Originally written by Tim Vine on Small Business
Poor payment practices continue to be a widespread issue. In 2018, Dun & Bradstreet found that small businesses were owed an average of £80,141, nearly a quarter more than in 2017 and worryingly, 17pc were owed between £100,000 and £500,000.
These numbers potentially have meaningful consequences for businesses and the wider economy. Overdue invoices can dramatically impact the cash flow of SMEs, as many of these companies lack the deep financial reserves or access to capital which can bridge the gap in payments for large businesses.
Essentially, today’s income is tomorrow’s payroll.
Any delay can have a cascading effect that strains the finances of the supplier and keeps their own vendors from getting paid on time. In fact, 31pc of respondents said that cash flow difficulties were the most serious consequence of late payments and 28pc admitted that they’ve had to delay payments to their suppliers as a result. A quarter have had to cease the supply of goods and services to customers who didn’t pay on time, and potentially lose a business relationship.
‘48pc of SME say that overdue payments put their business at risk of failure’
Perhaps the most disturbing figure uncovered was that 48pc of
Tag Archive for Accounts & tax
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Crunch to roll out accountancy on its new freelance bookkeeping network
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Crunch, the Brighton-based online accountancy service, plans to roll out its new freelance network to accountants as well as bookkeepers.
Until now, Crunch has employed 50 accountants in-house at its office.
Around 11,000 customers pay monthly to subscribe to Crunch’s online accounting platform.
Founder and CEO Darren Fell cites Crunch’s consistency of service, as well as being to pay monthly platform rather than being hit by a nasty accountant’s bill at the end of the tax year.
Speaking to customers, the Crunch team realised there was a need for freelance bookkeepers as small business owners are too overwhelmed to keep up with bank reconciliations.
So far, 20 freelance bookkeepers have signed up and Crunch plans to grow to 100 within two years.
The company believes this freelance push will help it grow by another 20pc next year.
This follows a substantial runoff growth with revenue of £9.4m in 2017/18, a 16pc increase on 2016/17 and 11pc growth to £10.3m in 2018/19.
Crunch’s platform
Crunch’s platform helps accountants compile VAT payments, expenses and year-end accounts – all compatible with the Government’s Making Tax Digital initiative.
Remote working bookkeepers will be allocated jobs and have controlled access through Crunch’s new practice management system, which was
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How UK businesses should cope with incoming IR35 rules
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
With the IR35 rules being reformed within the private sector from April 2020 (essentially mirroring the changes introduced to the public sector back in April 2017), there is a great deal of uncertainty, not only about how the rules will work, but also how employment businesses will practically operate the new legislation.
IR35 puts the onus for deciding whether a freelance contractor is truly freelance or a full-time employee on the recruitment agency. HMRC is on the lookout for what it considers “disguised employment”.
The controversy is that contractors who are considered to fall within IR35 are taxed as an employee, often at the higher rate of income tax, but do not get benefits like paid annual leave or sick pay.
Additionally, employment businesses will be responsible for deducting income tax and employee’s national insurance contributions (NICs) from fees paid, regardless of whether their client pays its bill.
With less than 12 months to go until these changes come into force, it is important that employment businesses who engage contractors through personal service companies (PSCs) understand what practical steps they can take now to prepare in advance.
How to prepare in advance:
Contact current PSCs
Employment businesses should liaise with
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How to change your small business accountant in 10 easy steps
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Eighty per cent of small businesses work with an external accountant or bookkeeper. However, 70pc of small business owners would not recommend their accountant to others and more than a quarter said they are likely to switch accountants, according to small business platform Xero.
On top of that, over one third of small business owners would tell others to avoid their accountant, as they feel they don’t understand business challenges, don’t provide the right support, charge too much and aren’t keeping up with technology.
Why small businesses switch accountants
Top mistakes that are causing business owners to switch accountants include: rarely providing support (62pc), limited industry knowledge (57pc), making them feel like a low priority (55pc), being behind on technology (53pc), being unresponsive (52pc) and not providing enough value (44pc).
Nila Khan, business advice manager at industry body ICAEW, says: “Accountants being unresponsive is the major gripe of clients. All they want is a response, it can be as simple as that. It can be a shame to lose a client over something so simple as lack of communication. It’s frustrating because it can be so easily fixed.”
Another reason is that your old accountant either retires or
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Late payers to small business could be barred from public sector contracts
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Some of the biggest Government contractors face being barred from public sector contracts if they fail to start paying small businesses on time.
From September, outsourcers which do not pay 95pc of small business subcontractors within 90 days could be frozen out of public sector procurement, according to Cabinet Office plans. The rule would apply to all contracts worth more than £5m in the £50bn Government procurement sector.
Outsourcers including Kier, Balfour Beatty, Mitie and Capita have fallen below the 95pc threshold, according six-monthly data collected by the business department, and would be excluded from bidding for new contracts.
Percentage of suppliers paid within 60 days%
Kier82%
Balfour Beatty82%
Mitie88%
Interserve90%
Capita90%
Serco96%
G4S100%
Source: company reporting
Last week, the Government announced that large companies which pay small businesses late could be fined under new powers given to the Small Business Commissioner. But professional associations and payment platforms say the Government late-payments crackdown does not go far enough. All large companies should be forced to pay small business suppliers within 30 days, they say.
