3 common misconceptions SMEs have about accounting and tax

Anyone who is thinking of, or has already set up, their own business may admit to having preconceived ideas about how tax and accounting works.

For some, these misconceptions could have put them off even starting up their own business so instead, they have stuck with the security of working for an established employer.

Don’t let this stop you from fulfilling your dream of running your own company.

Below are some of the most common misunderstandings.

1. My business is too small to need an accountant

Regardless of how big or small your business is, you can always benefit from the help of an accountant.

If cash flow is limited then admittedly a full time employee may not be the most practical step. However, many small companies enlist the help of an accountancy practice that can keep track of figures, submit tax returns on time, carry out payroll services and best of all, advise you on the best ways to save your company money.

Even if you’re happy to take on the extra workload yourself, hiring an accountant purely for the money saving advice can be well worth your time. You stay in control of what you want when, but you benefit from the professional knowledge, experience and advice.

2. I can do my accounts myself

This is of course true – you can do your accounts yourself. However, as mentioned above, even though it may not seem like it at the time, an accountant can save you a lot of money in the long run.

Furthermore, very few successful entrepreneurs got to the top because they spent their days bookkeeping.

You are of much better value to your business when you spend time working on new business development and growing the company rather than doing things that you can hire others to do.

3. HMRC is always right

Just like any business, HMRC isn’t immune to making mistakes. Although they endeavour to achieve incredibly high levels of accuracy, human error is part of life.

If you are uncertain about a tax bill, the complexities of filing online, your tax code or anything else to do with your accounts, check out the FAQ’s and help available on the HMRC website.

Alternatively, if you have been left incredibly confused by tax codes and balance sheets, or just want help or advice, contact Omni Chartered Accountants who will be able to advise you accordingly.

HMRC eases stance on late PAYE filings

UK businesses with less than 50 employees will now be allowed three days’ leeway by HMRC before being penalised for late filing of PAYE submissions.

HM Revenue & Customs has confirmed that late payment penalties will carry on being reviewed on a “risk-assessed” basis as opposed to being issued automatically.

No change to PAYE filing deadlines

HMRC have confirmed that there will be no change to the actual filing deadlines, which usually means that businesses need to file them actually on or before each payment due date.

HMRC will be closing close to 15,000 PAYE schemes in March 2015 in a bid to prevent unnecessary penalties being issued, for companies that have not filed a PAYE report since April 2013, and as a result, look to appear to have ceased trading.

These company schemes will be written to, advising them about the planned closure and what they should do if they are - or should be - operating PAYE.

Employers with less than 50 employees are also reminded that late filing PAYE penalties will apply from 6 March.

A discussion document has been published by HMRC in order to gauge views by the deadline of 11th May 2015. Suggestions concerning potential improvements to the way in which penalties apply for PAYE payment failure or to meet deadlines for registration or returns will be considered.

How to run your PAYE smoothly and avoid penalties

Of course, it is not always easy running a business and PAYE is something that a good accountant like Omni Chartered Accountants can help you with.

Seeking help with your PAYE affairs may work out more cost-effectively than you may think, especially when you consider the time saving and potential problems that your company could face if deadlines and payments are not made by the dates as set out by HMRC.

For more information, contact us now by clicking here or request a free of charge call back from our website by clicking on the link at the top of this page. 

A guide to auto enrolment for SMEs

Top of FormA guide to auto enrolment for SMEs

In order to enhance personal pension funding, the government has drastically changed the laws and regulations around pension provisions supplied by employers. 

Employer responsibilities

This article will give you a basic outline of these changes and your responsibilities as an employer.  The government has changed details from the point of first considering auto enrolment until now so it is important that you keep up to date with any changes in legislation going forward.

Ensuring you have the most suitable pension scheme in place is paramount in order to offer a quality benefit to your employees while reducing the costs and time associated with administering the scheme.

The duties of an employer pre-auto enrolment

If you employ less than five members of staff you currently do not have any responsibility or obligation to offer your staff pension benefits. 

If you employ five or more staff the minimum requirement is that you have to provide access to a stakeholder pension scheme.  There is no obligation to make contributions either as an employer or an employee.

