Tag Archive | "entrepreneurs"

Will he or won’t he scrap the 50p income tax rate?

The big day is here at last! It’s Budget Day and accountants will no doubt be tuned in at lunchtime to hear what delights George Osborne has in store for us over the coming year.

The will he or won’t he debate over scrapping the 50p income tax has continued to rumble right up until this week. Differing views have been bandied about with some people saying it will be scrapped and a different tax imposed on the wealthy, probably on their property.

A different idea sprang up in the Daily Telegraph at the beginning of the week. According to the paper, the Chancellor is set to tell us that the 50p rate is deterring entrepreneurs and investors. The article goes on to say that the top rate will be a replaced by one at 45p in April next year. Treasury officials think that this reduction will actually bring in more revenue because fewer taxpayers will attempt to avoid it.

Labour and Lib Dem MPs are highly unlikely to welcome the move as it will be seen as a way to help the wealthy. Lib Dem ministers had agreed that the rate should be scrapped providing a “tycoon tax” was implemented in its place.

The Chancellor is also expected to announce that tax-free personal allowances will increase more than originally expected in April 2013. It is understood that this was signed off last Friday after last-minute coalition talks.

George Osborne says this Budget will help the working population. The UK wants to be a top economic power and the only way to achieve that is to confront our problems.

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Are contractor accountants providing online services?

Accountants for contractors might want to brush up their online skills after Sage reported that online services will be the biggest growth area over the coming 12 months.

41% of the accountants who took part in Sage’s research said they will be focusing on online services for the rest of this year and nearly 75% said their working practices would change over the next three years.

It would appear that only 29% of accountants carry out the majority of their work in the office and now that around 60% of accountants are using devices such as tablets and smart phones, clients are becoming increasingly interested in online collaborative reporting.

However there is a difference in opinion over what services should be available using mobile apps. SMEs think business planning advice, final accounts and financial services should be offered whereas accountants say mobile technology is best suited to bookkeeping, compliance services and tax planning apps.

Jim Scott, the MD of Sage Accountants Division, said that sharing financial information online is a natural progression for entrepreneurs who have been brought up with Apple, Facebook and Google and accountants should take advantage of the opportunities available.

Online accountants need to demonstrate that they understand collaborative working practices and are able to provide them if requested. Not every business is suited to online accounting so accountants and clients must be able to choose the way in which they access data.

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FPB calls for national day to recognise UK entrepreneurs

Freelancers may be interested to learn that The Business Woman’s Network and the FPB are supporting the call for a national day to celebrate UK micro business owners.

The online business knowledge website wanobe.com launched the idea of a day to celebrate the UK entrepreneurs who run the 4.5 million small firms in Britain.

David Noble, the managing director of Wanobe.com said the men and women who run the UK’s small businesses represent dynamism for the battered economy at a time of high unemployment and are the nation’s unsung heroes.

95% of all companies in the UK are micro enterprises and between them they employ 33% of the workforce. Noble says it’s now time to acknowledge the vital role entrepreneurs play in driving the economy.

The FPB has already launched its own initiative called ‘Get Britain Trading’. Phil McCabe, the PR manager for the Forum, said although micro-business entrepreneurs are spearheading the fight to drive the British economy, a lot of people have no idea what it takes to run a business. Having a dedicated day to celebrate the contributions and efforts of small business entrepreneurs would be a wonderful way to highlight how commitment, creativity and bright ideas generate new jobs and help stimulate economic growth.

The Business Woman’s Network’s Mandie Holgate, explained that there are now more than 950,000 self employed females in the UK and around 15% of firms are majority owned by women. They should be extremely proud of the contribution they make to both society and the economy.

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High street banks are frightening off small businesses

A lot of small businesses and accountants for contractors are too scared to approach their bank for a loan and instead they are hoarding money that could be put to use growing their business, according to a new report from the Bank of England.

The BoE study found that small firms are worried in case their bank cuts their overdraft facility and are sitting on reserves. Entrepreneurs worry that asking for a loan will mean their existing borrowings will be reviewed and their overdraft may be withdrawn. Experts said the results show that small companies are still suffering financial nightmares more than four years after the start of the recession.

