With the ever-growing public awareness of their impact on the environment, the labour market, societies and small businesses around the world, more and more companies are being scrutinised about their attitude toward the way they operate. In fact, your company’s ethical stance is increasingly important, with customers wanting to see proof that your company takes care of its staff, the local community, and the environment.

Why is Corporate Social Responsibility (CSR) so important?

There are some compelling business reasons for your company to adopt a CSR policy. According to the UK Small Business Consortium: “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.”

Sharing and promoting your CSR policy will gain you more clients and customers and also a lot of positive PR. Use social media to let people know what you’re up to and to post news of staff who take part in fundraising activities. If you’re doing something special that is benefiting the community (e.g. corporate sponsorship, fundraising, providing work experience for vulnerable members of society), send a press release to your local newspaper, business magazines and organisations your company is a member of (e.g. the local Chamber of Commerce) in the hope of getting editorial coverage.

And if you are thinking of entering business awards, being able to show evidence of a strong CSR policy can really help your submission – indeed, it could mean the difference between being a finalist and being a winner.

CSR is as important on a global basis as it is in first world countries. The United Nations Industrial Development Organization (UNIDO) actively supports SMEs in developing countries with environmentally and socially responsible entrepreneurship. “Ensuring that CSR supports, and does not undermine, the development of small and medium-sized enterprises (SMEs) in developing countries is crucial to meeting the goal of improving the impact of business on society.”

Hoddesdon companies and their CSR policies

In Hoddesdon, Pindar Road is a hugely important commercial area in terms of industry and business. Out of interest, we looked at the websites of companies based on Pindar Road to see how they promote their CSR policies.

Our findings reveal that few companies publicise their CSR policies on their websites, but this isn’t to say that they are not doing anything in this area – indeed they are; references are made to staff taking part in events to raise money for charities on social media – they just need to make more of it.

To encourage you to think about highlighting elements of CSR your company excels at, here are examples of Pindar Road companies who talk about aspects of Corporate Social Responsibility on their websites.

Enterprise Document Solutions UK

One of the main selling points for a document management company like e-docs UK is that it works towards a paperless office, and this is going to have an obvious environmental impact. However, e-docs has gone further, with an active environmental

policy to lessen its own environmental impact, incorporating objectives and targets for the future, promoting environmental awareness, ensuring its operations are socially responsible, recycling wherever possible and using reputable waste carriers.

Affvs UK Limited

Affvs UK salvages vehicles that have been written off by insurance companies. It has turned a business requirement to be compliant with Environmental Agency guidelines into a CSR promotional tool. It provides information about the salvage process and guidance about buying used car parts which creates a good impression of a trustworthy company that cares about the customer.

In addition, it donates 10% of vehicle scrap value to Essex & Herts Air Ambulance Trust.

DW Windsor

DW Windsor is a designer and manufacturer of lighting solutions. This company’s main angle is that it supports British industry by sourcing components and raw materials from UK companies and, in doing so, supports the employment and skills of the country’s workforce. They are a member of the ‘Made in Britain’ campaign.

In addition, the company has also been a sponsor of Isabel Hospice’s Bubble Rush this summer, news of which was covered on its social media channels.

MISL

Three years ago, document management company MISL gained publicity for a recruitment drive that resulted in the employment and training of 20 previously unemployed new members of staff. Sadly there have been no updates about how the 20 have progressed as this could have provided extra publicity for the company.

Ambition Broxbourne Business Centre

The Ambition Broxbourne Business Centre is part of a nationwide chain run by Basepoint Business Centres. The Centre’s success as a business in its own right relies on the success of the start-ups and small businesses that rent office space. The company therefore provides free business support and mentoring for its members, and many Basepoint centres have regular networking meetings. Charity is at the heart of Basepoint’s CSR. The company is owned by The Act Foundation, a grant-funding charity, with all the profits going to people in need. Each centre also supports a local charity with fundraising activities, though there is no mention of Broxbourne’s chosen charity on the Basepoint website.

National Windscreens

Another company that is part of a nationwide group which understands the importance of informing consumers about its CSR policy. National Windscreens takes its environmental policy seriously, recycling 100% of its glass. And like many large companies, it also adheres to the Modern Slavery Act which means a commitment “to ensuring that there is no modern slavery or human trafficking violations in our supply chains or in any part of our business”.