The Government’s aim

Due to employees having to opt in to the pension scheme and there typically being no employer contribution the current schemes meeting the minimum requirements have very poor take up. 

In order to improve take up and therefore increase private pension funding, the government are taking away these two main barriers by bringing in auto enrolment and compulsory employer funding.  This means that instead of employees choosing to enter the pension scheme they will be automatically enrolled into the scheme and contributions taken.

Your staging date

The date by which you have to be compliant is governed by your number of employees on the 1 April 2012 and your PAYE reference number.  The earliest date was 1 October 2012 for employers with 120,000 or more employees gradually working through companies with less employees with the earliest start date for a company employing 30 or less employees will be 1 June 2015.

There is a comprehensive list of staging dates available from the Pensions Regulator.

Employers’ responsibilities

From their prospective staging date, any employer employing at least one person will be legally obliged to

•             Set up and register a pension scheme suitable for auto enrolment
•             Assess all staff eligibility at every pay period
•             Automatically enrol and make contributions for all eligible jobholders
•             Enrol and make contributions for non-eligible jobholders who wish to join
•             Manage the auto enrolment: including the joining and opt-out process
•             Keep records on how they have fulfilled their responsibilities

Scheme contributions

In order for the scheme to be classed as qualifying it must meet minimum contribution levels. There are different methods of assessing qualifying contributions but below is the simplest and is based on percentages of the employees total remuneration. The contribution level is to be bought in over three stages.

October 2012 – September 2017

Minimum Employer contribution = 1%

Minimum Member contribution – 1%

Total minimum contribution = 2%

October 2017 – September 2018

Minimum Employer contribution = 2%

Minimum Member contribution – 3%

Total minimum contribution = 5%

October 2018 onwards

Minimum Employer contribution = 3%

Minimum Member contribution – 4%

Total minimum contribution = 7%

Enforcement

In order to ensure compliance with the employers’ responsibilities, the following three stage process for non-compliance has been put in place by the Pensions Regulator.

Stage 1: compliance/ unpaid contribution notice

This will detail the breach and detail the timescale over which the employer has to put it right. Interest may be required on unpaid contributions.

Stage 2: fixed penalty notice

If the breach has not been rectified by the given time a fixed penalty of £400 will be applied.

Stage 3: escalating penalty

If employer continues to fail to comply with the first and second notice, then a daily penalty will be payable based on the number of employees.

Ensuring you have the most suitable pension scheme in place is paramount in order to offer a quality benefit to your employees while reducing the costs and time associated with administering the scheme.

These changes are likely to have great implications on business planning so be sure to understand the effect it will have on your business over the coming years.

For more information and impartial advice, you can be sure to count on Omni Chartered Accountants, who are here to advise you at every stage of your business journey. Request a free of charge call-back from this website or click here to find out more today.

Are you addicted to the busy drug?

It appears all of us at times become addicted to the drug 'being busy.' But let's be really clear.

Being busy doesn't necessarily mean...
1. You're being effective.
2. You're clearly a success.
3. You're incredibly important.

However, it could mean:
1. You've poor organisational skills and fail to delegate.
2. You're a people pleaser who cannot say no.
3. You're suffering from fuzzy focus and lack clarity regarding your purpose.

Are you addicted to the busy drug?

So please never ever confuse being busy with being effective. Instead, spend a little more time trying to Stop and Understand what you're aiming to achieve before you Move On to take action.

Do you know anyone who needs help with this addiction? Perhaps forwarding this message would be a start. Unless of course they're too busy to read it...

Omni Chartered Accountants - for sensible and advice when you need it most...
http://www.taxandaccountancysolutions.co.uk/

*courtesy of http://www.thesumoguy.com/

Can I switch from being a limited company to sole trader?

Here’s a typical question…

“I bought and took over a small business back in 2010, which was a limited company. Turnover has diminished so a lot less admin is needed. Is it possible to change a limited company to sole trader?”

Here’s the answer!

Can I switch from being a limited company to sole trader?

1.    Striking off a limited company from the Company Register

A limited company can cease trading at any time but as it has a separate legal entity it has to be removed from (or 'struck off') the Register of Companies.

