You’ve made the decision to set up your own business. It’s an exciting time and you’re keen to get going, but you need more startup cash than you have savings, so you’ll have to find an external source of finance to help you with your startup funding. Going to visit your bank manager is probably the first place you think of for a business loan, but it’s a good idea to look at other options available before you apply for any kind of business investment.

Family and friends

Whilst your family and friends are more likely to be enthusiastic about your new company and are the least likely to charge big interest rates on a loan, going down this route could be fraught with difficulties. Not least of which is your relationship with them. If you accept a loan from family and friends, the advice is to formalise the process, drawing up an agreement which details exactly what each party can expect, what their obligations are, and how the loan will be repaid. By treating it in the same way as you’d treat a loan from a bank or institution, you should be able to avoid the pitfalls informal loans often fall into.

Grants

Business grants are generally made for a specific purpose and do not have to be repaid, making them extremely attractive, especially to startup companies. Click here for a list of organisations that offer financial support for companies.

In Hertfordshire, Wenta offers a Startup Programme which includes practical advice and eligibility for a grant. You’ll get 12 hours of free business support and mentoring.

Once you have been trading for a year, you’ll be eligible to apply for smallbusiness.co.uk’s monthly Small Business Grant competition of £5,000.

Government loan

The Government offers a specialist unsecured loan for startups of up to £25,000 at 6% interest, repayable over five years.

Angels

Business angels are private investors who are willing to invest money and sometimes also their own expertise in startups and startup funding. Angels are generally looking to invest smaller amounts of money than the banks or venture capitalists, but expect lower return rates. There are a number of companies that help investors and startups find each other, but the trade association UK Business Angels Association specialises in early-stage investment.

Venture capitalists

If you are looking for an investor to get more involved in the running of your business, you need a venture capitalist. They will invest money and time in return for equity or shares and take a hands-on approach. If you’d rather not be seen being grilled on Dragon’s Den, visit the British Private Equity & Venture Capital Association for more information.

Crowdfunding

Most people think of crowdfunding as a way of asking people to donate to good causes, but there are also crowdfunding sites, like Crowdcube, that specialise in raising startup funding for small businesses. Crowdfunding has enabled smaller investors to put money into small businesses and startups, with the consequent benefit of allowing businesses to raise finances from a wider range of investors in return for shares.

If you would like advice about the best way of funding your new startup business, contact us to book an appointment.

A study undertaken by the Centre for Economics and Business Research study found that SMEs, on average, spend around a million pounds a year on their business operations. Those with more than 50 staff spend an average of £3m every year on goods and services; micro businesses, i.e. those with fewer than nine employees, spend an average of £225,379.

The study was able to drill down into the figures, discovering that the average SME spends 24% of its budget on hiring new staff, 20% paying suppliers, and 19% on technology. The good news is that older businesses tend to spend less on expenditure. However, overall, it shows the importance of managing cash flow at all levels of business.

Here’s our breakdown of these, and other expenditures that make up the majority of an SME’s costs:

Staffing

Don’t forget that staff expenditure doesn’t end with how much you pay them. You will also take into account any benefits, bonuses and commission, tax, insurance, as well as the HR costs involved, including pension contributions, the cost of recruiting and training new staff, training courses etc. You also need to factor in the cost of any consultants whose expert advice will help you do a better job of running your company, e.g. trainers, HR specialists, management consultants etc.

You also need to take into account the fact that there will be times when your staff are faced with productivity problems, which could be anything from being delayed in meetings, stuck in traffic, sickness, power cuts or breaks in broadband to disasters such as fire or flooding for which a rigorous disaster recovery plan needs to be in place.  

Suppliers

If you are a retailer or manufacturer, you will have the cost of buying in stock and raw materials which also have costs associated with delivery and storage.

Overheads and operating expenses

Having the right technology is vital for the smooth running of your business and provision must be made for upgrading it on a regular basis. Your computer systems may appear to be working, but older ones will probably be slower (wasting valuable staff productivity time) and less secure. In 2017, the average cost of a security breach to a medium-sized organisation was over £3k, so it is well worth the investment to keep your cybersecurity up to date.

All businesses incur the expense of running the organisation – office rental, utilities, office equipment, and any company vehicles.

