There are so many things that could go wrong and what business owners need to know is that compliance is one of the best ways to manage most risks that are inherent to Startups. Non-compliance to regulatory requirements results in fines, restrictions on operations, and license revocations. Therefore, Startups must observe compliance guidelines to ensure smooth operations. Compliance can be a complicated affair, especially when you realize just how much needs to be done.
Here are some aspects of compliance that are relevant to every Startup.
Choosing the Right Business Structure
Deciding whether your business will be a sole trader, partnership, limited company, or any other type is extremely important. There are regulations and tax requirements that are unique to each business structure. Understanding how your business structure relates to compliance is the first step for every entrepreneur.
You might have enough capital to register as a sole trader or require funding hence opt for a limited liability company. Business capital is governed by a unique set of laws that you have to consider. Whichever the case, keep tax and other regulatory obligations in mind as you make this choice.
Most SMEs either comply with basic registration or overlook it completely. This is a grave mistake that could have serious legal implications. Take the time to understand the categories your business falls under and what is expected from you as far as registration goes.
Adhering To Audit and Tax Regulations
All businesses are required to carry out yearly audits and prepare annual audit reports. These reports must contain all financial transactions of the year. Startups and SMEs are not exempted from this regulatory requirement.
Auditing may not be a familiar concept for most people running startups simply because not everyone knows the ins and outs of recording transactions. To simplify auditing and ensure you comply with regulatory requirements, maintain a book of accounts. Hire an auditor to crunch the numbers and prepare a report.
Startups are required to declare their tax liabilities at the time of incorporation. Failure to do so creates inconveniences down the road.
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It is no longer good enough for accountants to just have new technology; they need to tap into its full potential to stay ahead in the market and help drive business success for their clients.
When running a practice, it is easy to forget that you should treat your firm as a business rather than just a service. Businesses focus on growth and productivity, and so should accounting firms. A key way to ensure maximum growth is the optimisation of technology for multiple purposes.
Today’s technology can be adapted to your business, and here are seven ways you can use it to grow faster in 2018.
Automate processes for daily efficiency
The accounting and bookkeeping tools on offer today are transformative for both accounting firms and their clients. They can make tasks up to five times quicker than if they are completed manually, ensuring bookkeeping is automated and effortless, and there is no longer any need to spend time on mundane yet necessary actions.
The benefits of this automation are significant. The labour-intensive processes of yesterday only enable bookkeepers to have a limited number of clients, but with automation freeing up much of their time, they are able take on more clients, therefore growing their firm.
Offer real-time advice
Cloud technology enables accountants to give their clients anytime, anywhere access to their data within just a few clicks. This empowers the client to find out information for themselves instead of contacting their accountant, therefore releasing more of the accountant’s time.
One barrier to cloud accounting is security; there are still clients out there, who will be sceptical about the cloud. It is the accountant’s job to be knowledgeable about how cloud security works and stay up-to-date with changes so they can reassure their uncertain clients.
By providing clients with a way to access their data easily, accountants can spend more time growing relationships with current clients and looking for prospects.
Be contactable anytime, anywhere
There are many ways to reach current and prospective clients now. Traditional face-to-face meetings, telephone calls, and emails are now mixed with messaging apps, video calls, and social media. Accountants must be contactable and active on all platforms. Listen to your clients and establish their preferred way of contact.
Accountants can be in contact with clients even when the client is not actively seeking their services. Social media is an effective and sometimes even free way to market yourself. By posting content clients want to see, establishing a strong brand, and even reacting to comments from customers and prospects, firms can grow their business.
By advising your clients that they can contact you whenever they need to, and ensuring you always answer them or get back to them as soon as you can, they will trust your services and be more likely to recommend you to others.
Optimise services for millennial clients
Since millennials now make up 35% of the workforce according to a KPMG report, all businesses must ensure that every aspect of their services meet the preferences of these workers. This includeshowthey receive their invoices and other communications, and the overwhelming preference is for digital.
Out of the millennials surveyed, 82% would prefer if their accounting firm went totally paperless. It is easy to agree that removing paper receipts from the mix would be easier, not least because it prevents the issue of losing them, but actually making the switch is another story. Now, with products out there like Receipt Bank’s scanner app, clients can snap receipts and invoicing and send them to their accountants quickly.
Always consider the preferences of each individual client and cater to this. Show potential clients you can adapt to their specific needs, and be aware that many will favour digitisation.
