Last updated on July 8th, 2024 at 11:50 am
Running a small business in the UK is an exciting venture, filled with opportunities and challenges. One of the critical steps to scaling and enhancing your operations is employing new staff. Hiring the right people can propel your business forward, but it’s essential to navigate this process thoughtfully and legally. This blog post provides a detailed guide on employing new staff in a small UK business, covering legal obligations, recruitment strategies, and best practices.
As always with any post on this blog about financial or legal subjects it’s essential that you take professional advice – this article is an introduction and is aimed at giving a laymans overall view of the subject.
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Last updated on July 8th, 2024 at 11:34 am
Now that snow and ice has hit much of Britain I thought that it was time to offer some advice on how to protect your business against the problems caused by snow and ice, especially in the run up to the Christmas break.
If you are running an office based business, or anywhere where you have buildings the simplest advice is to leave your central heating running. Don’t use a timer to turn the heating off overnight as the coldest time of the day is normally between 1am and 3am. If possible leave it running in every room, if there are areas that do not have a radiator in them then leave the door ajar to allow warm air to circulate. Continue reading
The UK Government has announced that VAT at the standard rate (20%) will apply to certain postal services from 31st January 2011.
Most services will remain exempt from VAT. In particular, First and Second Class stamped and franked mail and standard parcels will be exempt. However postal services and goods that Royal Mail is not under a statutory duty to provide, such as special deliveries etc will be subject to the standard rate of VAT.
If you use any of the services below in your business you should be aware that they will be VAT liable and that you will be charged VAT on them and will have to account for them differently in your VAT returns and annual accounts.
Express and Tracked services
International Services (VAT will only be added to EU destinations)
Advertising, Catalogues & Magazine Services
Unaddressed Mail
Receiving and Managing Mail Services
Other Services
Contract Services
The good news is that the following services are still VAT exempt.
UK Services
International Services
Having had to go through the process recently with a friend of deciding whether to set up as a Ltd company or trade as a sole trader for a new business venture that they weer setting up I thought it might be useful if I summarised the differences for anyone else in the same situation.
Ltd Company | Sole Trader |
| Financial Reporting | |
| Companies are governed by the Companies Acts. A company must: • Keep accurate and full accounting records • Produce audited accounts (if turnover is more than £5.6m) • File the accounts and an Annual Return with the Registrar of Companies. This information is available to the public upon request and payment of a small fee. • Keep Statutory Books. | Sole traders and partnerships are not required by law to have annual accounts nor to file accounts for inspection. However, annual accounts are necessary both to fill in an Inland Revenue tax return and as evidence of income and expenditure in the case of an enquiry by HMRC. |
| Personal liability and borrowing | |
| Companies may have greater borrowing potential. They can use current assets as security by creating a floating charge. It is possible to limit personal liability for company debts although many banks and other lenders may want to make directors personally liable for loans. | Sole traders and partners are unrestricted in the amount and purpose of borrowings but cannot create floating charges. All personal assets are at risk as the loan is given to the individual. |
| Selling the business | |
| Shares in a company are generally transferable – therefore ownership may change but the business continues. | This is not the case with sole traders and partnerships – if you are a sole trader you are the business, although you could “sell” the busines and let someone else service your customers for example. |
| Business credibility | |
| Incorporation does not guarantee reliability or respectability but gives the impression of a soundly based organisation. Some industries such as IT will only take on a freelancer if they are trading through a limited company. Some people think that there is a prestige attached to a directorship. | The unincorporated business does not seem to carry the same prestige to many people even though it may have traded longer than a limited company. |
| Taxation | |
| Tax is payable on director’s remuneration paid via PAYE on the 19th of the following month. There is both employer’s and employees’ national insurance payable on directors salaries and bonuses. The NI charge is greater than that paid by a sole trader/partner. You accountant should advise you on a tax-efficient remuneration strategy. If applicable, higher rate tax is paid by shareholders on dividends under the self-assessment rules. Corporation tax is payable 9 months after the year-end. For profits up to £300,000 Corporation tax is charged at 21% (2010/11). This will fall to 20% in 2011/12. | For a sole trader or partnership, profits are taxed at 20% on taxable income to £37,000, 40% on taxable income in excess of £37,000 and at 50% over £150,000 (2010/11). Tax is generally paid by instalments on the 31 January in the tax year and the 31 July following the tax year. A partner/sole trader will pay Class 2 NI of £2.40p.w. and Class 4 NI dependent on the level of profits. |
| Losses in a company can only be carried forward to set against future profits and you can not claim a refund on tax paid in previous years. | Any losses generated by a sole trader or a partner can be set against other income of the year or carried back to previous years. Businesses that expect to make tax losses in the early years need to consider this carefully particularly if the owner has paid higher-rate tax. |
As you can see, there are pros and cons for both methods of working but if you are unsure you should ask your accountant, if you do not have an accountant yet you might want to look at our page of accountants for small businesses or even look at this directory of local accountants.
Oh, and the friend in question decided to go down the route of sole trader for the moment with a view to starting a limited company in the future if they needed to, you can see their website by clicking here.
Last updated on October 15th, 2024 at 04:48 pm
As a small business owner, you know how crucial marketing is for your success. Every interaction with a potential customer is an opportunity to present your brand and highlight why your product or service is the right choice. But how do you ensure that your marketing message is consistent, clear, and impactful every time? Enter the marketing script.
The concept of using a marketing script might seem a bit corporate or rigid, especially for smaller businesses that pride themselves on personalisation and flexibility. However, in the fast-paced world of modern commerce, a well-constructed script can be a powerful tool. But is it right for your business? Let’s explore the pros and cons to help you make the decision. Continue reading
At this time of the year many small businesses rely on grit to make sure that their car parks or public entrances are clear of ice and snow. I was reminded of this fact this morning when I woke up, looked out of the window and saw over an inch of snow outside.
The problem with grit (or rock salt) is that it is not always that easy to store – it’s fine while it is still in the bag (assuming that you are like many small businesses and buy the salt by the bag), however once the bag is opened you run the risk of rain getting into the bag and effectively melting the contents.
The answer to this is something that you have probably driven past many times in the past at the side of the road and is simply a grit bin. At the side of the road these are normally yellow in colour and are a plastic bin with a lid on to keep the contents dry. Having said that the bins do not have to be yellow and the author has seen yellow, green, blue, red and beige bins for sale on the internet, although I would probably go for the yellow one personally as this seems to be the standard colour. The important thing to look for when buying grit bins is to check that they are weatherproof and corrosion resistant , often this is accomplished by making them from polyethylene (a form of dense plastic).
Other things to consider is the size of the bin, they can hold as little as 30 litres of grit (about the size of a 25kg bag of rock salt) and as much as 400 litres (that’s 14 cubic feet holding 500 kg of salt or grit). If all you are doing is gritting a pathway and you but the grit a bag at a time then a small bin is probably all you need but if you have a yard used by lorries / forklifts etc or you have a large carpark you probably would want to buy one of the larger sizes any buy your salt or grit in bulk bags. You may also want to think about buying a scoop or shovel to get the grit out of the container – remember that you do not need a lot of grit to melt snow, if you think about the council grit spreaders they spray a small quantity of grit on the road and this works, there is no need to cover the complete surface.
There are many sources of grit bins if you look on the internet, one of the larger ones is Setons, they sell a wide range of de-icers, salt, spreaders, grit bins and snow shovels and offer same day despatch and a 30 day no quibble satisfaction guarantee that allows you to return unused items for a replacement, refund or credit on your account.