Late payments and long payment times

SMEs can really struggle and sometimes go out of business altogether because of late payments, whether it’s because of long payment conditions – sometimes 90 days or more – or the inefficiency or poor ethics of your debtors. Late payments cost SMEs a whopping £2bn a year in terms of chasing them and paying interest on overdrafts and loans to keep the company going in the interim.

If you run a small or medium business and need help managing your company’s expenses, financial planning and business advice, please talk to us! Call us on 01992 444466 or click here to contact us to find out more.

The Ambition conferences are a hugely important business and community initiative for two reasons. Firstly, it’s an incredible resource designed to help Hertfordshire entrepreneurs and small businesses develop their sales and marketing skills in order grow their businesses. Secondly, 100% of our ticket sales go to two amazing local charities.

I have been involved in all four Ambition conferences and am a huge advocate. The conference is organised on a voluntary basis by local SMEs who believe that if we work together and support each other, we can all benefit from the business opportunities in Hertfordshire, with a consequently positive knock-on effect on the local economy. 

On a personal and professional level, I’ve always got tremendous value from working as a team with the committee, and think it is an inspirational example of local businesses working together to help boost the local economy at the same time as benefiting the community.

That’s why I’m involved and why I agreed to become Chairman. But how will Ambition help your business? Here are the top reasons why you should attend:

It’s great for your business

First and foremost, Ambition 2018 is there to help local companies that are, as yet, too small to outsource their sales and marketing, but understand these skills are vital for their growth. Our professional speakers are all experts in their fields and will pass on tips and the benefit of their experiences in order to help you get to grips with this important aspect of running a business.

It ticks your business and Corporate Social Responsibility boxes

All the expenses involved in the organisation of Ambition are covered by our sponsors. This enables us to keep the cost of tickets down so they are low enough for even the most modest start-up to be able to afford – only £95 (Early Bird rates are even lower). But most importantly, all the proceeds raise thousands of pounds for our nominated charities. You don’t have to be an accountant to work out that the more delegates attend the conference, the more money we raise for good causes.

It attracts great speakers

Speakers really appreciate the ethos behind the conference and, because it is a non-profit-making event that benefits charities, it attracts higher quality speakers than we could otherwise bring on board – in fact, all our speakers are kind enough to donate their time and expertise so more money goes to the charities.

It’s inspirational

Having attended all the Ambition conferences, I know how inspirational they can be for entrepreneurs and people who run small businesses. They are exceptional value for money in terms of teaching entrepreneurs and managers more about sales and marketing, networking opportunities and having plenty of sales and marketing professionals to bounce ideas off. I really want to encourage more business professionals to take part and make 2018’s conference the best yet!

What happens at Ambition

The format is that we sit together on tables during sessions, listening to the speakers. We then have a chance to discuss the session on our tables before the next speaker so the key takeaways are more likely to be remembered. Delegates can network with each other during the breaks and over lunch. In previous years, people have not only got a lot out of them, but have also had a good time too!

Click here to find out more about this year’s speakers. Other speakers will be announced as soon as they are confirmed and we will shortly post more information about the sessions.

Booking will open soon – watch out for the Early Bird offers to get an even greater ROI!

HMRC allows certain gifts to be made in recognition of long service, subject to some conditions. To qualify, the gift:

• Must be for 20 or more years of service
• Is not cash or vouchers that can be converted into cash
• Does not cost the employer more than £50 for each year of service; and that
• Where more than one long-service gift is made to the same employee (or director) the exemption can only apply if there’s at least ten years between each gift

One way of putting cash into the employee’s hand (without actually doing so) could be to purchase something that they would normally but themselves, e.g. a season ticket at their favourite football club, a travel card or fitness club.

Another option is to consider making an employer’s pension contribution, of which 25% would be tax free when accessed. If they are 55 or over they can do this immediately, so making a contribution of £4,000 could be put £1,000 in their pocket tax free.

It’s always good to get an insight into someone else’s working day, that’s why we like to focus on different members of staff for our ’A Day in the Life feature’. This time, one of our Directors Keith Grover describes a typical working day.

