Choosing the right Accountant for your business
Choosing the right accountant for your business
So every good business needs an accountant. That should be – every business needs a GOOD Accountant, but how can you tell who’s good and who’s not? I’m going to take a brief look at how you can go about choosing the right one for your business:
1. Get recommendations from business associates or colleagues. Alternatively why not ask your bank manager or local business support groups in the area.
2. Once you have your recommendations and you’ve narrowed it down to a select few it is very important to check that the accountant is suitably qualified. They should also be a member of an accountancy body such as the Association of Chartered Accountants (ACCA) or the Institute of Chartered Accountants (ICC).
3. It’s important that the accountant has experience in working with the business field that you operate in. So you should ask what how many businesses of a similar size they work with and whether or not they have experience working in your business sector.
4. Setup a meeting to discuss the needs of your business and supply him/her with a copy of your business plan and details of the areas in which you want them involved. This can be anything from business advice to financial reporting and tax auditing work.
5. How much does the accountant charge and can you afford it? It is also worth checking if there are fixed fees for annual audits and when these fees should be paid.
Despite the points mentioned above it is also that the accountant you will be working with makes you feel comfortable and at ease. So probably the most important question to ask yourself once you’ve taken the above into consideration is – Do you feel comfortable enough with this person to discuss your business and any problems you may face?
In addition to this I would also continuously price compare between your existing accountant and what other firms offer to ensure you are getting value for money – but that’s just common sense.
For more business related help and advice check out the following:
How to write a business plan – 10 top tips
How to choose the right accountant
Tips on choosing the right accounting software for your business
Pre-Budget Report benefits small businesses
Small buinsess benefit from Pre-Budget Report
Excellent news for small businesses was announced by Alistair Darling as part of his pre-budget report today.
The measures Mr Darling is putting in place as a result include:
1. The increase in Corporation tax for small businesses to be deferred, leaving the 2010 tax rate unchanged.
2. The Enterprise Finance Guarantee scheme for bank loans to small businesses is to be extended for another 12 months; guaranteeing an additional £500 million of commercial loans.
3. The Time to Pay scheme that allows firms to spread out tax payments will be extended for as long as needed.
4. The Strategic Investment Fund that supports high-tech projects will be given a £200 million boost.
The only real down-side to the report was the announcement of National Insurance contributions to be increased by 0.5% for employers, employees and sole-traders. In addition to this Value Added Tax (VAT) is to be increased from 15 – 17.5% which is expected to affect consumer demand.
I expect EVERYONE (except the banks) will be happy to hear that the banks are to be taxed a one-off 50% payment for every bonus they pay out over £25,000, especially as many of us are still asking why are investment bankers receiving such large bonuses for doing such an appalling job?! Didn’t they get us in this mess in the first place?
Probably, most importantly of all, Mr Darling added that although this year has seen a drop of 4.75% to the economy we are expected to see growth (albeit slow) over the following three years. In 2010 the economy is expected to grow by 1 – 1.5% and in 2011 – 2012 the UK expects to see an economic increase of 3.5%.
Other useful links:
Small businesses to benefit according to Pre-Budget Report
BBC’s take on the Pre-Budget Report
Telegraph’s take on the Pre-Budget Report
Small business support schemes inadequate
Small business support schemes inadequate
According to small businesses in London the support schemes that have been put in place are inadequate, however, according to research carried out by Business Junction, only 22% of the 400 small firms questioned have actually accessed the schemes that the government have put in place. Over half of the companies questioned believe that the schemes are failing to make any impact at all.
The Director of Business Junction, Mark Herring, suggests that ongoing support in the capital must be examined and the London and national governments should be talking to small businesses to discover why the present system in place is not working and ideally “create a new, fairer and easier process.”
It doesn’t help that according to research at least 50% of all overdraft applications made to banks by small businesses are still being rejected. This, in turn, suggests an unchanged attitude to lending despite the cries for more and the insistence of our government demanding that the banks relax their attitude to commercial lending in order to help small businesses boost our fragile economy.