Before that can happen, financial reports up to the date of cessation must be prepared and filed and any outstanding corporation tax paid. If there are any unrelieved corporation tax losses (losses accumulated not yet offset against taxable profits), these will be lost.

2.    Asset disposal and liability settlement

In addition, any remaining assets must be disposed of and liabilities must be paid. Assets can be 'sold back' to you. This includes items such as a website and email address.

3.    Dealing with the VAT and PAYE

If the company is VAT registered you should check if it is possible for the registration to be transferred to the Sole trader. As you purchased a business there may be some goodwill remaining which will have to be written off. Any PAYE scheme must be closed.

4.    Closing company bank account

After the final payments of tax and other liabilities, etc. the bank account must be closed. It is possible to apply to HMRC that any distributions (usually the bank account balance) can be treated as a capital gain subject to capital gains tax instead of income tax. Generally there is a tax saving on this.

However this can be complicated so you should talk to your accountant for the best advice. In any case, this can only be done when the company is closing down and not at any other time.

5.    Notify HMRC and other parties

If the business is transferred to a sole trader you will need to notify the existence of the new business to various agencies such as HMRC. Arrangements to have insurances transferred to the sole trader business will also have to be made.

The payments on account regime for Income Tax for sole traders is particularly onerous in the first year or two of trading, so you will have to put by a percentage of income (approximately 20 per cent) to make the payments when they fall due.

Seeking advice makes this whole process easier!

Of course, this whole process can seem quite a daunting one, so it makes sense to seek professional advice if you can.

Omni Chartered Accountants are experts in all areas of small business accounting and taxation advice, and can offer free of charge advice to help you make the right decision and also offer a cost-effective solution to dealing with the stages that are required to make the transition from Limited Company to Sole Trader.

Call 01902 837408 today or request a free of charge call-back from our website for an initial consultation – alternatively, click here to contact us via our dedicated client contact form.

New Government legislation set to protect failing businesses

In a new move to protect failing UK companies, essential suppliers will not be able to stop essential services to businesses during rescue talks. The new government guarantee is a bid to assist companies in administration.

Essential business services include:

• Ø  IT
• Ø  Water
• Ø  Gas
• Ø  Electricity
• Ø  Communications services

Suppliers will also not be allowed to charge premium rates whilst insolvency practitioners are attempting to find seek a viable rescue solution.

They will be guaranteed payment before others that may be owed and will be able to request guarantees of payment from the insolvency practitioner.

The supplier can also make a court application in order to terminate their contract on hardship grounds and practitioners will be urged to contact essential suppliers at the "earliest possible time" to discuss what they expect will be used.

Business minister, Jo Swinson, said;

“Continued IT and energy supplies are needed for businesses to continue trading while options are sought about their future.

“These changes will help struggling businesses during rescue while providing confidence for the suppliers that they will be paid for the essential services they provide.”

Giles Frampton, president of insolvency trade body R3, said;

"Changes to the terms of supply for insolvent businesses place unnecessary hurdles in the way of business rescue. Without reliable and affordable IT and energy supply, attempts to save a business can be stymied quickly.

"Over time, we would like to see more types of suppliers added to the list of those prevented from trying to steal a march on other creditors and take advantage of their importance to struggling businesses. It will also be important to review the impact of the requirement for Office Holders to give a personal guarantee to suppliers."

What do you think of the new changes that are due to become legislation in October? Let us know your thoughts on Twitter and Facebook and remember, Omni Chartered Accountants are here to guide your business with any accountancy issue that you may have on 01902 837 408, or you can email us at mailto:enquiries@omnitas.co.uk?subject=Enquiry

Image credit www.gov.uk - Jo Swinson MP

5 tips to being successful in business

Everyone has their own unique working habits and you are unlikely to ever find two people who work in exactly the same way – regardless of whether or not they are successful.

However, research has shown that hugely successful people do often share certain habits and personality traits that are thought to be a massive contributing factor to their success.

1.     Work hard

When it comes to running a successful business, there are no shortcuts and there are very rarely any overnight success stories.  You can’t be truly great at anything unless you put an incredible amount of effort into it. Successful people have a long list of things they want to get done which means they put in a lot of time and work more hours that the average person.