The alarm goes off at the usual time of 6.00am. I’m up straightaway or else I’m struggling! I go downstairs for a shower, breakfast, stroke the cat and read the Bible. Before I leave, I check my emails. I live in St Albans and drive to work, so leave the house at 7.00am, popping into a local newsagent to buy a copy of The Times newspaper en-route. I arrive in the office at 7.30am.

Busy morning

I’m not the first one in; a couple of my colleagues are here already. I switch on my computer, re-review and deal with the straightforward emails and then put the kettle on for a cuppa char! I have a brief discussion with Karen Robbins, one of our managers, about how she’s getting on with her jobs and everything is going well. I go back to my desk and update my time records on our costing system for the last three days.

Next, I do some work on the accounts of a client, a business owned by a wealthy Greek businessman. I have a few questions so I email these over to the company administrator.

I’m responsible for the preparation of our company’s own accounts and so I do some work on the January 2018 books and records.

This year, I’m the Chair for the Ambition 2018 Sales and Marketing Conference. Even though it’s not being held until 14 November, we want to get 10 sponsors on board as soon as possible. I liaise with a member of the committee and email a potential sponsor, as does she.  

There is a little bit of our month-end billing still to do, so I discuss these with my fellow director Karen Chase in order to finalise them.

Signed accounts arrive in the post from a client, a small limited company owned by a guy I met through a local networking group. I sign these as well as our accounts file, then return the file to the manager handling the client and she does the rest.

A local accountant arrives with an audit of a large property company to sign off. We have an excellent arrangement with him whereby he prepares the accounts and we carry out the audit as he is not a registered auditor. We also discuss his exit strategy as he is coming up to retirement and wants to sell some of his portfolio to us. He agrees to prepare further details for me to review with my fellow directors, with a view to this happening in April.

We are having a marketing meeting this afternoon at 2.30pm with our marketing consultant, Kate Adam from Meredith Marketing. I do some preparatory work, scheduling the new clients that we have gained in January. It has been a good month and the results are encouraging.

We are in the process of becoming a Xero Partner – Xero is a very popular cloud-based accounting software that’s increasingly being used by our clients. In order to achieve this partnership, I’m going through Xero’s web-based training modules. I complete three modules. These are fairly time-consuming, but it is important that this is completed sooner rather than later.

Working lunch

Kate Adam arrives at 1.00pm and the two of us pop up the road to a local Italian restaurant for a light lunch. We discuss marketing as well as having a general catch-up. We get back just before 2.30pm and go straight to the boardroom where we are joined by Karen Chase, Amy Armitage and Charlotte Nicholson. It’s a very useful meeting where we discuss what has been successful and what hasn’t been over the past year. We come out with an action plan with a view to a follow up meeting in a month’s time.

It’s now 4.00pm so I go back to my desk to catch up and deal with a number of emails, telephone calls and other admin matters, before leaving at 4.30pm. I’m due to go out with some friends for an Indian meal tonight – we’re meeting there at 6.00pm so I need to get away a bit earlier today.

I like having a job with variety

My day is extremely varied, which makes it really enjoyable and rewarding. Being a director means that I get involved in practice management and marketing matters as well as accounting technical ones. Today has been more of the former rather than the latter, but that’s how it goes and both are important.

I’ve been at HB Accountants for over 31 years. It’s a great place to work and the people are wonderful, as are our clients and contacts. The work-life balance has always been important here so there is not a long-hours culture, which I’m extremely grateful for.

Starting your own business is exciting, risky, hard work and scary (especially if you’re giving up a full-time job in order to launch your own company), but at the same time it can be tremendously fulfilling as well as profitable.

According to the latest figures, the number of UK start-ups is booming – in 2016 there were a record-breaking 657,790 new businesses. In East Hertfordshire alone there were nearly 4,500 new businesses, which is terrific news for the local economy.

If you have a really good business idea and are determined to help break start-up records in 2018, there are a number of organisations you can turn to for support, mentoring and training to enhance your chances of becoming a success. We’ve taken a look at some of their advice:

Business plan

Entrepreneur.com has published a number of useful articles on how to write a business plan, letting you know what kind of information you need to include, including financial information, competitor analysis and a development plan.

