Tag Archive | "small business"

Government Scrap Tax Grab, Admit Defeat

If you read this blog every week then you will no doubt remember how I reported on the cheeky tax grab the government tried to bring in at the budget.

The Chancellor, Philip Hammond, announced to the country he was going to tax the self employed whether they liked it or not. Well, millions of hard working Brits didn’t like it, and after a national outcry that no-one in the government expected, the Chancellor quickly back tracked on his plans.

At the time I mentioned how this was a victory for contractors, freelancers, small business owners, and self employed people all around the country, although I hinted it might only be a small victory, because no doubt those politicians would have another go in a few months.

It doesn’t seem that way now though, as the government recently admitted defeat on their unpopular tax grab, with Deputy PM Damien Green saying that it won’t be revisited.

Something tells me the Conservatives poor showing at the recent General Election might have a lot to do with this back track, as they make an attempt to get the millions of self employed people back on their side.

Rightly so if you ask me. Politicians seems to forget that it’s self employed contractors, freelancers and small business owners that prop up this fragile economy and keep everything running smoothly.

When it comes time to cast their vote many don’t forget how they have been treated by the government, and it’s no wonder that a lot decided to stay away during the recent General Election, or even vote for another party.

In my opinion, the Prime Minister and her cabinet really need to sit down and work out ways they can do more for our nations self employed army, rather than just looking at them as a way to make more money every time they need to get some cash.

Let’s face it, with Brexit just around the corner the self employed are now more important than ever before, so let’s hope they keep their word this time and we don’t hear any more talk about tax hikes.

Right now, as we speak, it’s estimated that 5 million people in the UK are classed as self employed, which is around 15% of the workforce.

However, with the gig economy continuing to get more popular and the freelance lifestyle something that a lot of people want to have…then it’s not surprising that many experts are expecting nearly half of the workforce to be in some form of self employment in 10 years time.

So when you consider that many of the voters in upcoming elections will be self employed, then it’s about time politicians started catering to their needs. Dropping the tax hikes is a good start.

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New Figures Suggest 176,000 Self Employed People in Wales

Wales is quickly becoming the UK hub of self employment, with 176,000 now working for themselves. That is 32% of new jobs in the country.

Many of these people are no doubt contractors, freelancers, and gig workers, while others have taken the route of starting a small business in order to make their own income.

Take Tom Maunder for example, a car body repairer from Wales who had been made redundant 3 times. After getting his P45 for a third time he decided enough was enough, and instead of looking for another job went the self employment route instead.

Actually, he ended up buying the small company from where he had been given his walking papers before, thanks to a loan from his parents and a bit of savings.

This is the type of entrepreneurship I like to see among workers in the UK. Many people in Tom’s position could have simply given up and spent the next few years signing on down the local job centre, and this is what many people do.

However, Tom decided that if employers were not prepared to give him a chance then he might as well make his own opportunities, and that is why he has gone on to be a success, with help from his family along the way.

It just goes to show that self employment in Wales is still going strong, and as long as there are people like the Maunder family then I don’t think anything is going to change soon.

Around 1 in 5 new jobs in Wales are to do with self employment, whether it be contractors, freelance professionals, or small business owners, and it wouldn’t surprise me at all if in 10 years time this figure is 2 in 5 jobs…or even 50% of all new jobs.

The new figures do show that the area in Wales does matter when it comes to self employment, with towns that have historically been involved with industry having the lowest rate of people working for themselves, while areas that are more known for farming have the most.

In Powys it is said that 1 in 3 people are self employed farmers. Also, many of these rural communities in Wales have other businesses such as cafes, restaurants, and hotels, where the self employed do a great trade year after year.

Away from the town and villages we have the cities of Cardiff and Swansea, which are quickly making a name for themselves as the place to be in the UK if you want to work in freelance industries.

The cost of living in these cities in Wales is significantly lower than places like London and Birmingham, which means many gig workers are thinking about relocating to Wales.

So self employment in Wales is looking good, and things are only going to get better if you ask me.

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Contractors to Finally Get Paid on Time…Maybe

I reported right here on this blog about how contractors spend an average of 20 days a year chasing clients for late payments. Sometimes they never get paid.

This led the government to step in and announce they would setup a special branch that is focused 100% on making sure contractors, the self employed, and small business owners get paid on time.

To be honest I doubted if they would actually go through and take action, but it looks like they have.

From last week, all large companies and limited liability partnerships will now have to share details of their payment practices with the government, and if they don’t, then they can expect to get punished and even be put out of business.