Embrace mobile working
Apps are the friends of accountants and clients alike. If customers can use a smart phone, they will find using accounting apps, such as Receipt Bank, easy. By installing these apps on their phones or other mobile devices, clients can make use of them wherever they are; if they have a busy day planned they can still send paperwork while waiting for the train!
The benefits for the accountant are also clear. Clients can get receipts, bills, and other paperwork to accountants via apps in real time rather than sending everything at once at the end of the month. Accountants can then process them as they come in, and provide their customers with outstanding service by giving them the information they need to run their business successfully all the time.
By encouraging your clients to use mobile apps, you will reduce their responsibilities as well as making your job easier and giving you the chance to deal with bills as you go along.
Impress current clients, and gain new ones
According to 80 percent of high-performing accountancy firms, adding value to existing clients is the most effective means of growth. For this reason, accountants should not only look to implement new technology with prospective clients. They also need to get current clients on board.
Book in some time with your current clients to talk about their pain points and how you could help them grow their business. Introduce the new technology they could make use of to save them time and make their jobs easier. Sell them a package they cannot turn down because doing it themselves would be more expensive and time-consuming.
Excel during tax season
By making full use of automation tools and accounting apps, firms can always stay one step ahead of their clients’ needs. Technology leaves more time to consider advanced improvements to client services, such as rolling out a monthly recurring revenue model instead of dealing with a mad rush at tax season.
Accountants should actually see tax season should as an opportunity, rather than a nightmare. It is a chance to convert year-end customers into monthly paying customers, therefore providing the accounting firm with a steady cash flow.
Technology can be the difference between a good and a great business. Accountants can use technology to bring maximum benefits to both their firms and their clients, enabling their practices to become thriving businesses in 2018.
January can be a tricky time for companies and business owners. Even if you’ve kept on top of it all throughout the year, you can still have a time consuming task on your hands.
Companies face a number of challenges at this time of year, particularly as the tax deadline is in tandem with reduced revenue after the Christmas break.
It’s all too easy to forget that small business owners don’t have the luxury of enjoying much downtime over Christmas. The break is often a prime opportunity to catch up on important business admin and to start planning for the year ahead.
It’s worrying that nearly half of small businesses in the UK admit that they have struggled to pay tax bills, according to a report from insurer RSA. But what’s more worrying is that problem with accounting, or simply a lack of awareness about the process or the deadline, mean that as many as a quarter of companies are missing the due date.
Failing to file a self assessment form by 31 January can leave you facing an automatic £100 penalty.
The fines build up after three months, with HMRC starting to charge penalties of £10 per day, and after six months, the penalty amounts to five per cent of the person’s tax or £300, whichever is higher.
Being hit with fines will inevitably put a strain on the cashflow of small businesses, so managing your tax properly is important. We have here some tips to help you manage your taxes:
First, stay organised. You don’t want to be panicking the day before the deadline trying to find bits of paperwork, so it’s a good idea to file everything in an organised fashion throughout the year.
If you haven’t made any progress, there’s still a week until the deadline. Just don’t leave it until the last minute.
Second, keep tabs on all expenses and include all the information required. Make sure you don’t miss any sections out on the form, and include all earnings, including dividend income on any shares you own. You don’t want HMRC to reject your tax return if there are any mistakes, so also allocate time to double-check the form before you submit it.
Third, use tools available to you. The days of doing everything by hand are long gone. Software’s are available to give you a helping hand when managing your accounts, so do a bit of research to figure out which app is best suited to your business. Making use of these tools will make your life a whole lot easier; think of it as an investment.
Finally, if you are really stumped when it comes to your tax return, you can get a professional accountant involved who should be able to take all the stress away.
Yes, this will come at a cost, but you have to consider if that cost outweighs the penalty from HMRC. Seeking advice from an accountant on your finances can be invaluable to your business, particularly later down the line as your company grows.
Fulfilling tax obligations can be one of the biggest barriers to the success of a business, but don’t let it stop your company from having a prosperous future.
The Finance (No. 2) Act 2017 has introduced changes to the corporation tax loss regime. The rules are now more flexible for carried forward losses but restrictions to the amount of losses that can be carried forward have also been introduced. The changes apply to accounting periods beginning on or after 1 April 2017. If an accounting period sits on that date, the periods before and after are treated as separate accounting periods and its profits and losses for that period are time apportioned.
What was the position before the changes?
For periods before 1 April 2017, a company could set losses against profits of any description in the same accounting period and against profits of any description of an accounting period in the 12 months immediately preceding the period of the loss. If a trading loss had not been used in this way then the loss would be automatically carried forward and set against profits of the same trade in future periods.
What has changed?