Curiously enough, regardless of these rather grim figures, 83% of the small businesses surveyed expect turnover to increase or at the least stay constant in the first quarter of 2010, compared with 75% in the second quarter of 2009.
Despite what we might think, in order for small businesses to reach these optimistic figures we still have to partially rely on what Alistair Darling announces in his Pre-Budget Report on Wednesday 9th December 2009 before making such flamboyant statements.
Other useful links:
BCC forecasts low expectations prior to pre-budget report
RBS offers funding to small businesses
Industry leaders call for a change in small business lending
Balancing the UK’s budget – will Mr Darling get it right?!
Balancing the budget - will Alistair Darling make the right choice?
Small businesses await Alistair Darling’s Pre-Budget Report (PBR) with a certain amount of trepidation. I suppose the question on many of our lips is:
With this economic recession ever in the background, with lending at its weakest and consumer confidence still low, will Mr Darling make the right choice?
However, what exactly is the right choice for small businesses? Let’s take a quick look at some of the suggestions put forward by the Federation of Small Businesses (FSB):
1. National Insurance rebate in 2010 for small companies with less than 50 new employees who create new jobs.
2. No corporate tax increase – although current speculation is that this is likely to see an increase. It’s important to note that a drop in corporation tax could encourage multinational companies to remain in the UK and may encourage other multinationals to relocate to the UK – boosting our economy.
3. No increases in employers’ national insurance contributions and getting rid of plans to increase this in 2011.
4. A delay to the VAT increase in January 2010 from 15 – 17.5% (there has been speculation that this could increase by as much as 20% – let’s hope not otherwise it’s highly likely that we will see an even bigger drop in consumer spending.
5. Provide automatic business rates relief.
If Alistair Darling makes the right choices regarding the budget this could make all the difference in helping to boost our flailing economy. However, if not, we could be in for a longer economic slump than any of us anticipated. So pray to whatever deity you worship that he makes the right choice, I know I will be!
Other useful links:
BCC forecasts low expectations prior to pre-budget report
Pre-budget report – Q&A on what businesses can expect
Does my business need a plan?
Does my business need a plan?
With the current economic recession taking its toll on small businesses everywhere more and more emphasis has been put on the lack of financial help being provided by the UK’s banks. But what can you do to help your business to ride out the rest of the recession?
Ensuring that you have a cohesive business plan is a start. According to a study by the Bank of Cyprus UK 46% of small businesses out of 500 companies reviewed lack a business plan of any kind.
There are a number of elements you should consider when writing a business plan such as who will read my business plan? Let’s take a look at who your business plan will (or could) be aimed at:
1. You – the business owner. If you write a long-term business plan (i.e. 3 – 5 years) then it is important to retain a sense of what you are doing and what you want to achieve. The trick is to stay focused on your goal – having your business plan to hand can help you do this by reminding yourself of your business’ aims and objectives.
2. Potential investors. Partners, friends and colleagues won’t want to invest in something that seems implausible – no matter how much you might believe in it unless you can show them an intelligently laid-out plan that can clearly show them that your business has a clear, long-term goal as well as how your business could benefit from further investment from them.
3. The bank manager. Not everyone can rely on friends, colleagues or family to invest in their business, besides, not everyone has a lot of money to invest these days. So the next best thing is looking to your bank for overdrafts, commercial credit cards and loans. The majority of bank managers require small businesses to produce a coherent, well structure plan before even considering an offer of a loan let alone extended lines on credit cards or overdraft facilities.
Now let’s take a quick look at what you need to consider when writing a quality business plan:
• If you are starting a new business your plan needs to assess every aspect of the business and show how it can be successful.
• If your business has been established for a while but you are in need of investment then you will require a business plan to convince those investing capital into your company that you can and will make it successful.
• Who is your business plan for? This is a very important question as you will need to tailor it to the reader’s requirements and present it in a concise and logical format. This should help the reader to gain a good understanding of your business and make decisions based on the information you have presented them with.
• Consider the strengths and weaknesses of your business. This will help you to take advantage of your strengths and aid you in turning weaknesses into strengths.