Our own CSR policy

Here at HB Accountants, we take our own responsibilities seriously. We play an active role in the local community, with fundraising events for local charities and networking events to support other local businesses.

Our staff regularly take part in fundraising activities for the official HB charity, which this year is Teens Unite.

We are also a finalist in the Supporting Young People category at the forthcoming Hertfordshire Business Awards.

If you would like to talk to us about how we can help your business, contact us for more details. We would also be very happy to talk about all our CSR policies and activities at the same time!

In the old days, all your accounting was done on a disc. You would buy the software on a disc and install it onto your computer. It was self-contained, which meant that as long as your computer was working, everything would run smoothly.

Unfortunately, there were downsides. What if something went wrong? The system may well not have been supported, so if something did go wrong, you had to bring in outside experts to sort things out. Every two to three years, you’d have to make a decision about whether or not to buy an updated disc. And when it came to submitting figures to your accountant, you had to download the information and send it on a separate disc, risking it being damaged or lost in the post.  And if your accountant only ever saw your figures once a year and you’d been inputting them wrong, it wouldn’t be picked up until there was a year’s worth of corrections to make to the annual accounts. The downsides of disk-based applications have led to the introduction of cloud accounting.

These days, more people are switching to Cloud accounting, but mainly because there is no disc alternative any more! The switch happened fairly seamlessly and most people have adopted the new system quite happily. However, there are some people who are still wary of the Cloud; if you’re one of them, it might help to understand the advantages.

How the Cloud has simplified the accounting process

How you input your figures hasn’t changed at all, but the fact that the software is hosted remotely has revolutionised the process, making things a lot easier for all the parties involved for a number of reasons:

• All information is updated in real-time, enabling a number of users to work on the same file without having to send each other different versions every time it’s updated. The people who need to see the figures, e.g. bookkeeper, MD, can access it whenever they need to. This can save a lot of confusion about what changes have been made as it’s always up-to-date in real-time.
• It simplifies the year end processes. As your records are updated simultaneously, all your accountant needs to do to access your figures is to log in. They can work on your data, print reports, raise queries and make any adjustments they need to do there and then, speeding up the process considerably. Accountants can also log in at any time to check that everything’s all right, giving companies the reassurance that they’re on the right lines, and for any errors to be picked up early. With permission, we like to check our clients’ figures on a quarterly basis which gives us and you peace of mind.
• The software is automatically upgraded meaning you’re always working on the latest version.
• You no longer have to worry about the expensive and bother of security and maintenance as the host companies take care of backups, updates and cyber security. In fact,your data is probably safer on the Cloud as it is encrypted and password-protected, meaning that even if your computer is stolen, all your information remains secure.
• Cloud accounting is very cost-effective. Although you will have to pay a monthly fee to use the software, in the long run you could still end up saving money on the old system where you simply bought a disc. Your office will spend less on hardware as all your data storage is taken over by the Cloud company, with the added bonus of that hardware not taking up valuable office space; and you will no longer need to employ or outsource IT experts to look after it.

If you’re setting up a small business from scratch, you know that money is going to be tight. That’s why most entrepreneurs begin by trying to do everything themselves in order to keep costs down. But there are some compelling reasons to seek professional help from an accountant from the very beginning, which may end up saving you a lot of money in the long run.

Firstly, an accountant can help you get the structure right, especially when it comes to tax. For instance, often when a couple set up a business together, one of them will continue working in a full-time job until the business takes off. An accountant will help you set up an equal shareholding which will help keep finances ‘in the family’ when it comes to dividends. This can be especially helpful in cases where doing this can keep you under the 40% tax threshold.

Secondly, an accountant can help out with HMRC-related matters, helping you with VAT registration, setting up your payroll, registering for Corporation Tax etc. You can rest assured that your accounts would be set up accurately – it is not uncommon for people doing it themselves to make mistakes which can be costly to put right. And an accountant can also help you out with company registration.

The future isn’t necessarily bright

It is quite common for two or more friends or acquaintances to go into business together. Sometimes this doesn’t end well and the business suffers when friendships end and one of the partners wants out. To prevent a lot of grief and expense in such an event, it is recommended that all partners draw up a Shareholders’ Agreement before the launch of the business. A good accountant will be able to recommend a solicitor who specialises in these agreements.