Start-up loan

If you’ve been trading for less than two years, you could qualify for a government-backed start-up loan between £500 and £25,000 as an unsecured personal loan with a fixed interest rate of 6%. Applicants are offered free support and guidance with writing a business plan and, if your loan is successful, you’ll qualify for up to 12 months’ free mentoring.

Training

Although you will be starting a business to do something you not only enjoy but also do well, there are inevitably many processes and procedures you’ll have to follow, whether it’s registering your company, coping with the day-to-day finances, marketing and social media etc. In Hertfordshire, entrepreneurs can take advantage of free or low-cost training courses run by Wenta, an organisation that provides support to start-up entrepreneurs across the county.

Staffing

It may well be that you need to employ staff members, either from the outset or as you start to expand. If you’ve never recruited before, you’ll need to find out about your obligations as an employer, as well as advice on managing your new staff. The government website for small businesses has a section on recruiting and hiring providing comprehensive advice and a support helpline.

Accounts

Whilst it’s possible to set up your own business on your own, there are compelling reasons to use professional help wherever possible, especially when it comes to doing the small business accounts. We can help you with tax returns, VAT registration, shareholders’ agreements and even payroll to ensure that you don’t make mistakes that could prove costly in the long run.

In this tax blog, we will discuss the newly introduced (from 6^th April 2017 onwards) residence nil rate band and what this will mean for our clients.

What is the Nil Rate Band?

The nil rate band, also known as the inheritance tax threshold, is the amount up to which an estate has no IHT to pay. Each person’s estate can benefit from the nil rate band.

Everyone has their own nil rate band. This means that their estate and taxable gifts are exempt from IHT up to a certain threshold – currently £325,000. Any part of the estate up to the threshold is chargeable to IHT at a rate of 0%. Any part of the estate that exceeds the nil rate band threshold is chargeable to IHT on death at 40%.

The Transferable Nil Band

It is possible for the unused proportion of the nil rate band of the first spouse or civil partner to pass away to be transferred to their survivor. This means that any part of the nil rate band that is not used when the first spouse or civil partner dies can be transferred to the surviving spouse or civil partner for use on their later death.

Where the whole amount is passed to the surviving spouse or civil partner, the nil rate band of the survivor will be worth £650,000 (2017/18). If the deceased had made other gifts out of their estate, then the proportion of the nil rate band transferable is reduced proportionately.

What is the Residence Nil Rate Band?

The residence nil rate band is an additional nil rate band, which is available where a death occurs on or after 6 April 2017 and property in the estate which has been the deceased’s private residence, is left to direct descendants.

The residence nil rate band is set at £100,000 for 2017/18, £125,000 for 2018/19, £175,000 for 2019/20, and £175,000 for 2020/21.

As with the normal nil rate band, any unused portion is transferred to a spouse or civil partner on his or her death. If the spouse or civil partner of an individual died prior to 6^th April 2017, the residence nil rate band will still be able to be transferred in full to the surviving spouse or civil partner, if his/her death occurred after the 6^th April 2017.

The allowance is reduced by £1 for every £2 by which the value of an individual’s estate exceeds £2 million.

Downsizing

Availability of the residence nil rate band may be preserved where a person downsizes their property on or after 8 July 2015.

If at the date of death, the estate does not qualify for the full residence nil rate band, a downsizing addition may be available if the following conditions are met:

1. The deceased disposed of a former home and either downsized to a less valuable home or ceased to own a home on or after 8 July 2015
2. The former home would have qualified for the RNRB;
3. At least some of the estate is inherited by direct descendants.

The amount of the downsizing addition will generally be equal to the amount of the residence nil rate band that is lost because the residence no longer forms part of the estate. Assets at least equal to the residence nil rate band plus downsizing addition must be left to direct descendants.

Assistance

The HB Accountants tax team can assist you with any queries you have regarding the residence nil rate band, or any other tax questions.

Please do not hesitate to contact Amy Armitage, Tax Manager (amy@hbaccountants.co.uk), with any queries you may have or for further information regarding this topic.

For an SME, a merger can make very good business sense. The combined strength of two companies can provide rewards in terms of economies of scale, market share, a wider reach and improved productivity. A merger could help you get into different markets, allowing both companies to expand into different areas without the need to start from scratch and build up a client base.

