As a small business, you may be surprised at how quickly your needs can grow and change. There are few things more important than your finances, and staying on top of things like tax planning and cash flow can be challenging.

Saving Money

While you may have a great business plan, a full financial plan is something a little more exact. It is incredibly important to ensure that your business plan includes the likely financial status of your business in the future. This should be an accurate prediction that includes where you are getting your money from, where it is going and your areas of greatest gains and losses. If this all sounds overwhelming, a chartered accountant will advise you of the best account package for small businesses and help you lay out a financial plan that is completely realistic.

Additionally, hiring a Chartered Accountant can save you money internally. Rather than having to take time out of your busy schedule to sort out your business’s financial records, and thereby spending less time growing your business, outsourcing your bookkeeping and accounts to a specialist can save you valuable time which you can then use on increasing your business’s income, and therefore work out far cheaper in the long run.

Help With Tax Planning

Tax laws might seem like something you can navigate with relative ease, but they are not as simple as they may first appear. Business taxes tend to change and evolve quickly, and an experienced and professional accountant will be skilled at keeping up with all the latest rules and regulations. They can help you to avoid accidentally ending up with fines – something every small business owner wants to stay away from. With their advice and a tax plan in place, you might even be able to avoid paying quite as much tax as you expect.

Saving Time

Even basic accounting packages can help you to save time. Having a chartered accountant working with your business means that you will not have to spend time struggling to understand tax and other complicated elements of business finance. It leaves you more time to actually run your business!

Keep On Top Of Cash Flow

A vital part of running a successful business is managing your cash flow – but this might not be as straightforward as you think. A chartered accountant can create systems to help you track your incoming cash and outgoing expenditures and keep track of any financial leaks you might not spot.

Eliminate Human Error

If you are not a trained chartered accountant, the likelihood is that your financial knowledge will not be up to scratch. Basic errors are common, especially when you are rushing or trying to stay on top of too much. Allowing an accountant to take this over for you gives you the time to play to your strengths while taking advantage of theirs.

If you are looking for chartered accountants’ West Midlands or chartered accountants Wolverhampton, then reach out to Appleby Mall so you can get the support your business needs.

Update: Due to the recent outbreak of coronavirus in the UK, the Government has now delayed the introduction of the new private sector IR35 rules until 6 April 2021.

The IR35 rules for off-payroll working are due to change on 6 April 2020.

This rule change will mainly affect contractors who operate through their own personal service companies (PSCs). It’s important to be aware of these rules – they could affect you.

The IR35 rules were changed for public sector contracts in 2017. That rule change will be expanded into the private sector from 6 April. The new rule moves the responsibility for complying with IR35 from the contractor to the client who uses their services.

This is a complicated topic that can be difficult to understand, so we’ve broken down HMRC’s official guidance into sections. Want to skip to a particular section of this article? Click on the list below.

• The off-payroll working rules (IR35)

• IR35 rules before 6 April 2020

• IR35 rules from 6 April 2020

• What does IR35 mean for the intermediary and the worker?

• What happens to income after tax and NI are deducted under the new IR35 rules?

• Reviewing contracts for IR35

• HMRC and IR35

• Will the new IR35 rules be delayed?

• How Appleby Mall can help

The off-payroll working rules (IR35)

The individual who does the work (the worker) provides their own personal services – via an intermediary, their own private company, or personal service company (PSC) – to an end client who needs the work done.

They should meet this test – if the worker were actually providing services directly to the end client, the worker would meet the employment status tests to make them an actual employee of the end client.

These rules are known as IR35. If the rules apply, tax and NI contributions must be deducted and paid to HMRC.

IR35 was introduced in 2000 to prevent self-employed workers avoiding PAYE and Class 1 National Insurance contributions. This is referred to as disguised employment.

IR35 rules before 6 April 2020

If you’re a worker and your client is in the public sector, it’s their responsibility to decide your employment status. They should tell you their decision.

If you’re a worker and your client is in the private sector, it’s your intermediary or PSC’s responsibility to decide your own employment status for each contract.