Advice

Accountants are always happy to help give clients advice which points them in the right direction. They can put you in touch with bookkeepers, and can also recommend the right bank to have your company account with – the bank that is right for your personal account isn’t necessarily the right bank for your business.

It is always a good idea to keep in touch with your accountant and recommend touching base every three months to make sure everything’s running smoothly? This is especially important if you’re doing your own bookkeeping, as you need to make sure it’s up-to-date and being completed properly – if not, there will be plenty of time to fix any errors.

Our approach

From time-to-time, all small business clients have little questions that will only take a couple of minutes to answer, but they are reluctant to get in touch with their accountant about it. We don’t have a problem with our clients calling us with such questions and are happy to answer them free of charge. That way small issues can be dealt with before they can escalate.

In its 2017 annual Audit Quality Thematic Review, the Financial Reporting Council found nearly a third of audits carried out “required more than just limited improvements”. In reporting about the review, the Financial Times pointed out that recent high-profile accounting scandals “raise questions about whether auditors are being appropriately sceptical when they scrutinise company accounts”, quoting a £4m fine the FRC had charged Deloitte for its audits of Aero, and a £3m fine against PwC for its audits of Yorkshire-based sub-prime lender Cattles.

Relationship-building with clients

We understand that as the majority of companies start out small – many as sole traders – directors prefer to use the services of a sole practitioner accountant or a small accountancy practice. It’s understandable that the accountant and the client will build a very good relationship with each other, with a lot of trust and loyalty on both sides.

As a business expands, it is inevitable that the director will want that relationship with the accountant to continue – and so it should. The problem for the accountant is that if the company is ever in a position to need auditing, it could become problematic if they don’t have the training and experience to undertake the task.

Many accountants in this situation are hugely reluctant to introduce their client to another accountancy firm as there is a risk that their client could be poached by a larger company. Quite often they muddle through with their own audit – but without the specialist training, experience and accountability, it could leave them vulnerable.

Outsourcing

The best compromise for sole practitioner accountants, or those in firms too small to have trained auditors, is to outsource the task to a registered auditor.

We are Registered Auditors with the Institute of Chartered Accountants in England & Wales and specialise in audits for businesses requiring FCA compliance, charities, pensions and solicitors.

At HB Accountants, we pride ourselves on our ethical stance and would never approach your client.

Under company law, all businesses must prepare annual accounts, as well as annual tax returns, to file with HMRC and Companies House. Many start-ups and small businesses hire an accountant to write these reports and leave it there, but when a company begins to expand, they tend to hire a management accountant to not only generate quarterly or monthly management accounts, but also to make the accounts more meaningful for the future success of the organisation. Below is a management accounting guide for small business owners: 

Management accounting

With management accounting, the more frequent production of reports enables managers and directors to use the up-to-date financial information to help them make better-informed business decisions and maintain effective control over corporate resources.

After the production of each report, the accountant will help clients to analyse the figures in order to work out how well, or otherwise, the company is doing. The frequency of analysis can help flag up the products and services that bring in the greatest amount of money, and those that aren’t living up to expectations, as well as help, identify and control wastage, improve cash flow and reduce expenses.

The regularity with which management accounts are generated depends on the individual company. Most will only want quarterly figures, but larger companies tend to do theirs on a monthly basis.

Outsourcing

On the whole, a large number of companies outsource management accounting to specialist companies like HB Accountants. One of our directors, Keith Grover, explains the advantages of outsourcing your management accounting.

“On a quarterly or monthly basis, we will prepare a set of accounts, then sit down with you and discuss the findings. We’ll tell you what we think the important points arising from the analysis are, and advise on the best course of action. We are also happy to attend Board meetings.

“An additional advantage of doing the accounts on a more regular basis comes with making better tax planning decisions at the best time.

“In taking the role of a virtual accounts director, a management accountant can make a significant difference to a company’s success. ”

For more information about management accounting or to make an appointment to discuss it with one of our qualified team members, call us on 01992 444466 or email directors@hbaccountants.co.uk.

Knowing what your gross profit and net profit are is a fundamental part of running a business. In the simplest terms:

Gross profit – you calculate what your gross profit is by taking your total turnover, minus the costs of the goods sold.