Not only that, but contractors who are finding it difficult to get paid by clients can go directly to the government to get things sorted.

Why are the government stepping in now? Well, I think they have just realised how much of a problem late payment is…with one report suggesting that self employed workers in the UK are owed £26 Billion pounds in overdue payments as we speak.

That is definitely not small change, and if big companies keep getting away with not paying contractors the money they are owed then it could start to become a real problem for the economy.

If the government don’t take action then it might lead to an economic meltdown, not something we want as Britain leaves the European Union.

The main information that large companies are now required to share is their average payment time for invoices. If they are taking too long then a government official will be demanding to know why.

Right now, it is only companies who have a turnover over 36 million a year or a balance sheet of over 18 million that will have to report on details of their payment practises, but as time goes on I think that smaller companies might have to do the same as well.

This ensures that contractors get paid on time by all of their clients, and they can even check to see the payment record of a particular company before agreeing to work with them.

Will this completely stop late payments for contractors though? Unfortunately not, as there is always a few companies that try to game the system and get around the rules.

Also, it remains to be seen if the government actually enforce the rules and punish companies that don’t pay contractors on time. They might take action for a few months to grab some headlines, but then start to ignore it after a while.

Hopefully this won’t happen, and contractors can finally get paid the money they are owed. At the end of the day, £26 Billion pounds owed is just way too much, and something needs to be done about it.

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Boss of Twitter Launches Payment System in the UK

We all know how frustrating it can be for small businesses, freelancers, contractors and gig workers to get paid by clients, but there could be a solution.

It’s called “Square,” which is a payment system that connects to your smartphone or tablet, which then makes it easier to collect payment from clients.

Gone are the days of waiting around for weeks on end to receive a cheque in the post. These days, all you have to do is turn up at a clients office with your smartphone or tablet. “Just give me your credit card details and I will be on my way,” you say, before walking away with a completed payment.

This new payment system called Square was actually created by the guy that invented Twitter, so you can imagine it has been getting a lot of attention, as well as a decent amount of finance to push the system out there.

In America Square has already been a big hit, and now they are hoping the same thing is going to happen right here on UK shores. Will the British self employed embrace this new system though, or will they vote with their feet by ignoring it.

My opinion? I definitely think we are going to be seeing more and more people using these smart reader payment systems in the UK, especially when you consider that many contractors and freelancers have trouble getting paid.

This has led the government to set-up a special branch that focuses on clients who don’t, or just won’t pay, and it wouldn’t surprise me if they are going to be soon encouraging entrepreneurs to use this type of technology in a bid to get paid on time, every time.

If you ask me, one of the main reasons why so many people find it difficult to collect money from all of their clients is because they are not comfortable with using complicated digital solutions.

For example, one option is to take credit card payments on your website, but for a lot of people this is just way too much hassle to get sorted.

On the flip side, if you can start collecting payments with the push of a button on your smartphone, then it makes the whole process of getting paid extremely simple, to the point where even someone who has never been on the internet before could do it.

With the Square payment service, small business owners will pay a transaction fee of only 1.75% of the total amount paid. Not only that, but the money reaches your bank account that very same day, so you are not waiting around to get cleared funds.

If you’ve ever struggled to get payment from customers and clients, then you might just want to give a Square a go.

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Research Shows Self Employed Work 10 Hours Less

If you thought working for an employer was the best option then it’s time to reconsider, as new research shows self employed people work 10 hours less a week.

Not only that, but the research also shows that they make £5000 more per year than the average salary, bringing in £33,000 a year compared to £27,000.

This includes umbrella contractors of course, and it doesn’t surprise me one bit as I’m always hearing stories of people who quit their job to become self employed and are now making more money working for themselves.

These statistics were all taken from the “definite study of the self employed” where 5,010 people in the UK were surveyed. Of those asked, 67% commented they were now better off financially now than when working for a boss, with 65% saying they now have more time to do the activities they want.

I’m sure they do, because when you think about it, if self employed people work 10 hours less a week, then based on a 5 day working week that is an extra 2 hours a day. Who wouldn’t want that? It’s much better to be spending time with family and friends rather than sitting at an office desk or being in traffic on the way home.

It’s also worth noting that many self employed people do work from home, or are at least based from home. This means that the commute is often no longer there, which means the time you save from working for yourself might even be more than 10 hours a week.

So why are more people than ever before starting to look at becoming self employed? When asked in the survey, 77% said they wanted more control of their work day, while 65% said the thought of being their own boss was something they liked.