“We expect [all companies] to meet the 60-day target and, if they don’t, they may not be considered for public sector contracts,” small business crown representative Martin Traynor told the Sunday Times.
Traynor
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Government must halve late payments window to 30 days, urge experts
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Government reforms to pressure large businesses to pay small business suppliers on time do not go far enough, say experts.
Small Business Minister Kelly Tolhurst announced yesterday that entire corporate boards will be culpable if large businesses do not pay SME suppliers on time, not just finance directors, as previously mooted.
Large businesses could also be fined for failing to pay small and medium-sized business suppliers on time, as part of a Government crackdown on SME late payments.
The Small Business Commissioner could have beefed-up powers to tackle SME late payments and enforce binding payment plans.
However, the Government has ducked compelling large employers to sign the Prompt Payment Code and to close the late payments window under the code from 60 to 30 days, say professional bodies.
Malcolm Harrison, group CEO of The Chartered Institute of Procurement and Supply (CIPS), said: “More change is necessary. It is important we do not stop there and continue to drive down lengthy payment terms in supplier contracts to ensure SMEs are able to manage their cash flows, to grow their businesses and remain productive.”
Lengthy payment terms
Peter Kubik, partner at accountants UHY Hacker Young, said: “New proposals do not get to
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Large businesses could be fined for failing to pay SMEs on time
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Large businesses could be fined for failing to pay small and medium-sized business suppliers on time, as part of a Government crackdown on SME late payments.
The move will see entire company boards held responsible for supply chain payment practices, and not just finance directors, as previously mooted.
The Government has also announced a new £1m fund to to encourage businesses to use technology to simplify invoicing, payment and credit management.
And the Small Business Commissioner could have beefed-up powers to tackle SME late payments and binding payment plans.
SME late payments result in the closure of more than 50,000 small businesses each year, according to the Federation of Small Businesses, costing the economy £2.5 billion. On average, small businesses are owed £80,000 apiece. In 2018, Britain’s small businesses collectively spent £6.7bn just to collect money they were already owed – a huge drain on investment.
From now on, company boards will be held accountable for payment practices to small businesses within their companies in a drive to increase transparency and accountability on late payments. Measures will force audit committees to report payment practices in company annual reports.
The Small Business Commissioner will also assume responsibility for the voluntary
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6 tax breaks every small business should know about
by David Redfern • • 0 Comments
Originally written by David Redfern on Small Business
When setting up and running a small business, it’s very often “all hands-on deck”, with all efforts focused on the day-to-day running of the business. It is easy, therefore, to forget about areas such as tax relief which don’t come under the daily management of your business. However, forego these tax breaks and you could miss out on ways in which you can make your business more efficient and competitive.
A number of tax breaks are applicable to small businesses, some which are industry specific and some which are generally applicable to all SMEs.
If your business meets the HMRC-qualifying criteria, these tax breaks could significantly lower your tax bill, making your business more profitable and efficient with little extra effort on your part.
The following tax breaks are available to SMEs so let’s take a look and see if your business could be eligible:
Employment Allowance
If your business has employees which you pay through PAYE, Employment Allowance is worth up to £3,000 off your employer’s Class 1 National Insurance bill per tax year. It reduces your employer’s National Insurance bill each time you run your payroll until the £3,000 is used up or you reach the
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TAX ADVISER OF THE MONTH: Jonathan Amponsah
by Stephanie Spicer • • 0 Comments
Originally written by Stephanie Spicer on Small Business
Name
Jonathan Amponsah
Company
The Tax Guys
Title
Director
Qualifications
Chartered Tax Adviser (CTA) and Fellow Member of the Association of Chartered Certified Accountants (FCCA)
Before I was an accountant
Most of my roles have been in accounting, tax or finance related going back to the late 90’s when I started out as a training in firm of accountants in London. I went on to hold a number of different roles as finance officer, management accountant and then financial controller. In 2006 I took the brave decision and quit my high-flying financial controllership role to set up my practice with no savings, no clients and little business management experience. Today the firm has won major awards including the British accountancy award firm of the year for Greater London.
Business or Personal tax or both
Both but mainly business tax and the personal tax for the owners.
Specialisms
Helping business owners run a tax efficient operation, by lifting the tax rocks to find hidden tax reliefs for them. I make business less taxing.
Advice to a client seeking an accountant
Speak to three good ones. Look at their reviews. Never go for the cheapest. Instead find out what you can get for the price they charge. Far better to
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MTD explained – what it all means and why there’s no need to panic
by Stephanie Spicer • • 0 Comments
Originally written by Stephanie Spicer on Small Business
Making Tax Digital (MTD) for VAT came into force in the UK on 1st April 2019, but while the deadline may have come and gone, many businesses and accountants affected by the new rules are still trying to sort the fact from the fiction. Many are still unsure as to what they need to do to ensure that they are HMRC compliant, and crucially, what will happen if they fail to comply with the new rules.
MTD for VAT is the first major phase in the government’s overall initiative to make tax digital, which is designed to make it easier for businesses to keep on top of their day to day accounting. The legislation is intended to make tax administration more effective, efficient and easier for taxpayers by integrating digital record-keeping and enabling businesses to generate and send updates directly from their chosen accounting software to HMRC.
While the government’s intention is to bring the days of foraging for receipts and painstakingly checking through spreadsheets or files for accuracy to an end, many small businesses were quite happy with the status quo, and are reluctant to embrace this move towards digital.
We understand that change can