2.     Have big ambitions

Right from the outset, successful people identify where they want to end up and set that as their goal. Once they know what they want to achieve, they work backwards and lay out every step that is required to meet their goal.

Smart leaders find that this helps them to make better decisions and makes it easier for them to work harder because they know that their ultimate goal is success.

What’s more, achieving a goal, no matter how big it is, merely acts as a launch pad for successful people to set another equally ambitious goal.

3.     Sell, sell, sell

The vast majority of very successful people will agree that the one skill that has contributed the most to their achievements is the ability to sell. Selling is the foundation to success because being good at it means that chances are you will know how to negotiate, deal with people saying no to you, can maintain confidence when being rejected, can communicate effectively and very importantly, build long term relationships. All of these skills are vital to success but those who truly believe in what they do find that they don’t need to sell – they simply communicate their feelings about something they truly believe in.

4.     Don’t have a back-up plan

Whilst many people might argue that a back-up plan is a sensible thing to have, highly successful people feel that this merely creates an easy out when things get tough.

Chances are that you will work a lot harder and a lot longer if your primary plan simply has to work and you don’t have any other fall-back options.

5.     Don’t let pride get in your way

Even the most successful people in the world will never be too afraid to admit when they are wrong, when they have made a mistake and when they need to say sorry.

This grounded nature makes them much nicer people to work with and as a result, professional and personal relationships thrive and so does the business.

Summary

If you would like to be successful, these are of course, general pointers to help guide you in the right direction. Having the right accountant and getting the right advice when it comes to your business finances should also be a crucial part of any plan that you may have to make a success of your venture.

Omni Chartered Accountants are here to guide you along the way and offer impartial advice; our years of experience make sure that clients always get a cost-effective solution to managing their tax and accounting affairs.

For more information, call us today on 01902 837408 or request a free of charge call back from this website. Alternatively, click here to make an enquiry and we will contact you by return.

Are you on cruise control with your business?

I spend a lot of time driving.

I stuff my face with Maltesers (the giant size pack) and listen to sporting trivia on Talk Sport. My only company in the car is the Sat Nav lady who  occasionally interjects with phrases like “You are no longer on the planned route. Do a ‘U’ turn when safe to do so”.

I sometimes ignore her instruction and take another handful of Maltesers.

I’m back on cruise control.

Only another 96 miles to go.

I’m not bothered about the journey, I just want to reach my destination.

Before I know it, the Malteser bag is empty. I cannot believe I’ve consumed so many in so short a space of time. I promised myself I would only eat half the bag and save the rest for my return journey but I have failed again (miserably).

But let’s forget driving for a moment – the above scenario can be a fair reflection of my life at times:

• Operating on cruise control
• Not appreciating the journey
• Ignoring advice
• Getting caught up in trivia
• Lacking self-discipline

I’m not trying to make myself (or you for that matter) feel guilty, I’m just pointing out the down sides of being “on cruise control”; in other words, coasting through life rather than taking a firm grip of the wheel.

So I’m re-committing myself to the following:

• I want to reach my destination and have appreciated the journey.
• I want to listen to and weigh up the advice of others.
• I want to focus on what’s important and not get side tracked by trivia.
• I want to really feel I’m driving my life and not simply coasting on cruise control.

What about you? Which of the above particularly strikes a chord? Is it time to switch off cruise control?

This is relevant to everyone, but I think it is particularly pertinent when you are self-employed or running a small business. Stay focused and make the most of every available minute.

And above all, remember to enjoy the Maltesers!

Omni Chartered Accountants are here to help you take more control of your company finances and taxation affairs – request a free of charge call back from this website or click here to contact us today.

KPMG’s 2015 Global Audit Committee Survey

According to a recent survey by accounting giants KPMG, audit committees around the world are seeking better technology information and more ‘thinking outside the box’ from members to improve their effectiveness.

The KPMG’s 2015 survey questioned 1,500 audit committee members from a total of 36 countries. Tim Copnell, KPMG UK Audit Committee Institute Chairman, said that some of the most interesting results from the survey were about the subject of improving audit committee’s effectiveness.