IR35 rules from 6 April 2020

All public sector clients and medium and large-sized private sector clients will be responsible for deciding if the IR35 rules apply.

If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status, and if the IR35 rules apply.

Broadly, a client is classed as small unless two of the following criteria apply:

• Their annual turnover is more than £10.2m.

• Their balance sheet total is more than £5.1m.

• Their average number of employees is more than 50.

What does IR35 mean for the intermediary and the worker?

The new rules apply to payments made on or after 6 April 2020, for services provided on or after that date.

When work is done for a public sector client, or for a medium to large-sized client in the private sector, the client is responsible for deciding on the tax status of the contract.

If it’s judged to be disguised employment, any payments made to the worker’s PSC under the contract must be made after the deduction of PAYE and National Insurance.

The organisation who pays the worker’s PSC (the fee-payer) must deduct the tax and NI via their payroll. This could be either the client or the agency.

Although tax is deducted via the payroll, this doesn’t give the worker any employment rights. Legally, they’re still not an employee of the client.

What happens to income after tax and NI are deducted under the new IR35 rules?

This is a complex question.

The income that the worker receives from the fee-payer will be shown as employment income on the worker’s tax return – even though it’s paid to the worker’s PSC. Any amount which the PSC pays to the worker out of this income will be tax and NI free.

Although the full contract fee will be invoiced by the PSC to the client, PAYE and NIC will have already been deducted from it when received, so the PSC will be paid a net figure.

The fee has already been taxed, so there is no further corporation tax due by the PSC on this net payment.

If the PSC has been paid by other contract sources, and these weren’t deemed to be employment income, then these receipts will be charged to corporation tax, as usual.

The amount of take-home pay that the worker receives could be affected.

Reviewing contracts for IR35

Medium to large-sized private sector clients – and all public sector clients – must review each contract to decide whether it falls under employment or self-employment tax status.

After reviewing the contract, the client must issue a Status Determination Statement (SDS), including the reasons for the decision.

This decision can be challenged at any point. Either the fee-payer (the organisation who pays the worker’s PSC) or the worker can challenge the status determination. The client must have a process in place to handle the disagreement.

HMRC and IR35

The Check Employment Status for Tax (CEST) tool will offer HMRC’s opinion on whether an engagement is employment or genuine self-employment.

CEST can also be used to check the status of contracts with public sector and private sector clients.

The tool isn’t perfect and has been criticised for not applying all of the required tests for IR35. HMRC are working on improving CEST, but private sector businesses are already beginning to review off-payroll contracts before the start date in April.

Will the new IR35 rules be delayed?

Businesses and contractors are encouraging the Government to delay the start date to 2021 to allow more time for the IR35 legislation to be implemented.

Despite this pressure, the Government have made little comment on the prospects of a delay. Until then, you should proceed as if the new rules will go ahead on 6 April 2020.

It’s important to consider if the new legislation will affect you as a contractor. It would be wise to review all of your current contracts with IR35 in mind.

How Appleby Mall can help

Please get in touch if you have any queries or would like any clarification on this complicated topic. We can assist with reviewing contracts, if this is required.

An increase in customer numbers is a boost for any business, especially smaller firms that are looking to grow. If you’re keen to expand your customer base then there are some simple ways to do it.

To skip to a particular section of this article, click on the list below.

• Re-evaluate your website

• Use social media to promote your business

• Understand your customers

• Improve your customer service

• Consider a joint project

• Follow up on leads

Re-evaluate your website

Your website is like an extra shop front. If your resources are limited, improving your site is one of the fastest and most effective ways to increase customer numbers.

Take a look at your website. Is it intuitive to use? It should be simple for inexperienced web users to navigate. You should also examine your current SEO (search engine optimisation) techniques to draw in more visitors via Google.

Update your website regularly with fresh content, such as blogs, videos and other multimedia. This will boost your search rankings and attract customers who are looking for useful information.

Use social media to promote your business

If you’re regularly updating your website with fresh blog content, you can use social media to share it and increase traffic to your website.