Net profit – this is what’s also known as your bottom line. It’s what’s left after you’ve deducted all your costs from your total turnover, i.e. the costs to you of the goods as well as all your business overheads, staff costs, interest on any business loans etc.

How to use gross profit to help you increase net profit

If you are taking steps to increase turnover, it will obviously have a knock-on effect on your net profit – ideally a very positive one.

You may want to offer discounts in order to get more business – “pile them high and sell them cheap” as the idiom goes. If your overheads stay the same, this is all well and good, but if your strategy to sell discounted products is successful, you may well need to increase your overheads in order to cope with the extra demand, and this will impact your net profit.

As soon as you understand your gross profit margin, you can use it to calculate whether any extra overhead costs involved in getting those extra sales are a justifiable business expense.

We find that, as a general rule of thumb, if you are looking after your overheads properly, the net profit should take care of itself. There’s a great phrase, “turnover is vanity, profit is sanity but cash is reality”, which means you need to get your profit right before taking care of your working capital.

If your small business is based in Hertfordshire and you would like to know more about our services and find out how our local Hertfordshire Accountants can help your business succeed, contact us to book an appointment.

At Budget 2016, the Government announced two new £1,000 allowances for property and trading income to take effect for income arising from 6 April 2017.

The Government also announced at Autumn Statement 2016 that the trading allowance may also apply to certain miscellaneous income to the extent that the £1,000 trading allowance is not otherwise used.

Further detail has now been released:

• Where the allowances cover all of an individual’s relevant income (before expenses) then they will no longer have to declare or pay tax on this income. Those with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses. The trading allowance will also apply for Class 4 NIC;
• The new allowances will not apply to income on which rent a room relief is given; and
• The new allowances will not apply to partnership income from carrying on a trade, profession or property business in partnership.

From 6 April 2018 Class 2 NIC will be abolished and Class 4 NIC reformed to include a new threshold (to be called the Small Profits Limit).

Access to contributory benefits for the self-employed is currently gained through Class 2 NIC. After abolition, those with profits between the Small Profits Limit and Lower Profits Limit will not be liable to pay Class 4 NIC but will be treated as if they had for the purposes of gaining access to contributory benefits. All those with profits at or above the Class 4 Small Profits Limit will gain access to the new State Pension, contributory Employment and Support Allowance and Bereavement Benefit.

Those with profits above the Lower Profit limit will continue to pay Class 4 NIC.

From 6 April 2018 Class 3 NIC, which can be paid voluntarily to protect entitlement to the State Pension and Bereavement Benefit, will be expanded to give access to the standard rate of Maternity Allowance and contributory Employment and Support Allowance for the self-employed.

Changes from 6 April 2018 will align the rules for tax and employer NIC by making an employer liable to pay NIC on any part of a termination payment that exceeds the £30,000 threshold. It is anticipated that this will be collected in ‘real-time’.

In addition, all payments in lieu of notice (PILONs) will be both taxable and subject to Class 1 NIC. This will be done by requiring the employer to identify the amount of basic pay that the employee would have received if they had worked their notice period, even if the employee leaves the employment part way through their notice period. This amount will be treated as earnings and will not be subject to the £30,000 exemption.

Finally, the exemption known as Foreign Service relief will be removed and a clarification made to ensure that the exemption for injury does not apply in cases of injured feelings.

Legislation will limit the income tax and employer NIC advantages where:

• Benefits-in-kind are offered through salary sacrifice; or
• Where the employee can choose between cash allowances and benefits-in-kind

The taxable value of benefits in kind where cash has been forgone will be fixed at the higher rate of the current taxable value or the value of the cash forgone.

The new rules will not affect employer-provided pension saving, employer-provided pensions advice, childcare vouchers, workplace nurseries, or cycle to work. Following consultation, the Government has also decided to exempt Ultra-Low Emission Vehicles which have emissions under 75 grams of CO2 per kilometre.

This change will take effect from 6 April 2017. Those already in salary sacrifice contracts at the date will become subject to new rules in respect of those contracts at the earlier of:

• An end, change, modification or renewal of the contract; or
• 6 April 2018, except for cars, accommodation and school fees when the last date is 6 April 2021.