Interestingly, 47% mentioned that lack of workplace politics was a motivating factor. This is something that I hear a lot, as it seems that many companies are now more like a high school drama than a place of work.

It’s much better to work on your own in my opinion, although this isn’t something that appeals to everyone. Some people would prefer to have the office politics I guess, and if that is your thing then becoming self employed might not be for you.

Although the research does show that self employed people work, on average, 10 hours less a work than people who have a job, don’t forget that it is not always like this at first. When you start working for yourself you might have to work more hours, so make sure you are aware of that.

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Barclays Now Offer Near Instant Business Lending

If you’re a contractor or small business owner, then you will no doubt be pleased to hear that Barclays now offer lending without the usual hassle.

One of the complaints I’m always hearing is how difficult it is for self employed people, especially contractors, to get a loan quickly and easily. Usually it involves a lot of forms to fill out and then a lot of waiting around until…declined!

While Barclays are not offering any guarantees that you will get approved for a business loan, it’s good to hear that they have made the decision process pretty much instant, which means you get to know if you are approved or declined almost straight away.

So how do you apply? The best way is through their mobile app, where you are asked a few basic questions and then how much you want to borrow.

They currently offer up to £25,000 and will let you know a decision within 60 minutes. Barclays are the first bank to offer this kind of almost instant lending, although if reports are to be trusted just about all of the high street banks are set to follow.

While it’s beneficial for contractors to get decisions on their business loan application as quickly as possible, I would like to see the lending remain responsible and not get to the point where anyone gets approved.

We had this kind of situation a few years ago of course, and it’s one of the reasons why the UK found itself in a less than desirable financial situation. Let’s hope some lessons have been learned.

If you are already a business bank account holder with Barclays then you’ve probably already received messages from them about this with a note telling you how much you could potentially borrow. While it can be tempting to take out a business loan when offered one, it’s a good idea to give it a lot of thought before moving forward, and in my opinion, only apply for a loan when you really need one.

At the end of the day, being a contractor can be difficult enough without having to struggle with loan repayments every month.

What I find interesting is that many thought business lending in the UK would slow down after the Brexit vote, but the fact that Barclays have introduced this new feature to their App and many other banks are doing the same, it would suggest to me the opposite is true.

A spokesperson for Barclays recently commented, “Since the EU referendum our appetite for lending has not diminished and we continue to lend to a business in the UK every 4 minutes.”

Like I said, let’s just hope that lending is responsible, but if it means a contractor can get the funds they need then I’m all for it.

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Small firms doubt efficacy of Local Government Finance Act

The Local Government Finance Act is being touted as the next big thing, but smaller firms such as contractors and sole traders aren’t quite convinced of this.

Redistributing cash from supplementary business rates may look like a good idea on paper, but smaller-sized businesses aren’t holding out much hope for the new legislation to make much of a difference, according to research conducted by the Forum of Private Businesses on the subject. The act provides for extra payable levies on top of any industry standard business rates, with the plan being that the cash generated by these levies would then be put towards specific local projects that would be selected after a local authority consults wiht local firms, but the FPB found that 56 per cent of its members didn’t see how the new rules would have much of an impact on their business activities.

To make matters worse, a full 22 per cent – nearly one out of every four – felt that the local economy most likely wouldn’t benefit from the new Act. Around 6 per cent of the survey’s respondents also feared that the end result would be that small business owners, contractors, or freelancers might end up having to shell out cash towards something that had no direct or indirect benefit to them whatsoever.

Scepticism ran high in the survey, with an overwhelming 76 per cent feeling anywhere from moderately to severely sceptical that local authorities would actually work hand in hand with local firms in order to revitalise the economy. Less than 20 per cent actually had any confidence in such a plan.

Alex Jackman, the FPB’s head of policy, said that it was obvious that small firms have little to no confidence when it came to local authorities being able to not just spend the money gathered by such a scheme n a responsible manner but that businesses will not benefit from the matter. With quite a few survey respondents indicating that their local authorities are pushing for an increase in the kinds of activities that go on in town centres, Mr Jackman remarked that it seems as if the focus is being paced upon larger firms.

Truth be told, I tend to agree with Mr Jackman’s assessment and the words of the Forum as well. The Government’s heart is in the right place in wanting to increase funding for the types of projects that will bring local communities together, it’s head seems to be lodged firmly up their own backsides if it thinks local authorities can be trusted to do the right thing and invest in smaller, local firms instead of something else altogether.