• Writing a business plan yourself allows you to analyse your business at the fundamental level – without understanding your business from the ground up how can you ensure your company’s growth and maintainability?
• Research your market thoroughly and understand your competition. Without a clear understanding of the market you’re entering how can you expect to compete in the industry? Understanding your competition will allow you to identify how big the barriers to entry are and more importantly – are you able to compete at any level with the existing players?
• What opportunities are there? Without including this in your plan it is a sure-fire thing that investors will put their money in something more secure like a savings account, shares or another business.
• All key areas should be included in the plan – including, your product or service, the market, competition, the management team, marketing and sales, operations and finance.
• It’s important to calculate your costs however; a more crucial factor to the success and failure of a business is the level of sales. It is therefore a requirement to produce a cash-flow and break-even chart. This should clearly show the reader how many sales need to be made to ensure that all costs are covered.
• Have your business plan reviewed by a detached individual who can offer constructive criticism on all aspects of your plan. Once reviewed elements of your plan may need to be revised.
There is of course so much more to writing a business plan – I have included a number of links to resources and information that could help you:
Nearly half of small firms lack a business plan
Starting your own business – a mini guide
Royal Bank of Scotland to offer financial aid to small businesses
Royal Bank of Scotland to offer financial aid to small businesses
Possibly good news for small businesses today, the Royal Bank of Scotland (RBS) announced that they would be making essential improvements to the borrowing terms for their 1.2 million small businesses that currently do business with them.
The RBS have announced the following changes to-date:
Free banking services for all new business start-ups.
They will cap their overdraft charges at 1.5% for any business that has a turnover under £25 million. In addition to this they have guaranteed that they will not withdraw existing overdraft facilities without a breach of contract.
They have also agreed to cap loan arrangement fees for small businesses at 1.5% as well as renew lending on the same of improved terms for at least 12 months.
Despite this apparently good news there have been mutterings that the Government have effectively pushed them to this decision. This is something that RBS’ small business chairman, Peter Ibbetson, vehemently denies and is in fact quoted by the Daily Mail as saying:
“This is the right thing to do; we are trying to respond to what businesses are telling us.”
To me this sounds like a bit of a cop-out, however, before we pass judgement let’s take a look at some of the facts of the case:
The RBS reported in the third quarter that lending had fallen by £500 million in the first nine months and then argued that this was partially due to lack of demand. Interestingly enough RBS has produced this long-term improvement plan just after the Treasury demanded that they provide evidence that businesses are not choosing to apply for loans.
Apparently the pledge of not withdrawing overdrafts has been in place for several years, however, instead of requiring their customers to accept that it can be withdrawn at any time they have put in an extensive list of terms and conditions that must not be broken. If they are broken, no surprise, they remove the overdraft facility!
The promise that overdraft charges will not increase depends on whether or not the risks associated to lending to the customer has risen. So if you’re operating in a declining environment then there is a good chance the charges will increase. Considering we are trading in one of the most serious economic recessions in the past hundred years doesn’t that include everyone?!
So they reserve the right to charge higher fees for firms in financial difficulties – I can’t see how this is beneficial to small businesses… can you? Let’s face the facts – they’re simply going to charge an already struggling company more money and make their financial situation even worse with high bank charges!
Other useful links:
RBS offers funding to small businesses.
Saving your business money and helping the environment
Saving your business money and helping the environment
The Department for the Environment, Food and Rural Affairs (DEFRA) released a report that states that businesses in the UK could save over £6 billion by putting some easy money saving steps in place.
By managing resources efficiently small businesses could reportedly save themselves over £100,000 per year as well as help to bring down the levels of greenhouse gas emissions.
It’s also worth remembering that during a time of recession small businesses could use £100,000 in a much more useful way such as investing in sales, marketing and product development than throwing it away on utility bills.
Let’s take a brief look at how putting just a few simple steps in place can help optimise your company’s efficiency and save you money:
1. When not being used all office equipment should be switched-off. This includes overnight, weekends, bank holidays. Switching-off just one computer and monitor could save you up to £35.00 per year.