Lending is not so much of an issue for larger organisations, but start-ups and small businesses are still finding it difficult to access credit. And the study shows that if they manage to secure a loan they face elevated fees and a long drawn out application process.

Another survey, this time from Syscap, found that 75% of SMEs think the lending margins charged on loans are too high.

Only 8% of the respondents to the Syscap survey said it was now easier for them to access a bank loan. 33% said the situation had got worse over the last year and another 12% said it had worsened in the last three months.

50% of small business owners use credit cards, personal loans or savings to fund their business, rather than approaching their bank for help. Of the firms which have asked for finance from their bank in the last 12 months, more than 33% were refused first time around.

The high street banks say they accept around 80% of applications from SMEs but this figure does not take into consideration the large amount that are put off applying.

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Why you should know your market before you apply for a loan

Owners of small businesses, contractors and freelancers should have in-depth knowledge of their own sector before approaching banks for investment funds, advises the British Bankers Association.

The BBA claims that SMEs will have a better chance of getting a loan if they are prepared to answer a barrage of questions about their respective industry.

Angela Knight, the BBA’s chief executive, said that it is imperative that you understand your market; what it looks like, is it a growth market? Is it vibrant? How large is your customer base?

Business owners should also compile a realistic set of forecasts showing costs and projected income. These numbers should be discussed with the bank to make sure they look right and are presented correctly.

In the financial year ending April 2010, total business angel investment activity dropped to £60.5 million, a decrease of 3.7% on the previous year, according to the Annual Report on Business Angel Activity in the UK.

Entrepreneurs have found it increasingly difficult to obtain funding for new start-ups. As a result, owners started exploring angel funding whereby wealthy individuals provide private equity and get shares in the business in return.

However, business angels were also affected by the recession and they had less money to invest in new ventures. The ARBAA report also showed that there were 4,555 registered business angels in the UK between 2009 and 2010, but only 37% of them were active and less than 10% made any investment during the period.

Despite the drop in activity, Mark Prisk, the business and enterprise minister, said the study shows the important role business angels have to play in financing new businesses. He went on to say he hoped businesses will continue to look to angels when they need business expertise and guidance as well as funding.

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Contractor accountants could be in demand this year

Accountancy recruitment is continuing to increase according to the latest Ashdown Group Jobs Index.

The profession registered a 13.52% rise in recruitment during December and January and a 5.95% increase last month.

The BCC and the CBI have predicted Q1 economic growth and as business confidence returns to the marketplace companies will be looking to increase their headcounts. Financial professionals will be in demand as their numerical ability is vital for businesses looking to implement sustainable growth strategies.

Ashdown’s director, John Lynes, said it is not clear whether churn or departmental expansion is responsible for the increase in vacancy numbers. He pointed out that the considerable growth in online recruitment has made it easier for financial professionals to apply for new positions. Whatever the reason, more accountancy positions are now available.

He continued by saying that unless large numbers of accountants are quitting the profession, the trend points to new hirers. This bodes well for contractor accountants this year, both in terms of prospects and the ability to command higher rates.

Meanwhile, entrepreneurs are concerned that limited company contractors may be receiving poor business development and marketing advice from their accountants.

On the whole, accountants do not understand marketing and business development. Robert Craven, a marketing consultant, said a lot of accountants appeared to be interested solely in surviving and are making no attempt to win new business.

It has been suggested that this lack of interest in marketing could lead accountants to give aggressive cost-cutting advice to business owners.

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Cameron lays out plans to help create 40,000 new businesses

The government has promised to help 40,000 new businesses start up during the course of the next 3 years.

Last week, David Cameron announced that the government run Business Link service is to be overhauled in order to provide more support to British entrepreneurs, a move that could also benefit accountants for contractors.

The Government currently provides various online resources to support businesses but there have been complaints that it’s time consuming to trawl through different websites looking for information. 170 publicly-funded websites will now be condensed into a single Government business resource site.

The new Business Link website will allow companies to register online, sort out their tax affairs through the business tax dashboard, search for public sector contracts and find information on legislation and training.

The news came as the coalition looks for additional ways to stimulate job creation and boost economic growth.

The Prime Minister said that during 2011 and beyond, the government will focus on driving job creation and supporting growth. In order to transform the economy and create many thousands of new job opportunities, the government must help new firms start up and SMEs grow.

