workplace.

 

How Can Employers Improve Mental Health At Work?

As a business owner and employer you undoubtedly have a lot on your plate, and we understand that you may feel you don’t have the necessary time or resources to dedicate to mental health in the workplace.

However, there are a number of simple measures you can take to boost the mental wellbeing of your workforce and reap the benefits of improved productivity for your business in the process.

It goes without saying that staff who feel happy and content at work are more likely to perform well in their duties, have strong attendance levels and be actively engaged with the aims and objectives of the business.

However, everyone is different and, as such, it can be difficult to create a positive working environment that meets the wants and needs of the entire workforce.

It is important that business owners are able to identify any signs of mental ill health in their staff and provide the appropriate levels of support and guidance where necessary.

Check out our top tips for improving mental health in the workplace below:

 

Offer your employees flexible eating options

We all know the old adage, ‘you are what you eat’. Well, it’s true! What we eat and drink at work can affect how we feel, both mentally and physically. And these changes can affect how well employees perform on the job. Encourage your employees to maintain a healthy routine of eating at work – healthy meals and regular water breaks are essential for maintaining energy levels throughout the working day. It may seem counterproductive as an employer but encourage your workers to get away from their desks when they’re on their lunch break. Taking a walk or enjoying a change of scenery is proven to reduce stress and revitalise the mind.

 

Encourage a positive work/life balance

Maintaining a positive work/life balance is essential for both employee and employer. If staff feel happy at work, are able to leave on time, and are able to relax when they’re at home without feeling pressured to check their company emails or do that one extra piece of work, then wellbeing levels will undoubtedly rise – leaving to less absences and increased productivity. Encourage your employees to listen to their bodies and gain enough rest. After all, our mental health and concentration at work is proven to suffer if we don’t have enough sleep and relaxation.

 

Allow your employees to take regular breaks

A change of scenery is proven to be good not only for mental health and wellbeing, but also for productivity. Whether it’s offering employees a five minute break after each hour of work, encouraging them to work in different environments throughout the course of the day, offering an extended lunch break outside of the office, or rewarding your employees with a team bonding exercise away from the workplace, it’s important to give your staff the flexibility to recharge their batteries by taking a break.

 

Talk about mental health matters with your team

Despite improving awareness levels, mental health is still considered a taboo subject with many people. It’s important to remove this stigma by encouraging workers to open up about their feelings and responding in an empathetic and caring manner. As an employer, nobody expects you to be a mental health expert, which is why investing in management training may be a good solution for introducing mental health awareness into the workplace.

 

Keep your mental health resources up to date

Even if you’re a proactive employer in terms of raising awareness and offering support for mental health in the workplace, just like in other areas of business it’s important to stay on top of any changes in research and legislation. Make sure that you regularly audit your mental health policies and keep them up to date with practical advice that your employees can use to maximise their productivity and happiness at work.

 

Are You A Business Owner Looking To Improve Your Staff’s Mental Health?

An Accounting Gem can guide you through all the options available to you and your staff about improving mental health in your workplace. Speak with our friendly and knowledgeable team today by calling 01473 744 700 or email us at contactus@aag-accountants.co.uk

If you work as a self-employed taxi driver, HMRC require you to file a self assessment tax return each year. This tax return is used to record your earnings and expenses, and to calculate how much tax you should be paying.

If you’re new to being self-employed and haven’t completed a self assessment tax return before, we know it can be daunting knowing what information and deductions to include, and indeed which form to fill out and submit in the first place.

HMRC penalties for filing an incorrect or late set of accounts can be severe, so it’s worth taking the time to understand how the system works.

However, using our handy guide we’ll help guide you through the process of filing your tax return as well as highlighting some of the tax benefits you’re entitled to as a self-employed taxi driver.

 

I’m a taxi driver – which self assessment form do I need?

You are considered a self-employed taxi driver if you work for yourself and set your own hours. Even if you use someone else’s vehicle for your job and use the services of a dispatcher, in the eyes of HRMC you are considered an independent contractor. Because of this, you will need to deduct expenses on your self assessment return, to lower your tax bill.

The two most widely used forms for self-employed taxi drivers are CWF1 which is used for newly self-employed workers, and SA1 which is used if you’re currently filing any other tax returns, such as if you’re a buy to let landlord.

To begin filing your tax return, visit the official GOV.uk website. You will need some basic information to hand – such as your name, address and date of birth – as well as your National Insurance number. You will also be asked about the type of work you’re doing and when you started working for yourself.

Once you’ve registered, HMRC will send you a unique taxpayer’s reference number (UTR) which should be used on all future correspondence related to your self assessment return. Keep this number handy as you’ll need it for any queries you may have about your taxes going forward.

 

When should I submit my tax return?

Your tax return should include your taxable income for the corresponding tax year. The UK tax year begins on 6 April and ends on the 5 April of the following year.

As a self-employed taxi driver, if the end of your business year is not the same as the tax year, you need to work out which accounting period to include on your self assessment tax return. The simplest solution is to align your business year with the tax year. So, if you started working on 1 January 2019, your first accounting period will run until 5 April 2019, before you start from scratch on 6 April for the next tax year.

Any tax you owe to HMRC, must be paid by the 31 January following the end of the tax year – this can be done online or via a Direct Debit.

 

Should I keep my receipts?

Yes, you should always save your receipts. Keeping a well organised record of your taxi fares, tips and other business earnings will make life much easier when filing your self assessment. Every year we deal with a number of drivers who could have benefitted from paying less tax if they’d kept evidence of their expenses.

As a self-employed worker, you should get into the habit of making a note of your business income and expenses. There are a number of apps and software programs on the market that offer an easy and hassle-free way of recording your expenditure, or if you require more personalized advice, get in touch with our experts on 01473 744 700 and we’ll be happy to help.

 

Taxi drivers – allowable expenses

If you’re a self-employed taxi driver, you’re able to claim a number of expenses when submitting your self assessment tax return, including:

  • Fuel costs
  • Repair costs
  • Annual road tax and MOT tests
  • Interest on loans taken out to buy your taxi
  • Washing and cleaning costs
  • License fees
  • Insurance costs
  • Breakdown membership fees
  • Office costs (if applicable)
  • Accountancy fees
  • Radio and communications systems
  • Business telephone costs
  • Parking fees
  • Airport, bridge, tunnel and other toll charges
  • Advertising costs

 

Capital allowances

In addition to the expenses we’ve highlighted above, capital allowance – also known as depreciation allowance – can be claimed for the cost of your vehicle. This rate is currently set at 18% per year. If you’re a Hackney carriage or black cab driver then you are also eligible for an annual investment allowance of 100%. Get in touch with our tax experts today to find out more about what allowances you may be entitled to as a self-employed taxi driver.

 

Fixed scale mileage rate

One alternative to claiming the running costs of your vehicle is to use HMRC’s fixed scale mileage rate which is currently set at 45p for the first 10,000 miles your car, van or minibus travels, and 25p thereafter. Capital allowance (see above) is included, but any interest on a loan made to purchase the vehicle is not, meaning this can be claimed alongside your mileage allowance.

nd that if you use your vehicle for your own personal use alongside its use as a taxi, then this will need to be factored in when you claim any expenses. As an example, if you use your vehicle 50% of the time for running personal errands, then your running expenses would need to be reduced by 50% accordingly.

 

Are you a taxi driver and need help with your self assessment tax return?

An Accounting Gem are here to offer you expert legal advice on how to fill in your self assessment tax return, and let you know about what tax breaks you may be eligible to as a self-employed taxi driver. Get in touch with our friendly team today on 01473 744 700 or via email at contactus@aag-accountants.co.uk