Tag Archive | "small business"

Small Businesses to be Offered Alternative Finance

Every year there are thousands of small business owners that are turned down for loans, but a new scheme is looking to offer alternative finance.

It seems the mainstream banks don’t want to lend you money if you’re a small business, freelance professional or contractor.

Recent figures show that over £4 billion worth of loan applications are turned down every year, although it now looks as though there is a solution if you are one of those people who just can’t get a loan for your business.

The new scheme, which is being endorsed by the government, will bring small business owners in contact with alternative financing sources, such as online lenders who specialise in bad credit or peer-to-peer lending companies.

My opinion? I think this is a great idea, and long overdue of course, especially when you consider there are thousands of hard-working freelance and contractor professionals who are no being approved for loans.

The figures show that currently only 3% of small businesses who get turned down for a loan seek out alternative financing, but now, with this new scheme and government backing we should be seeing more of the self employed getting the loans they need.

I’ve always said that I think many of the mainstream banks are way out of touch with reality, and some of the criteria they want small business owners to meet in order to get a loan is simply ridiculous. Hopefully, this new scheme will give people the alternative they need to start going away from banks and towards online options that are more with the times.

Even the Chancellor, Philip Hammond agrees with me, as he recently commented, “A refusal from a bank should not be the end of the road for a small business, and thanks to the finance platforms being launched today, now it won’t be.”

This all comes at a time when some of the more well known banks have been getting a lot of criticism for the way they treat small business owners. Well, maybe the tables are about to be turned? Let’s hope so.

One thing to note is that while many small businesses, freelancers and contractors should find it easier to get a loan, that doesn’t mean anyone can get one.

Let’s not go back to the days where being financed was so easy even a new business with no track record could get thousands of pounds overnight, and then a few months later go bankrupt.

Sensible lending is always the way forward, and small businesses should still have to check boxes if they want to be approved, including having a proven track record of sales and profit, as well as a solid business plan.

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The Government’s Guide to Becoming Self-Employed

Not all contractors choose the limited company route as a payment structure. There are, or can be, good reasons why you’d choose the umbrella or sole trader route, instead. If choosing the latter, it’s possible you’ll forego an accountant, too.

Whichever structure you decide is right for you, setting up shop on your own can be daunting. It’s not like you have a line manager or head of department to make a decision when you get stuck. The buck stops with you.

It doesn’t deter thousands of self-employed people from tackling their own accounts, tax, NICs, etc. But there are times when it can all get a bit much.

So to whom do you turn when you don’t have a specialist accountant to fall back on?

Knowing your trade isn’t the same as knowing your business

It’s taken as read that you know the industry upon which you’re launching your business. Otherwise, how are you going to compete with others who are more experienced?

This is especially true today in a world where gaining trust online is so important. You must at least grasp the concept of what the market expects of you and your business.

But what about the other stuff that goes into running a business? Self-Assessment, trading in a global capacity online, the acumen you need to succeed that the school curriculum conveniently sidesteps? It’s all here.

Just because you’re amazing at the skill you provide doesn’t make you Sir Alan Sugar. So, what happens when your in-tray’s full of business-type paperwork that you haven’t got a clue what to do with?

Enter the taxman (of all people!)

Yep – you read that right. HMRC has just updated its guidelines on what it takes to be a successful small business in the UK, today.

The latest updates are aimed at sole traders and partnerships, not limited company directors. Most contractors who form limited companies often make appointing an accountant their first task, anyway. So it makes sense to offer these courses to those who wouldn’t already have someone looking after their books.

Moreover, the taxman is inviting you to learn what it takes to keep your head above water for free! There’s a number of ways you can take advantage of the updated offering.

Email learning

With the HMRC “Business Help and Education” email service, you can choose what you want to study.

The courses range from generic topics, like “Being Self-Employed”, to specifics. If you want to learn how to trade online or about being a director, there’s a course for that.

You choose your topic, fill in the online form and off you go.


The Government’s e-learning course covers many of the aspects a contractor accountant would often take care of.

There’s tax and self-assessment, as well as where you stand with National Insurance. To compliment those, there’s instruction on keeping records and expenses, too.

Getting into the habit of keeping track of your transactions is vital. When it comes to self-assessment, you don’t want to have to start wading through a year’s worth of receipts you keep in a shoebox.

The courses uses case studies and input from others who’ve been in business for themselves to get its message across. And there’s no rush. You can take as long as you like to digest the information. But, the faster you learn, the quicker you can start adopting what you learn into your day-to-day business.


In addition to the static content, there’s also a choice of webinars and video to help you get started. Across May 2015 alone, there are six dates to choose from at varying times of day.