2. Switching off lights in empty rooms and using energy efficient light bulbs could save your company up to 15%.
3. Constantly dripping taps could cost your business a further £400.00 a year. So ensuring you turn taps off fully or spending a little to get a tap fixed could save you a lot of money.
4. Partnering with other businesses to recycle waste or selling it to be used as raw materials could save you 4% of your annual turnover with waste management techniques such as this.
5. Your company could save 8% on your company’s heating bill by simply turning down the thermostat by a single degree!
6. Save up to a month’s worth of fuel over a year with smarter driving techniques such as reducing load and good vehicle maintenance.
7. Invest in efficient equipment to help cut your energy, transport and water costs. It is also worth bearing in mind that the government are running an interest-free energy efficient loans through the Carbon Trust.
8. Refill inkjet cartridges instead of buying new ones. Refilling old cartridges in printers, fax machines and photocopiers is a fraction of the cost of buying them brand new. In addition to this use email where possible and if you do need to print out documents try setting your computer to print double-sided to reduce the amount of paper used.
9. Publicise your company’s commitment to reducing your environmental impact as more than a third of customers will usually favour recyclable products or those with minimal packaging.
10. Some suppliers offer “take-back” schemes for unused products. You may be able to get some money back for them.
Useful links:
Making your small business more energy efficient
Zero percent interest loans for energy efficient equipment
Banks win in overdraft bank charges case
Banks win in overdraft charges case
With the recent ruling on excessive bank charges on overdraft fees by the Supreme Court in favour of the banks there has been increased speculation that the law has been wilfully misinterpreted so that further financial issues for the banks can be avoided. It has been widely acknowledged that should the Office of Fair Trading (OFT) have won the case against the banks this would have resulted in a loss of £2.6 billion annual income to the banks. It seems to me that both the Supreme Court and the banks in the UK forget we, the taxpaying public, now part own the banks.
I suppose in the current economic crisis that is still gripping the UK, the ruling probably should not come as that much of a surprise to us. Unfortunately it is relatively easy to understand why they ruled in favour of the banks. However, this does not mean that they were right.
Consumers and small businesses alike have every right to be appalled by the outcome of this case, made worse by the pompous arrogance displayed in the British Bankers’ Association (I can think of a better name for them!) comments that the charges were an important part of current account services and the amounts were “not assessable for fairness”. They went on to say:
“We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties.”
However, considering the banks make a third of their retail revenues from unarranged overdraft fees that are not only difficult to understand, are not transparent in any way and are not subject to consumer control how much clarity this case has actually brought is debatable really! All it’s really done is highlighted that these were all issues to begin with.
It is also worth considering that the cost to the bank of unauthorised overdraft fees is as little as £2.50 and yet they feel the need to charge a flat rate of anything up to £35.00 a time! In reaction to the outcome of this case the Liberal Democrat Leader, Nick Clegg, stated:
“Regardless of the legal position, it simply isn’t right that someone on a low income should pay £25 or more to their bank just because they’re overdrawn by a pound or two.”
Unfortunately, as well as consumers, it is also apparent that many Small businesses are likely to continue to be affected by the unfair, excessive charges made by the banks when an account goes over the agreed overdraft limit.
The question has to remain – if the UK’s small businesses are seen as the “backbone” of our economy and require more money pumped into them why are banks consistently throwing up restrictions such as unfair overdraft charges, limited access to funding as well as the exorbitant annual percentage rates (APR) on commercial loans?!
The good news is that there are other legal avenues for the OFT to go down should they wish to pursue a case against the banks. We will just have to wait and see if they choose to or not. In the meantime the Government have stated that they will continue to work with the banks to work out charges that are fair to everyone. As a warning shot, Sarah McCarthy Fry, the Exchequer Secretary to the Treasury, stated they would take further action against the banks if necessary.
Video coverage:
Related links:
Shock overdraft charges ruling in favour of banks
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How do I maximise sales?
How do I maximise sales?
This is a key question for many small businesses looking to grow effectively.
