Being in business is a struggle at times. Read the stories of any successful business man or woman, and none of them will have had a smooth ride to the top.
It is very easy to get caught up in the day-to-day battles. This is especially true in a sole trader/owner-manager business. You often have no-one to tell you whether something is good or bad, someone to add perspective to a situation.
In the early days of my business a very wise friend gave me some advice. He said that when you are working by yourself it is easy to have huge swings of emotion – one day it is great, the next you want to give up. Something very small can tip your mood; one small thing can turn a great day into a disaster.
Often you will then look to blame yourself and come up with all the reasons why you are not capable of running a business. In reality it is probably nothing to do with anything you have or have not done.
But you don’t have anyone to tell you that.
These are my three pieces of advice to help smooth your journey through the ups and downs of business:
Never make a decision off the back of a ‘bad day’. If you are having a bad day, step back and make your decisions later with a clear head.
Always watch the tide and not the waves. Business can be rough and the waves can push you up and down but it is not the wave which we need to look out for. The wave will be here one moment and then will go past us. It is the tide that we need to be aware of, washing us out of our depth or up on to dry land.
Always try to make decisions from a position of strength. We often make bad decisions when we are under pressure or forced into a corner. Just because it seems like a way out of a problem does not mean that it is the right way.
At Altus, we support clients by providing that listening ear and sense of perspective. We are at the end of the telephone line for that quick ‘can I just run this past you?’ call, while our Freelance FD services provide a critical friend on a regular, on-going basis.
If your business receives payment by debit or credit card, you may get a letter from HMRC asking you to check it has all been declared on your 2015/16 tax return.
Last month HMRC launched its Card Transaction Programme – a chance for businesses who may not have declared all their sales to get their affairs up to date under the best possible terms. Laws passed in 2013 give HMRC the power to access data from organisations that process credit and debit card transactions for businesses, which is how they are now able to check.
Some businesses (and their accountants) are now getting letters from the HMRC Campaigns and Projects team, giving them 28 days to:
Check the income on tax returns for 2015/16 is correct
Go back and look at earlier years if a discrepancy is found
There are then 3 ways to respond:
1.If you have additional income to declare, go to cardtransactions.campaign.gov.uk which explains how to bring your tax affairs up to date in a straightforward way
2.If you have declared everything, call 0300 123 9272 to avoid further unnecessary contact
3.If you need more than 28 days to check your records, call 0300 123 9272 to arrange this.
If you get a letter it is because HMRC suspects you of under-declaring income, so don’t ignore it! It is possible that there will be no penalty to pay, or perhaps up to 20% of the tax due, depending on the circumstances. However failure to declare the underpayment is likely to lead to higher penalties or even a criminal investigation.
Providing you have a 64-8 in place your accountant should also get a copy of the letter, but knowing the vagaries of HMRC and the postal service, don’t rely on this!
For help and advice on this or any issues contact Altus here.
Have you ever received your final year accounts from your accountant and realised that the year didn’t go quite how you expected it to?
You didn’t expect the profit to be that low, or you didn’t think costs would be as high. Oh well, it’s too late now, the year is over, the money has been spent, and you have already started the next year.
The following year end comes around and you have the same thought process… sound familiar?
Then it is time to be proactive – and create a budget!
You may budget for your weekly shop, for your holidays or for your wedding; you may budget for your mortgage, for Christmas, for birthday presents, or even budget for your monthly clothes shop. All of us have budgeted for something in our personal lives even if it is just kept in our heads.
So if we budget outside of work then why do many company owners not budget for their business?
The act of creating a budget for a business is very useful, and can be an eye-opening experience.
It forces you to stop and look at what you have spent in the past and make decisions about how much you want to spend going forward. You set an amount and you stick to it.
Businesses need to budget to control costs and understand where their money is being spent and on what. The only way that you can reduce costs is to understand what the costs are in the first place. This will improve efficiency and in turn improve your profits.
If you don’t stick to your budget, the costs get out of control and money often gets wasted.
When you set a budget it helps you to recognise problem areas and spot issues coming down the line. This means you can be proactive and plan for those times early instead of having to deal with them at a moment’s notice.
It also helps you to see when you are likely to have cash flow highs and lows and you can plan accordingly.
Therefore, set your budget – stick to it – your business will benefit.
If you would like any assistance in creating or using a budget to help your business move forward and grow then Altus is here to help. Contact us here.
Making Tax Digital (MTD) is the latest brainwave from the Treasury, and is going to impact pretty much every business in the UK.
We are finally beginning to get some detail fleshed out on the bones of this tax announcement, originally made in the 2015 Budget. We accountants have been pouring over the responses to the consultation process that has been taking place. So what is the digital tax revolution all about?
Making Tax Digital requirements
All businesses with sales of more than £10,000 will be required to maintain their accounting records in a digital format, so out the window with those manual records.