If you can’t make those dates, there’s a 20-minute video on YouTube covering the basics of self-employment.

Understanding the basics is important, whatever your payment structure. Yes, it’s unlikely that HMRC’s advice will avail you of all the tax breaks on offer. But if you’d rather tackle your own accounts while remaining compliant, this is the resource for you.

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Small firms given extra time to prepare for RTI

Implementation of the new Real Time Information scheme, which was slated to go into effect next month, has been relaxed for firms with less than 50 employees.

Almost everyone has been up in arms about the new RTI scheme, which is on the rails and ready to launch on 6 April, as it will make the lives of businesses just that much more complex by requiring PAYE details to be transmitted electronically to HM Revenue & Customs every time an employee receives a pay cheque. However, in a rare show of compassion from HMRC, the taxman has said that if your business has less than 50 workers you can hold off on complying with RTI for another six months while you jump through the hoops required to set up your payroll system to interface with HMRC servers over the internet.

Lucky small businesses now have until 5 October before having to get with the RTI programme. In the meantime, the taxman says it will take the summer to see how the new PAYE scheme is being handled by larger firms, leaving the door open for more changes to the system; if we’re lucky, perhaps HMRC will bin the whole programme if it turn out to be more trouble than its worth.

The sudden change of heart on the part of what most people usually consider a heartless tax collection entity such as HMRC could be due to the fact that there are serious misgivings about how well the nation’s firms will be able to handle RTI implementation, industry experts say. The Forum of Private Business’ Robert Downes intimated as much in a recent statement concerning the news about the relaxation of the RTI rules for small businesses, but he was quick to add that the taxman’s decision was most likely a pragmatic one, as a full-scale meltdown of the tax system this April is not going to help anyone, including the Government.

Still, there are many concerns that changing the rules so close to the implementation date is likely to just confuse many small firms even more, especially in the face of how a large number of these small businesses have already been scrambling to find a way to prepare for RTI. I have to agree, as there’s nothing more frustrating to be yanked back and forth so quickly; it leaves you completely off-balance and most likely does nothing except increase the per capita alcohol consumption amongst small business owners.

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Are contractor accountants held back by employment legislation?

Contractor accountants should be aware that the government is planning to overhaul the UK’s employment laws in order to help the economic recovery.

One of the proposals, which has already provoked fury, is to allow firms to fire employees who are underperforming during their first two years of employment, without the threat of facing an unfair dismissal tribunal. Under the current regulations, an employee can seek redress from an employment tribunal if they are sacked after 12 months.

The coalition is also looking into the system of tribunals at present. Business groups, such as the BCC are urging for immediate reform but the TUC suggested that workers could be discouraged from seeking justice if major changes are implemented.

Union leaders are also concerned that increasing the qualifying period to two years could give a green light to unscrupulous employers to break the law.

The coalition is likely to launch a consultation into the future of tribunals after business groups complained that there was a 56% increase in the number of cases in 2010.

One possible solution would be to charge claimants a deposit of up to £500 which would be refunded if the case was successful. But the TUC argues that this will deter low-paid workers from seeking justice.

Meanwhile, Vince Cable, the business secretary, has been asked to look into whether small businesses could be exempted from some employment regulations but any such changes could see the government in hot water from the EU.

David Cameron wants to see new jobs created this year in order to boost the economic recovery and whilst large companies have promised to do exactly that, smaller firms need more encouragement. Reforming the employment tribunal system and reducing the red tape for small businesses could go a long way towards providing it said David Frost from the BCC.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Talking Logistics by Gamma-Ray Productions

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Is the UK tax system too complex?

According to the results of a new survey by online accountants Sage, the UK tax system needs to be radically simplified.

This is the view of over 2,000 self employed contractors and small companies who took part in the survey in March 2010. Overall, the respondents felt that the rules governing PAYE, VAT and Corporation Tax are way too complicated and as many as 80% felt that current legislation was preventing both them and their contractor accountants from seizing tax planning opportunities.

The research found that nearly two thirds of SMEs did not know what tax allowances there are entitled to. Furthermore, over 70% felt that the tax system in this country was actually acting as a barrier for many would be entrepreneurs.

Small businesses are generally regarded as engine room for economic success in the UK and have become a key focus for the main political parties as we enter the final days of the election campaign. The proposed hike in employer’s national insurance contributions is still dominating the political landscape and many experts now feel that this could be the tipping point for a Tory victory.

A spokesperson from Sage said that there is a great deal of confusion in the SME marketplace with regard to the tax system in this country. They suggested that this was the cause of huge frustration amongst small businesses, many of who do not seek the advice of their accountant as much as they should do.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Confused like Green spaghetti by tanakawho

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