Social media offers a vast potential audience for your business, but it’s important to tailor your message to each platform. A Facebook page is more likely to be followed by your current customers, while Twitter offers an opportunity to tie your services to a current event. Most social media sites also offer paid advertising. If this is in your budget, it could be useful.

Promote your content, launch products, run campaigns and seek out reviews via social media to gradually grow your customer base.

Understand your customers

Understanding your current customers will provide the foundation for increasing your numbers. What drew them to your business in the first place?

The most important part of this is identifying your customer’s needs. Once you understand this, you can start creating more personalised marketing, specifically designed to highlight how you meet the needs of your customer base.

Satisfied customers are much more likely to recommend your business to others. Their word of mouth is an extremely effective strategy for recruiting more customers.

Improve your customer service

A study by American Express found 78% of customers walked away from a sale as a result of poor customer service. One small interaction could cost you a sale.

Analyse the level of customer service you offer. How is your response time? Is there a range of different contact options? A more comprehensive support service could help you to retain more customers.

Try a joint venture

For small businesses, teaming up with another business can be a useful way to increase customer numbers. Hosting a joint event, or collaborating on products or services are simple options where costs are split and benefits are shared.

Follow up on leads

Following up on all of the leads you generate will improve your chances of landing more customers. You could send email reminders about abandoned purchases, offer free samples to potential customers, or reach out for networking purposes.

Update: Please note that this article was written prior to the announcement of several additional emergency measures drawn up by the Government to support businesses through the coronavirus pandemic.

The 2020 Budget has been announced, setting the Government’s tax and spending policies for the next financial year.

Measures for dealing with the outbreak of coronavirus across the UK dominated much of Rishi Sunak’s first speech as the new Chancellor. He unveiled a £30 billion stimulus package to help the economy to cope with the impact of COVID-19.

The Chancellor also suspended business rates in 2020-21 for tens of thousands of companies in England, increased the National Insurance threshold for low-paid workers, and maintained the freeze on fuel duty for a tenth consecutive year.

For a more detailed look at this year’s Budget, carry on reading or click a topic from the list below.

• Coronavirus

• Business taxes

• Personal taxes

• Other announcements

• How Appleby Mall can help

Coronavirus

The rapid outbreak of coronavirus across the world in the last couple of weeks has brought the economy to a standstill. On Thursday, the stock market in the UK recorded its worst day since the infamous Black Monday crash in 1987.

Mr Sunak admitted during his statement to the House of Commons that the coming period is “going to be tough” as the economy absorbs the shock. The Office for Budget Responsibility has warned the coronavirus crisis could cause a recession in 2020.

The Chancellor announced a stimulus package of £12 billion to be specifically invested in protecting businesses, the NHS and the welfare system from COVID-19.

Firms will be able to apply for a temporary coronavirus business interruption loan from the British Business Bank. The Government will give lenders an 80% guarantee on each loan to encourage them to provide finance to virus-hit SMEs.

Statutory sick pay (SSP) will now be available from the first day of self-isolation. The Government will pay the cost of 14 days of SSP for businesses with fewer than 250 employees.

On the morning of the Budget, the Bank of England also announced an immediate cut in interest rates from 0.75% to 0.25%. This measure is designed to reduce the cost of borrowing and encourage banks to lend to struggling companies.

Business taxes

Business rates for many small businesses have been suspended for the 2020-21 financial year.

Nearly half of all business properties in England will be exempted from rates for the upcoming year. Businesses with a rateable value of less than £51,000 will pay nothing.

This £1 billion tax cut has also been extended to tens of thousands of other businesses in the leisure and hospitality industries, in order to reduce the impact of coronavirus on trading.

Businesses with a rateable value of below £15,000 – who qualify for the Small Business Rate Relief scheme – will instead receive a £3,000 cash grant.

While these changes will only benefit smaller firms, the Chancellor also confirmed the business rates system would be under a fundamental review, planned to conclude in the autumn.

Despite recent rumours that it would be scrapped completely, Mr Sunak has decided to keep Entrepreneur’s Relief, although it will now be calculated at a significantly reduced rate.