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Do contractors turn to their iPad for tax advice?

Small business owners and self-employed individuals are increasingly turning to apps when they want accountancy and tax advice.

Newby Castleman, an independent firm based in Leicester, has seen its app shoot to the top of the global iPad finance category download list, even though it was only launched three weeks ago.

Marketing manager Raquel Lesta said the company was delighted that the app ranked ahead of names like CNN Money and said that not only does it highlight a growing trend for financial advice on the go, but also that the app is perfect for these changing times.

The app is available on both Android and iPhone and includes tax tables and tax calculators as well as advice on tax savings and business news.

A number of leading software companies have recently jumped on the free bookkeeping app bandwagon. Although these apps are not accredited by HMRC, they do meet its specifications.

These free mobile phone apps are designed for companies trading below the VAT threshold. They record income and expenditure and provide a running P&L balance. Construction industry subcontractors will find a facility to record CIS deductions and the self-employed can get an estimate of their tax liability to date based on income and expenditure.

The apps also provide links to HMRC advice and guidance and users can export their data to pass on to their accountant. Four out of the five apps currently listed on HMRC’s website are standalone apps; i.e. they don’t link with other software. However, as more companies enter the mobile finance app market, that situation is bound to change soon.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: iPad by Yagan Kiely

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Small business owners don’t want to lose their staff

Contractors working through umbrella companies may be surprised to discover that some small business owners would rather remortgage their property than reduce the size of their workforce.

Research from MORE TH>N Business found that 5% of small business owners have freed up funds by remortgaging their home and 35% have taken a significant cut in pay so that they don’t need to lay off workers.

Of those who have reduced the size of their pay packet, 60% said they’ve been doing so for over a year and 17% believe they may have to continue doing so indefinitely. Furthermore, 70% say they have chopped their own salary in half and 5% aren’t taking any money out of the business for themselves at all!

Other ways of keeping the wolf from the door include moving to smaller premises and selling off inventory at reduced prices.

SME owner may find these statistics depressing, but the Business Inflation Guide suggests that a light may be appearing at the end of what has been a very long tunnel. The BIG Index shows that key costs only rose by 0.31% in the final quarter of last year, and that rise followed an increase of just 0.05% in the third quarter of 2011.

Janet Connor, the MD at MORE TH>N Business said it was sad to see business owners having to take drastic measures to retain their employees, but it shows they are compassionate enough to sacrifice their own personal gains.

Although trading conditions are still tough for the small business community, they may be able to approach the summer with more confidence now that key costs are not increasing quickly.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Small businesses want to see a reduction in employers NICs

A new survey from the FSB confirms that small businesses would be more willing to take on staff if the coalition reduced employers National Insurance Contributions.

The survey, entitled ‘Voice of Small Business’ received more than 1,700 responses. 31% of respondents said they would be encouraged to hire more employees if they could pay less in NICs for the first six months of employment. 11% also said an incentive would be the extension of the NICs holiday scheme.

The NICs holiday scheme was set up last year to encourage new start-ups to hire up to 10 employees. However, the FSB would like to see the scheme extended to existing micro-businesses with four employees or less, to encourage them to hire up to three more.

Furthermore, the FSB wants the government to do more to help small firms take on apprentices and interns. 29% of the survey’s respondents said they would be encouraged to take them on if more support was available.

Although a lot of companies want to increase the size of their workforce, many of them are not keeping accurate National Insurance data and their employees’ pensions could suffer as a result. A KPMG survey has shown that fund liabilities can be increased by up to 5% by poor record keeping.

22% of the firms surveyed had missing NI entries and 12% were missing the complete history. 17% had data that was inconsistent with expected retirement ages and 6% had missed contributions. 5% of cases had no salary information and 6% showed participants had left a scheme before the date they joined it.

Roger Higgins, a pensions partner at KPMG, said a lot of pension schemes still have a long way to go before they meet the quality targets set by the Pensions Regulator.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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North wins the first round battle for regional growth funding

Umbrella company contractors might be interested to hear that the government will be distributing £450 million of funding over the next few months to deprived areas as part of its regional growth fund initiative.

The coalition aims to boost the creation of jobs in the private sector in areas that have been heavily dependent on public sector employment.

Regions in the north will be the major beneficiaries whilst London and the south east will get nothing. In fact businesses in the north west and north east account for almost 50% of the bids that have been approved during the opening round of funding.