Copnell said;

“From a UK perspective we had 58% of respondents saying a greater diversity of thinking on the committee would improve its effectiveness and that is in an environment where all the codes and guidance and things coming out of Europe tell us again and again to have accountants and people with audit knowledge on the audit committee.

“They are saying fine there is a need for hard skills but actually there is also a big need for soft skills.”

Lack of technology knowledge

Although respondents pointed out that whilst they recognised that it is important to have audit committee members who have accounting and auditing skills, it is also of importance to have members with other varied skills. One particular worry was the general lack of technology knowledge in audit committees.

Cybersecurity concerns

Another finding from the survey was based around the quality of the information at the audit committee’s disposal. Respondents rated the quality of information that they receive regarding specific topics – when asked about cybersecurity, a whopping 90% of them aired concerns.

Copnell said;

“That is quite important, because these are the risks audit committees really engage with nowadays… it is one thing to debate these issues, but if the information the audit committee has is below par then that is quite a difficult position to be in.

“The whole audit reform environment of the last five years, not just in the EU, has been to create more clarity about what is the audit role and the advisory role and obviously to prohibit non-audit service with a view to maintain independence and objectivity.

“But at the same time they would argue that as a result of that process, the relationship between auditors and audit committee has changed such that the auditors no longer provide perhaps a richness of support as the audit committee would wish.”

Keep up to date with the latest news on our blog page and we love to hear your thoughts on Twitter and Facebook, too.

Reprieve for small businesses affected by new EU VAT laws

Businesses affected by the change in EU VAT regulations have been given until 30 June 2015 to ‘adapt their websites to meet the new data collection requirements.’

This ‘transitional period,’ announced by HMRC, is aimed at businesses selling digital services to other EU member states.

VAT charges dependent upon consumer location

New laws state that rather than the VAT on digital products being dependent on the country it is being sold in, it is dependent upon the consumer’s location.

The change in EU VAT on digital products was changed initially to stop companies from residing in certain countries to either avoid or decrease the VAT they had to pay. Luxembourg, for example, was a popular choice for relocation.

Small business owners, however, are worried about the new legislation, fearing that it may have a detrimental impact on their digital EU sales. A major concern is administration costs, which would include adapting their websites to alter the VAT for each consumer’s product and to provide proof of their place of supply.

HRMC VAT Moss

To combat concerns, HMRC set up VAT MOSS, an online service aimed at helping small businesses comply with the regulations. Signing up to this service means that digital service suppliers won’t have to singlehandedly register for VAT in every EU state.

HMRC provided the following guidance;

“Until 30 June 2015, micro-businesses that are below the current UK VAT registration threshold, and which register for the VAT MOSS online service, may base their ‘customer location’ VAT taxation and accounting decisions on information provided to them by their payment-service provider. They do not need further information to be supplied directly by the customer.”

Why trusting your accountant is key

Is it possible that the big players can ever really take over the position of the “high street accountant” or the reliable online accountancy practice that is always happy to offer one-on-one advice?

Of course not – not in our opinion, anyway.

An accountant should be there for you to advise you on the best way to manage your business finances and tax affairs. Let’s face it; this is a huge responsibility and one that you should only ever hand over to a company that you 100% trust in.

For example, you may be looking for the best price, but do cheap prices always mean great value?

Save more than just your accountancy bills

At Omni Chartered Accountants, we do what we say on the tin. We are direct, honest, experienced and – like our title says – we are Chartered Accountants, so you can be sure you are getting a professional level of service at all times.

We offer our clients excellent value for money but at the same time, we don’t scrimp on client service. All of our customers are given an initial consultation and we are always on-hand to offer advice in all aspects of their accounting queries when they need us.

In short, we are in business to save our clients money – we don’t put our profits first.

Why trusting your accountant is key

If you are unhappy with the way in which your company affairs are being managed, or if you would like to review your current accountancy bills, why not contact us for a free review? We will be happy to speak to you over the telephone initially and put forward our ideas as to how we feel our services could benefit your business.

Call 01902 837408 today or request a free of charge back from our website – also, check out our pricing page now to see how competitive our fees actually are.

And that is before we have started helping you to make the most of your company finances and tax affairs! Call Omni today: you won’t look back.