As we predicted in February, the Chancellor has cut the life-time cap on Entrepreneur’s Relief from £10 million to £1 million. This relief is available on capital gains tax when selling a qualifying business. It had been criticised for being overly generous to wealthy business owners.

The Employment Allowance will rise from a maximum of £3,000 per year to £4,000 per year, starting from April 2020. This will save eligible businesses and charities an extra £1,000 on their secondary Class 1 National Insurance contributions.

The Structures & Buildings Allowance will be increased from 2% to 3%. This tax relief on corporation tax and income tax is designed to support investment in new infrastructure.

Personal taxes

The Chancellor has confirmed a cut in National Insurance for basic-rate payers. The NI threshold will increase from £8,632 to £9,500 in April 2020.

Mr Sunak said this change will save £104 per year for around 31 million people. Self-employed workers who pay the lower rate of NI will save about £78 per year.

We had expected the Chancellor to slash pension tax relief in this Budget, but higher earners have been spared from a reduction in the rate of relief, which is currently at 40% for those who earn more than £50,000 per year.

The annual pension allowance will increase from £110,000 to £200,000. This effectively removes the controversial pension taper that had caused many senior doctors to refuse to work over-time or retire early to avoid losing money.

The Chancellor has also frozen fuel duty for the tenth consecutive year.

Other announcements

We had been waiting for clarity on IR35 for several months and now we have it. The IR35 rules will be expanded into the private sector on 6 April 2020, as planned. Contractors should check our guide on how to prepare.

The Chancellor announced a new plastic packaging tax. Plastic packaging which doesn’t contain at least 30% of recycled plastic will be taxed at £200 per tonne when imported or manufactured in the UK.

Businesses that import or manufacture less than 10 tonnes of packaging per year will be exempt from this charge, which will be introduced in 2022.

The Government is also providing extra funds for HMRC to improve compliance, enforcement and technology. These measures are expected to raise £4.4 billion in additional tax revenue.

HMRC’s efficiency has considerably improved in recent years. They collected £16 for every £1 spent on investigating individuals and small businesses in 2018-19.

Since smaller firms are more vulnerable to these potentially costly investigations, this makes it even more important to compile accurate records and tax returns.

How Appleby Mall can help

These are uncertain times for business. Coronavirus is likely to cause a recession in the UK and it’s vital that your business is well-prepared for any potential economic shock.

We’re proactive accountants and business advisors with decades of experience. If you’d like to discuss any of these Budget measures with us, or you’re worried about how your business will fare as the UK struggles with COVID-19, please get in touch.

The roles of an accountant and a bookkeeper are fairly similar. There can be a lot of crossover in the services they offer.

Whether you’re working with an accountant or a bookkeeper, you’ll be able to focus more on the day-to-day running of your business. You should also get some useful insight into your cash flow and finances. But which one should you choose?

• What’s the difference between an accountant and a bookkeeper?

• The role of an accountant

• The role of a bookkeeper

• Which is best for my business?

What’s the difference between an accountant and a bookkeeper?

While both a bookkeeper and an accountant handle your numbers, their roles are very different.

A bookkeeper will usually take responsibility for the day-to-day recording of financial transactions and handling basic financial processes.

An accountant does more analysis and provides financial advice on the basis of that analysis.

The role of a bookkeeper

• Handling payroll.

• Processing transactions, receipts and payments.

• Managing debts and credits.

• Reconciling accounts.

• Reviewing existing accounting systems.

• Monitoring late payments.

• Preparing and sending invoices.

The role of an accountant

An accountant can typically assist with all of the above bookkeeping duties.

The role of an accountant also includes more analytical and strategic financial duties. 

• Creating and maintaining financial statements.

• Calculating estimated taxes.

• Preparing tax documents and tax planning advice.

• Auditing.

• Advising on long-term financial strategy.

• Forecasting and projecting cash flow.

• Budgeting (and tracking performance against that budget).

• Dealing with financial and tax compliance issues.

Which is best for your business?