Now, for trade losses arising in accounting periods beginning on or after 1 April 2017, they can be carried forward and set against a company’s total profits (including capital gains) in the next accounting period, subject to certain conditions being met (for example, that the trade did not become small or negligible in the accounting period in which the loss arose). The claim to set the loss against the total profits needs to be made within two years from the end of the later period. There are also similar changes to the loan relationships non-trading debit rules and the losses on intangible fixed assets rules, where the losses can now be set against total profits where they could not previously. All carried forward losses will also be available for surrender by way of group relief.
The new regime also introduces a restriction so that, from 1 April 2017, companies are only able to set losses against 50% of total profits exceeding an annual deductions allowance of £5 million. There is no restriction if profits are below the deductions allowance, so HMRC expect most small companies or groups to be unaffected. There are specific rules for single companies and groups of companies in relation to how the restriction and deduction are applied.
A targeted anti-avoidance rule (“TAAR”) has also been introduced to prevent abuse of the corporation tax loss rules. The TAAR enables HMRC to make such adjustments as are just and reasonable to prevent a loss related tax advantage arising from relevant tax arrangements.
Furthermore, the various relaxations described above (and indeed, a company’s ability to carry forward losses at all) are subject to particular limitations following a change in ownership of that company. Specialist advice should always be sought in these circumstances.
If you would like more information on how any of the changes or proposals affects you or your business or how they may apply in specific circumstances, please contact a member of our team on firstname.lastname@example.org or phone us 0161 205 6655 www.stanleycarter.co.uk
We’re just a matter of days into the New Year and no doubt accountants are already looking ahead at the new challenges and obligations 2018 will bring.
Of course, some of the most important deadlines for accountants to meet fall in the first few months of the year, and May 2018 brings a deadline of a different nature – with firms needing to ensure their data is compliant with the new EU-led General Data Protection Regulation (GDPR).
But what other challenges might accountants be facing this year, and how might they need to prepare to respond to them?
Self-assessment deadline looms large
The first real target to meet for accountants is the annual scramble to ensure clients submit their online tax returns in order to meet the 31 January deadline.
In truth, of course, the majority of accountants will have done the bulk of preparation by now; readying their clients and securing the necessary information for the 2016-17 tax year in the hope of comfortably ensuring submissions are made.
However, if you are struggling to extract the last pieces of information from your clients it’s worth sending out one last mail shot as soon as possible, not only to remind them about the deadline but also to ensure they fully realise they are entirely responsible for submitting their returns and thus avoiding triggering the automatic £100 penalty.
You don’t want to be in a position where any client tries to put the blame for any penalty at your door.
HMRC is in the process of reviewing how penalties are applied, with a review suggesting a driving licence-style points system, but for now, the immediate £100 fine remains in place, with further penalties following for clients who continue failing to submit.
From the start of the new tax year in April, legislation will come in reducing the band where dividends incur a 0% tax charge from £5,000 to just £2,000. Clearly, this could have an implication for how some clients choose to be remunerated in the future.
Tax relief for finance costs reduced
Also in April, the tax relief available for the finance costs of individual landlords will continue to be hit.
During the current 2017-18 tax year, higher rate tax payers have only been able to claim higher rate tax relief on 75% of the total finance costs deductible from rental income received. The remaining 25% of finance costs incurred only qualify for tax relief at the basic rate. From April 2018, the higher rate relief available will fall to 50%. Ultimately, landlords will only be able to claim basic rate tax relief on finance costs incurred; this process is set to be completed at the start of the 2020-21 tax year.
Making Tax Digital comes ever nearer
Finally, while Making Tax Digital (MTD) will not start to come into force until April 2019, many sole traders, partnerships or limited companies likely to be affected should be advised to consider whether their existing bookkeeping function will meet HMRC’s strict MTD filing requirements. If it doesn’t they will need to invest time and effort into adapting their record keeping to be MTD-compliant. This is not something that can happen overnight. The smooth transition can only be achieved if sufficient time is allowed for planning and evaluation.
While many VAT registered entities are already virtually compliant, for others the process will take a little longer, and it will be prudent to consider software choices a good nine months in advance of any new legislation coming into place. For a number of businesses therefore, the summer of 2018 will be a good opportunity to choose an option that will work best for your needs.
As the ribbon is cut on 2018, there’s usually a slight pause in business owners calendars which can be used to look back at what your company’s accomplished and how it might be get better.