In what has been termed ‘the end of the tax return’, not only will there be a requirement to complete an annual return but also quarterly returns with varying levels of detail depending on the size of the business.
This means that not only will your records need to be in a digital format but they will need to be up to date, at least on a quarterly basis. They will have to be in sufficient detail and accuracy that you will be able - and perhaps more importantly be happy – to complete a return to HMRC.
Accurate bookkeeping
This truly sounds the end of bringing a box of receipts to your accountant at the year end. All businesses will need to either maintain those records themselves or ask their accountant or bookkeeper to keep those digital records up to date.
It is understood that spreadsheets will be an acceptable method, but of course they do need to be accurate enough to produce the necessary quarterly reporting. HMRC states that free software will be made available for the smallest of businesses with the simplest affairs but it is unclear at this stage how comprehensive that will be.
It is likely that this is going to force more small businesses to move over to cloud-based bookkeeping systems as they try to balance the additional cost of maintaining their records to the required standard (see more on cloud bookkeeping here)
Many businesses, whether they currently use digital methods of bookkeeping or not, will have to significantly change their current processes to comply. Especially those that are below the VAT threshold and have not had to deal with any form of quarterly reporting before.
Tax timetable
When is all this happening? Well, not as far away as you might think. The current plan is that Making Tax Digital will apply from April 2018 – yes, just 12 months away. In a concession HMRC has announced that businesses below the VAT threshold will have a further 12 months to comply (April 2019).
However, this change is starting with sole traders and limited companies will follow on afterwards.
Of course all businesses should have accurate and up-to-date accounting records already, to provide good information for business decision making. Unfortunately, it is still all too common for business owners to ‘learn to their surprise’ about the results for the year when they sit down with their accountant 6 months after the year end!
Perhaps MTD will have a positive impact on businesses. There is so much information for making better, more informed business decisions hidden away in the accounts systems of small businesses.
Too many business owners see the bookkeeping as just a cost necessary to keep the taxman happy. This new requirement may be the catalyst needed to push that information into the light. Perhaps it will get business owners to seek some value from the extra work that undoubtedly will be required.
If you are worried about getting compliant with new digital requirements, want assistance with your bookkeeping or need more information to make better business decisions then Altus is here to help. Contact us here
Remember your partner and kids? Chances are that if you run your own business, you don’t see as much of them as you’d like – or should.
Finding the right work-life balance is crucial for small business owners. The Mental Health Foundation calls the growing demands of work “perhaps the biggest and most pressing challenge to the mental health of the general population”.
Smartphones and tablets might help us keep in touch when we’re on the move during the working day, but unless we are strict with ourselves, they can extend our working week into 24/7 and intrude into our holidays.
When I set my accountancy business Altus up, I was determined I would not be one of the many business owners who blurred the lines between work and home. So the mobile phone is switched off at evenings and weekends, and I will respond to any messages as soon as I can next day. Of course there will be times when you need to work that bit longer to meet deadlines, but unless you are a brain surgeon on call, the chances are that whatever issues arise outside office hours will not be a matter of life and death.
Busy-ness doesn’t equal success
Working long hours and at weekends can become a habit and we need to stop and ask ourselves if it is necessary, or do we do it because we feel we should? Being busy is not a barometer of how successful we are or how well our business is doing. The order book and P&L account will tell us that. It may have much more to say about our effectiveness.
It’s essential to honestly analyse your time – do you actually know what you have spent your time on? Spend a week faithfully noting down what you do and for how long – it may give you a shock.
There’s an old and true saying that sales are vanity, profit is sanity but cash is king. Are you spending your time chasing sales, running quicker and quicker to keep up, when it is profit you should be focusing on?
If you cannot get everything done in a usual working week, it can point to one of three things:
You are trying to do too much yourself
You are not working efficiently
There is something fundamentally wrong with your business model
Remember the 3 Ds – delegate, dump, do. When you have analysed what you are doing, identify the things you have to do.
Learn to step back
In my experience many business owners are by their nature control freaks – you have to learn to accept that someone else will not do it quite the way you would, but their way is not necessarily wrong. Do you think Richard Branson does his own payroll?
The age-old excuse is that ‘I can’t afford to pay someone to do it’ – no wonder when you are spending all your time doing ineffective, unnecessary things. Spend that time making profit and you will have plenty of cash!
I was delighted recently when one of my clients said that thanks to Altus, he was now able to spend more time with his family, doing the things he loved.
A good accountant should be someone who wants to support your business throughout the year, providing services that leave you free to focuson what you do best.
Having worked in companies of varying sizes, and building up my own business from scratch, I know the pull to put in long hours, but it should never become the norm. At Altus we work with businesses to provide the services that they don’t have the time or expertise for, and I can also act as a ‘critical friend’, advising clients on how to be more effective.
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