A bookkeeper is essential for maintaining high-quality financial records. Bookkeepers will manage your accounts and make sure your day-to-day processing and transactions run smoothly.

More complex issues like compliance and tax planning require an accountant. Accountants will also be able to offer detailed financial forecasting and projections, which most bookkeepers don’t do.

This means there is a strong argument for using both an accountant and a bookkeeper. Hiring an accountant and a bookkeeper will give you a good perspective on your current financial situation, as well as where the business is going.

This is Photoshop’s version of Lorem Ipsum. Proin gravida nibh vel velit auctor aliquet.
Aenean sollicitudin, lorem quis bibendum auctor, nisi elit consequat ipsum, nec sagittis sem nibh id elit.
Duis sed odio sit amet nibh vulputate cursus a sit amet mauris. Morbi accumsan ipsum velit. Nam nec tellus a odio tincidunt auctor a ornare odio. Sed non mauris vitae erat consequat auctor eu in elit.

This is Photoshop’s version of Lorem Ipsum. Proin gravida nibh vel velit auctor aliquet.
Aenean sollicitudin, lorem quis bibendum auctor, nisi elit consequat ipsum, nec sagittis sem nibh id elit.
Duis sed odio sit amet nibh vulputate cursus a sit amet mauris. Morbi accumsan ipsum velit. Nam nec tellus a odio tincidunt auctor a ornare odio. Sed non mauris vitae erat consequat auctor eu in elit.

• How will the new points-based immigration system work?

• How will the points-based immigration system affect staffing in social care?

• Low hourly rates from councils will push care providers into a tight spot

• How can domiciliary care firms prepare for the new immigration system?

• How can Appleby Mall help my care business?

How will the new points-based immigration system work?

The new system is based on points, which are awarded to migrants who meet certain criteria. Anyone who wants to move to the UK must meet a 70-point threshold. There are two compulsory criteria, which add up to 50 points.

• Have a job offer from an approved employer at an appropriate skill level.

• Speak English.

Migrants must make up the remaining 20 points from the following criteria.

• Earn at least £25,600 per year at their UK job. (20 points)

• Earn between £23,040 and £25,599 at their UK job. (10 points)

• Have a job in a shortage occupation. (20 points)

• Have a PhD in a subject relevant to the job. (10 points)

• Have a PhD in a STEM subject, which is relevant to the job. (20 points)

Immigrating to the UK will become impossible for lower-paid workers, especially those who don’t have a degree. The current list of shortage occupations mostly includes degree-level jobs, such as nurses and social workers.

How will the points-based immigration system affect staffing in social care?

Social care is one of the most volatile industries in the UK, in terms of staffing. One in three workers leave social care each year, according to the Care Association Alliance.

An industry that loses staff so regularly needs a reliable pool of workers to fill these vacancies. Immigrants from the EU and the rest of the world have often stepped in to take these roles.

8% of the current social care workforce are EU citizens – around 115,000 workers. While many of these employees will have obtained settled or pre-settled status in the UK, the rapid turnover in the industry is likely to mean more staff shortages in the future.

Businesses have been encouraged to fill these vacancies with British workers. In 2019, it was estimated that there were 110,000 vacancies in the social care sector.

The points-based immigration system isn’t due to come into effect until January 2021, but the available workforce is already limited. Employment is at a record high level in the UK.

Low hourly rates from councils will push care providers into a tight spot

Instead of relying on the immigration system, the Government has encouraged employers to invest in staff retention and productivity.

The easiest way to attract new employees and retain current staff is to increase wages. For smaller domiciliary care firms, it will be very difficult to absorb this cost.

Rates paid by local councils for domiciliary care have struggled to keep pace with the figures recommended by the UK Homecare Association.

The chart below shows this difference is set to grow in the next three years.

More funding cuts are expected to local government in 2020-21, which will have a knock-on effect on providers’ already-squeezed budgets.

Increasing wages to attract more British workers to social care will reduce profit margins. Many smaller domiciliary care firms are already working to a very tight budget. These changes could mean many providers are forced to cease trading.