However, although mergers and acquisitions can ultimately be good for business, they pose a lot of challenges that you will need to consider if you want to get it right. It could be quite beneficial to seek objective and practical advice from an expert. 

Due diligence

However well you think a merger is going to work, you must always do your due diligence in advance to make sure your new partnership is based on strong business and financial foundations. This could involve a thorough audit and assurance check before any documentation is signed.

Governance

One of the main problems that can occur from two companies coming together is that you will have twice as many directors and managers! The combination of doubling the management team and bringing together their different leadership styles could result in a much slower decision-making process. The new leadership and decision-making structure needs to be clearly defined as uncertainty about who is responsible for what will end in chaos, and that is not good for business.

People

Possibly the greatest challenge to a successful merger is people. The changes will bring with them uncertainty and resistance that will need to be managed carefully. There could be a lot of problems caused by bringing two distinct company cultures together and many mergers and acquisitions have failed because of HR issues. It could well be that you lose key talent because of the uncertainty beforehand, or personality clashes once the merger is complete. To make the new business work, you must effectively manage the changes in order to get buy-in from staff in both companies.

Communication

Communication plays an absolutely key role in the success – or otherwise – of a merger. Change is unsettling for everyone concerned and, if you are not careful, will cause rumours to circulate that could cause a lot of trouble amongst your staff and clients, with the potential to sabotage the success of the merger. To avoid this happening and to allay people’s fears, you must keep everyone informed at all times, letting them know how changes will affect them.

It’s always interesting to get a little snapshot of other people’s lives which is why, from time to time, we like to feature some of our team in our Day in the Life Of… feature. If you’ve ever wondered what someone who works in the Payroll department gets up to on a daily basis, now’s your chance! We asked our Payroll Manager Jane Dunn to take us through her typical day at work.

6:45 Woken by alarm. Up for breakfast, calling to my daughter Bridie on the way to ensure she is awake and getting ready for 6^th Form. I always ensure I have breakfast – I function better that way – then back upstairs to shower and get dressed, shouting a time check to Bridie as I pass her room!

7:45 I usher Bridie out of the door to catch her school bus – she is 17, but that’s being a mum for you!

8:00 Leave for my journey to work which can be unpredictable at times. Today the traffic is really slow locally, probably due to the high winds. Thankfully by the time, I reach the A10 the traffic has reduced and I make it to work arriving 5 minutes late. The Directors at HB are more than understandable and know that a little give and take about these things works well.

9:05 I always make a point of saying good morning to everyone and then make a quick pit stop for a cup of tea.

9:10 My first task, as always, is to start the day looking through my emails, answering any queries that I can straight away. Those that need more time to look through historical data are put to one side so that I can review the day’s schedule – in Payroll, it is imperative that the clients’/HMRC reporting deadlines take priority.

9:45 I start working on today’s payrolls – January can be a busy month for changes as many clients use this month for salary increases. Today’s clients fall into this category, but otherwise, their payrolls are relatively straightforward, with just the addition of automatic enrolment pension assessment administration to be completed.

12:10 An email query arrives asking about paternity leave and pay entitlement. I am at a good point in between payrolls to answer the email, so I make a quick check to ensure legislation hasn’t changed, and then send a response.

12:30 Back to processing payroll.

1:00 I always tend to take my lunch break between 1-2 and try to pop out to stretch my legs and get some fresh air – a proper break from the office refocuses the mind… and I do enjoy a little bit of retail therapy from time to time.

1:50 Back a bit earlier today I have a client coming to the office which is good for me as a lot of my communication with clients tends to be either by email or phone, so I do enjoy meeting face-to-face.

2:00 The meeting starts and we have a little catch-up on family and Christmas, then it is down to business and we discuss how I can meet the payroll reporting needs of the client – I offer an example of a report and the client feels it could work well. We agree to run with the change for February. Further discussions follow regarding the forthcoming automatic enrolment pension changes in April.

4:00 Payrolls from earlier in the day are sent out to clients. I do a quick check to make sure all reporting to HMRC has been completed for all clients with today as their deadline.

4:30 A last-minute call with a client about a change for an EPS submission to HMRC and it is sent.

4:40 I begin work on a historical review of PAYE liability for a client, following correspondence received from HMRC.

5:05 Switch off and start the journey back home.