In order to maximise sales you really need to put a plan of daily business activity in place that allows you to prioritise tasks and maximise sales performance. I would like to look at this as optimising your time effectively:
1. Avoid scheduling too many appointments in one day otherwise it will be harder to invest more quality time in important prospects.
2. All prospect or customer enquiries and requests should be dealt with quickly and efficiently. Failure to do this could result in loss of business and it’s better to deal with it when it’s still fresh in your mind.
3. Prepare daily to-do lists the previous day to ensure that it’s ready in the morning otherwise you may find your time taken up with additional tasks that you could have prioritised for the night before.
4. Plan your presentation carefully – see how you can personalise it to the prospect you are selling to.
5. Always set aside some time in the day to prospect for new business. Try to promote your product/service thoughtfully and positively to prospects.
6. Manage relationships with existing customers consistently. I think customer relationships are crucial to not only retain existing business but to establish yourself and your organisation as a viable, professional organisation.
7. Automated list management is a very quick, useful way of tracking and managing prospects. For example, email marketing systems will allow you to upload a list of prospect email addresses and mass-mail to them rather than spending too much time sending out individual emails.
8. The key to being successful is to have a good work/life balance. Spending all your free time focusing on sales and work will not only leave you with no real personal social life but also means that you aren’t leaving yourself to wind-down after a tough day. Personally I like to go down the gym and take out my frustrations on the treadmill or simply go home, have a beer and spend time with the family.
Now don’t get me wrong – I am as guilty as the next man, and I have been known to sit at my laptop until late into the evening working on projects, much to the annoyance of my wife and daughter I might add. Despite this I have started to learn that switching off the PC or work phone in the evening is as important a step as any other on this list. My advice to any aspiring business man is to allow yourself time to breathe otherwise you’ll drown in your own ambition.
More useful links:
Taking a larger bite out of the marketplace
Ten tips to maximising your sales through ECommerce
Small businesses affected by lack of bank funding
Small business affected by lack of bank funding
Unsurprisingly the biggest factor adversely affecting the UK’s economy is still the exorbitant charges that are being made by the banks on commercial loans. As a result of these excessive charges small businesses are finding it increasingly more difficult to obtain much needed credit.
It is often heard that small businesses are the “backbone of the British economy,” and consequently the crucial element in promoting economic recovery. This is undoubtedly going to be hindered by the likes of the UK’s greedy banks that have not only raised overdraft charges but are now refusing loans or recalling existing ones. Let’s suffice it to say – if the UK is ever likely to recover from the recession it won’t be thanks to the banks.
The head of the Federation of Small Business (FSB), Stephen Alambritis, stated that if small businesses are in a position to obtain funding from the bank, they now come with additional fees and charges. He has called for the government to keep a closer eye on the banks as 89% of small businesses tend to do business with the big four high-street banks.
I believe that what the UK’s banks fail to realise is what small businesses offer the UK. Let’s take a look of some of the benefits small businesses bring to the country:
- Small businesses account for over 50% of all turn-over by UK companies.
- Small and medium sized businesses account for 60% of private sector jobs – without these small businesses even more people would be out of work. What the banks should be considering – is that by aiding small business growth in the UK this will not only have a knock-on effect to boost the economy but will open up more jobs to those people currently out of work.
- The majority of young people under the age of 25 in work as a result of apprenticeships can be attributed to small business. I believe this is 7 out of 10 young people are apprenticed to small businesses.
- Research shows that small businesses grow a significantly faster rate than their larger counterparts, thus creating opportunities for more jobs in the future.
We are fortunate that the UK’s government have recognised the financial problems faced by small businesses in the current economic climate and continue to urge the banks to increase lending to viable business schemes. We are also fortunate that there are governmental schemes that have been set-up to alleviate the pressure on small business such as tax deferrals and the enterprise finance guarantee scheme aimed at providing government backed loans to small businesses.
So let’s hope that the banks of the UK start to recognise the importance of small businesses before it’s too late.
Useful links:
Small businesses think bank lending terms excessive
Access to finance still a problem for small businesses
Business News
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