Vince Cable said that the government adopted the criteria of alleviating concentrated deprivation and bids were judged accordingly. However, he went on to say that he hoped applicants who had been unsuccessful would bid again in round two.

The government hopes the funding will leverage in excess of £2.5 billion in private sector investment and enable the creation of thousands of new jobs. Lord Heseltine is responsible for the allocation of funds and he has also channelled £150 million into the business angel scheme, a micro-financing initiative and a bank lending programme to support small enterprises.

The second round of bidding is aimed more specifically at small businesses although the minimum you can apply for is £1 million. This could result in partnerships coming together and proposing community finance initiatives that would distribute micro-loans to small enterprises.

A series of roadshows will be taking place, run by the Department for Business, Innovation and Skills, to encourage small companies to put forward their proposals and advise them on the bidding process.

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

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Are new government measures enough to support SMEs?

Earlier this week Mark Prisk spoke to the Summit for Small Business and explained how the government intends to help the five million SMEs, which includes umbrella companies, in Britain grow now that the recession is behind us.

Prisk used to own a small business so he says he understands how important SMEs are to the UK’s growth. The sector provides 60% of UK jobs and 50% of GDP and Prisk’s speech could make SMEs a bit more optimistic that support will be forthcoming from the government.

According to the Department of Business Innovation and Skills, 60% of SMEs want to grow in the next three years but getting access to finance has been an ongoing problem since the start of the recession. The Department has now announced it intends to rectify this, as well as making it easier for small firms to do business with public sector organisations and allowing social tenants to start running a new business from home.

The Federation of Small Businesses has called on the government to make good on these promises and ensure that smaller firms and contractors get 25% of public sector contracts. FSB spokesman, Stephen Alambritis, also agreed that SMEs need easier access to finance but added that less onerous red tape was also required if the government wants to help small businesses flourish.

The government intends to continue the Enterprise Finance Guarantee scheme for the next four years. This scheme helps 6,000 SMEs a year by making about £2bn available to small firms and freelancers without either collateral or a credit history. In addition, it will commit another £200m to Enterprise Capital Funds that support equity investments in potential high growth businesses.

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

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Northern companies struggle to obtain finance

New research shows that small businesses, recruiters and umbrella companies in the north have less chance of obtaining business loans than their counterparts in the south.

Three times as many small business managing directors in the north are worried about obtaining investment and only 14% of northern SMEs think their bank understands their business and its objectives whereas almost a third of small businesses in the south say their relationship with their bank is satisfying.

Small business owners are currently waiting anxiously to see who will be most affected by the government’s spending review.

The MD of the Leoni Sceti Group, the company that commissioned the research, said the results show how small firms were affected by the recession and highlights the ever growing North-South divide.

Business Smiths support service agreed that many enterprises are having no luck when they approach their banks for funding and it does not expect that situation to change in the near future. Simon Ellingworth, a director at the company has gone as far as urging entrepreneurs to look for alternative means of funding.

Earlier this month the Bank of England announced that businesses are not benefitting from the historically low base rate as the high street banks are charging individual borrowers a much higher mark-up than the BoE standard policy rate.

It looks like SMEs will be struggling for some time to come and for those in the North these are very worrying times. The Leoni Sceti Group research also determined that small businesses in the north are twice as likely to be in debt compared to their southern counterparts. Are we therefore going to see a large increase in business bankruptcies?

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

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Don’t divulge personal information over the phone!

A fresh warning has been issued about a telephone scam that could be targeting small business owners and umbrella company contractors.

HMRC issued the warning after receiving reports that fraudsters were making calls and claiming to be from the Revenue. The caller informed victims that they were due a tax rebate and asked them to divulge their personal bank details over the telephone.

There has also been an increase in the amount of phishing emails, supposedly from HMRC, asking for bank details. In the last 3 months, the authorities have shut down over 180 of the websites responsible for these mails, but more keep springing up.

Victims of these attacks could find their bank accounts emptied and other organised criminal gangs may get hold of their personal details.

Chris Hopson, from the Revenue, confirmed that they never use telephone or email as a means of informing customers they are due an income tax refund; they always send the letter by post.

HMRC strongly advises people not to divulge personal information over the phone, but contact the police immediately. And if they receive an email purporting to be from the Revenue, they are advised to send it to HMRC so that they can investigate.

It’s not only tax rebates that are used as bait in these scams. Income support and child benefit claims, lottery winnings and ironically, compensation for being the victim of a fraud, are other topics that have been used by scammers.

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

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