Reform to the immigration system also arrives at a time when demand for social care is increasing.

Overstretched staff are more likely to make mistakes, which leads to a poorer quality of care. Inadequate CQC reports will damage your firm’s reputation and make it tougher to win contracts.

How can domiciliary care firms prepare for the new immigration system?

Acquire or merge with other care providers

Strength is in numbers. Merging your business with other care providers – or acquiring them if you have the available capital – will allow you to spread operating costs more evenly. A merger will also give your firm access to a larger pool of workers.

Streamline your costs with better accounting and bookkeeping

In a challenging financial climate, an experienced accountant is worth the investment. An accountant will help to manage your cash flow more effectively and spot any allowances that your business can claim. They’ll also ensure your tax returns are free from potentially costly errors.

Automate and update as much as possible

The Government has recommended that businesses invest in automation to replace migrant workers. While replacing care workers with robots is clearly impractical, we do recommend automating as much administrative work as possible. This will cut overheads and save time. Using Xero to maintain your records will speed up your bookkeeping.

Put pressure on politicians to add care workers to the shortage occupation list

The Government has previously considered an exemption to the new immigration system for the social care industry. Sustained pressure from care providers could help to sway their opinion. We recommend writing to your MP about the issue.

How can Appleby Mall help my care business?

We’ve been working with domiciliary care firms for several years. Our accounting and bookkeeping services are fast and reliable.

We’ll also be able to guide you through any potential acquisitions and mergers – or help you to find a buyer for your firm.

If you’d like to get in touch, please give us a call or send us an email.

The self-employed lifestyle is often perceived as the Holy Grail of careers. No commute, no dress code and no nine-to-five. It can seem like every day is a day off when you’re self employed.

The reality of being your own boss is very different to what you might see on Instagram. It can be a tough and demanding lifestyle and doesn’t suit everyone. So, how do you know if it’s the right choice for you?

• Advantages of being self-employed

• Disadvantages of being self-employed

• How Appleby Mall can help

Advantages of being self employed

Self-employed workers have more freedom

If you can motivate yourself to do the work, then self-employment is ideal. Days can be scheduled to suit your workload and any other commitments.

Self-employment can increase your earnings

When you’re starting out as self-employed, you might have to compromise on what you charge to establish a client base. As your portfolio of work grows, you can increase your rates. Self-employment can be lucrative – especially with no employer to take a cut.

Self-employed workers can save on tax

Self-employed workers can claim expenses, which will reduce your overall tax bill. Everything from your spare room to your laptop can be tax deductible, if they’re used for business purposes.

Self-employed workers commute less

How often do you sit in traffic on the way to work? In 2017, a study found that every extra minute of commuting reduces your job satisfaction. If you’re self-employed, then your commute can be from your bed to your desk. You’ll be happier and you’ll save money spent on getting to the office.

Disadvantages of being self employed

Self-employment can mean no fixed working hours

Although you can set your own working hours, many self-employed people rarely do. You might well find yourself working all the time, including evenings and weekends. No set working hours might seem great to the outsider, but the reality can in fact be very different.

Self-employed workers cover their own pensions and sick pay

You become entirely responsible for yourself once you’re self-employed. You’ll need to choose your own pension scheme and make your own contributions to it. You’ll have no employee benefits or sick pay. If you do get ill, then you won’t be able to earn money.

Self-employed workers have to file tax returns

You’ll need to complete a self-assessment tax return and file it with HMRC. You’ll also need to make multiple tax payments throughout the year, including some on account for the following year. If you’re not familiar with the tax system, then many self-employed workers use an accountant.

Self-employment means more responsibility

Acquiring clients, managing cash flow, and marketing your business will all become your full responsibility. If you don’t relish this challenge, then this can be a big source of stress.

How Appleby Mall can help

We’ve been working with self-employed people since we opened our doors in 1998. We’ll work closely with you and your business. Our accounting service is affordable, fast and reliable.

And we’re more than tax accountants – we’re also business advisors. We can help you to choose the right business structure, draw up a plan for your business, and even find loan finance and raise capital.