The government also intends to offer grants and loans, under the New Enterprise Allowance scheme, to help 20,000 unemployed people start their own business if they can demonstrate a robust business plan. Back in October, the coalition said it would offer this help to 10,000 individuals but it has now doubled the figure.

Under the scheme, people wanting to become self-employed will receive £1,725 in allowances over a six month period. They will also be paired with a volunteer mentor who will examine their business plan and if it is robust, the individual will receive a loan from Jobcentre Plus, up to a total of £1,000, to cover business start up costs.

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Vince Cable celebrates Global Entrepreneurs Week

The government is determined to get rid of quangos and yet advisory groups are already popping up around the small business regulations and tax issues that affect contractor accountants and their clients.

On Monday, Vince Cable, the business secretary, created the Entrepreneurs’ Forum to advise the coalition on business and enterprise policies. The group, which is made up of high profile entrepreneurs, will meet four times a year to give informal and personal advice. 16 entrepreneurs have already been appointed to the forum, including Jan Fletcher and Sarah Tremellen, and there may be up to 10 more members.

Setting up the Entrepreneurs Forum was one of the ways Vince Cable marked the start of Global Entrepreneurship Week. He also created a new business mentoring network. The network consists of around 40,000 business mentors who will help start-up enterprises across the country access information and advice on running a successful business.

The business secretary called on firms around the country to join the mentoring network. People who have started up their own successful company have to be the best mentors for new start-ups, he commented.

Cable also remarked that start-up businesses and limited company contractors are going to be important to the country’s overall economic recovery. He said that not only do start-ups create jobs, they stimulate innovation and provide competition for existing businesses which encourages them to increase productivity.

Recently, the government confirmed that the Enterprise Finance Guarantee scheme will continue for the next four years. About £2 billion will be made available to firms through the scheme.

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Online accountants in for a rocky ride

Contractor accountants should take note that the CBI warned recently that although the economy has been showing signs of improvement, challenges and uncertainty still lie ahead.

The comment came after the Bank of England decided to maintain the historically low interest rates at 0.5% last week.

The head of economic analysis at the CBI, Lai Wah Co, said that although the move was widely expected, there is growing disparity amongst members of the Monetary Policy Committee over the strength of the economic recovery.

GDP has increased by 1.1% in the past three months according to government figures but this is expected to slow down during the second half of 2010. The recovery is being supported by an exceptionally loose monetary policy and it may be sensible to move towards gradually withdrawing this monetary stimulus, the CBI expert remarked.

Meanwhile, the majority of the UK’s small businesses and limited company contractors have still not returned to pre-recession levels of profitability. 70% of British entrepreneurs have not seen their profits return to normal after the credit crisis, according to RSM Tenon’s Business Barometer.

9% of entrepreneurs believe they will have to wait for at least another 3 years before their business returns to normal, 20% think between 2 and 3 years and 27% say 1 to 2 years.

Over 40% of entrepreneurs have had to review their business through fears of a double dip recession and 22% think that a lack of cash flow could seriously threaten their operation in the coming 12 months.

The head of recovery at RSM Tenon said that they are expecting to see corporate insolvency levels remaining the same as over the past two years as business owners still struggle to secure additional funding.

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Recession inspires increase in contractors

The recession has inspired more of us to become self-employed according to Kensington Mortgages.

They recently published a study that found that just under 25% of the self-employed have been so for under 2 years. This equates to 1.2 million people changing their employment status since March 2008. And half of them became self-employed within the last year. The report also shows that the UK now has 5 million freelancers, contractors and temporary workers.

But unnecessary taxes and a lack of available bank support is hampering opportunities.

Rhiannon Davis from Shelter Offshore believes that businesses could get more support if they moved abroad. She said that UK law is restrictive and taxation excessive citing Class 4 National Insurance Contributions as an example. Effectively, they are a tax on tax, she said.

It seems some of us agree with her as 24% of the self-employed are thinking of setting up abroad according to a recent survey by foreign Direct Currency.

The outcome of the General election is still unsure but should the Conservatives form the next government, contracting may become even more attractive. The PCG expects the Tories to review IR35 which has been seen as a major factor in putting people off becoming freelancers.

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