Managing a small business is a complex endeavour that only passionate people can dare to undertake. A small business owner has to wear many hats, especially in managing sales, customers, workers, partners, and personal life at the same time. Keeping the finances of a small business running efficiently is one task that business owners cannot afford to outsource or delegate completely because finances is the lifeblood of the business.
However, managing the finances of a small business is fundamentally complex because there are so many balls that you must juggle at the same time. Nonetheless, the right tools can help you manage your business finances more efficiently without ignoring other important parts of the business.
Anyone who needs to complete a Self Assessment has the potential to shave hundreds of pounds off their tax bill by getting savvy on which expenses are eligible for relief with HMRC.
Keeping proper accounts is an important part of managing a small business, but the accounts of a small business can become confusing pretty fast if you don’t have a background in finances. In fact, many small business owners need help knowing where their personal finances end and where their business finances begin.
Once you moved up from being a sole proprietorship to become a small business owner, you’ll start having to manage other people other than yourself alone. However, many small business owners who don’t have a background in HR tend to see payroll management as a time consuming process.
Expenses are an important part of running a small business; you’ll have a number of core operational expenses and an even higher number of non-core but important expenses. You’ll spend money on petrol, meals coffee with potential clients, and sending holiday gifts. Those seemingly minor expenses can pile up and leave a big hole in your finances.
When it comes to claiming R&D tax credits, many business managers assume that their accountant is best-placed to handle the claim while they provide the technical input.
Furthermore, there’s often an automatic assumption by many accountants that if they have the correct technical information, a claim is fairly straightforward.
Admittedly, the fact that any limited company developing new products, technology or processes may be eligible and can claim for up to two accounting years retrospectively, sounds straightforward enough.
But, even when a business owner or director feels he or she can identify R&D projects better than anyone else, scoping them in the context of the R&D tax criteria is not that simple. It requires technical understanding combined with an in-depth knowledge, without which the numbers might not add up.
Therefore, the reality is that presumptions can fall way short of the need for an in-depth understanding of what potential R&D activity may or may not fit within the context of the current legislation.
Take the meaning of R&D in the context of R&D tax relief; an issue that isn’t simple to handle. R&D in this case is not limited to the R&D department, as HMRC defines it as work that achieves a scientific or technological advance when scientific or technological uncertainty exists.
This can include achieving an increase in overall scientific or technological knowledge or capability; significantly improving products, processes, materials or services through scientific or technological development; or using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.
For instance, a whole project might not qualify but the element addressing the technological uncertainty does. That can include planning and managerial activities in some instances.
To be sure a claim is justifiable and as beneficial as it can be, an accountant must fully understand the detail of the HMRC guidelines. That’s a 15-part manual and, once you have read through it all, you will need the technical expertise to define, quantify and support a claim.
This is where a specialist partner that lives and breathes R&D and has extensive experience in supporting companies in funding, resourcing and exploiting R&D would make the process more efficient and more profitable for all parties.
With Stanley Carter R&D, clients often find that the objective, expert evaluation and broader experience in supporting technology companies can fundamentally change the way they look at and approach their R&D strategy going forward.
In both tables, PwC leads the way with total UK tax fee income of £822m and audit and accounting fee income of £1.24bn.
The remaining Big Four firms replicate the same positions occupied in the Top 50+50 table with Deloitte in second, and EY and KPMG in third and fourth respectively.
Deloitte recorded audit and accounting fee income of £824m and tax fee income of £654m. EY took £581m from tax services and £619m from audit and accounting, and KPMG registered £498m in audit and accounting and £479m in the tax table.
Elsewhere in the tables, BDO occupied fifth position in both tax and audit ahead of Grant Thornton. The firm, which placed sixth in the main Top 50+50 rankings, had a total tax fee income of £126.8m, with Grant Thornton slightly behind on £104.4m. In audit, BDO edged ahead of RSM by £10.4m with total audit and accounting income of £170.4m. Grant Thornton took seventh with £148.4m.
Saffery Champness has ranked at number 13 in tax, but slipped out of the top 15 in audit and accounting. UHY Hacker Young entered the audit table with fee income of £30.13m, ahead of MHA MacIntyre Hudson and Smith & Williamson.
PKF UKI posted strong growth of 24% in tax services this year, holding ninth position in the table. The firm also holds ninth in the audit table with growth of 16% and fee income of £71.26m.
Other firms showing strong growth this year are Moore Stephens, with a 27.9% increase in tax fee income compared to 2016, and Haines Watts and MacIntyre Hudson with 18.6% and 20.8% tax growth respectively.
The only firm to post negative growth across the two tables was KPMG, with a decline of 3% in audit compared to 2016 figures.