•BKS_2018_12pp_AW

Our guide
to help you
in business.

Rule #1

Running your own
business should
be rewarding.

This stands both financially but also in Having an experienced qualified
terms of the sense of achievement it accountant by your side is therefore vital
brings when you are successful, along to provide you with support when making
with the freedom that comes with being key business decisions, while also dealing
in charge of your own destiny. with regulatory and administrative aspects
that could otherwise take up your valuable
However being in business requires far time, freeing you up so you can get back
more in terms of skills than simply to business.
delivering a product or service as decisions
need to be made on things such as Bennett Kirkhope Smith have over 50
pricing, promotion, capital investment, years of experience in helping business
employment and funding to name achieve success, so we’ve produced this
just a few. brief business guide with key points that
any new or potential business owner
should put into practice.

Rule #2

Get the
basics right.

Getting the basics right at the outset is • Product – What we are going to sell
fundamental to your success, but there • Price – How much we are going to charge
are endless variables which can influence • P romotion – How we are going to
the decision such as the type of product,
the cost base, existing competition and the communicate to potential customers
target market. We have the experience • P lace – How we are going to deliver
and knowledge to assist you in making
these decisions but here’s a few pointers our product
to help you along the way.
As business has become more complex
The 4 P’s (or should that be 7?!) however three further P’s have
been added:
The core foundation of any business
premise should be the 4 P’s: • P eople – The importance of staff in your
delivery and reputation

• P rocesses – The customer experience
of your product or service delivery

• P hysical Evidence – First impressions
of your company’s appearance e.g.
the website

Rule #3

Cash is
definitely King.

A business will incur some costs before Ideally how long it takes customers to pay
it has begun earning so it is important you would be less than the time it takes
to have some cash at the outset to meet you to pay suppliers. Agreeing acceptable
these expenses. Bennett Kirkhope Smith credit terms at the start of your customer
can assist in establishing working relationships as well as prompt invoicing
capital requirements. once you have supplied the product or
service, is a key part of achieving this.
As your business grows maintaining
positive cash flow is important to business Credit control in the form of checks
success as even profitable businesses have and credit limits is also vital as sales to
failed because they have run out of cash. customers who do not pay simply do
In a nutshell a business should have more not count.
in the bank and owed to it, than what is due
out to creditors.

Rule #4

Profit definitely
is sanity.

Figuring out how much of a product or Variable costs are costs where the amount
service you have to sell to cover your fixed is directly linked to what you sell such
overheads, perhaps as part of a business as materials and sub-contractors. The
plan or forecast, in the early stages difference between your sales and your
is a powerful tool in determining the variable costs is your gross profit.
feasibility of your business and in giving
you a target to aim for. Simply put, it tells We can help you in forecasting and
you how much you need to sell to make budgeting to help you benchmark and
a profit. set targets.

Fixed overheads are expenses that are
not directly connected to how much of
a product or service you sell such as
insurance, telephone and wages.

Rule #5

Good management
helps build a
good business.

The word ‘bookkeeping’ sounds very There are now various cloud based
mundane, however if it is re-phrased as packages which allow your accountant
‘management information’ it takes on a to see your business’s performance in
whole new meaning. real time so they are not just advising on
historical information, and can be
An up-to-date, maintained accounting proactive rather than reactive.
software system can provide you with
the day-to-day information you need to We would be pleased to assist in selecting
control costs and monitor cashflow and and setting up an appropriate system,
can simply be a useful tool to relieve as well as training you in its
administrative burden by for example effective operation.
integrating invoicing with the book
keeping function.

Rule #6

Tax! (We know…
this is a biggy, it has
to be done so bear
with us!)

The type of tax and rates you pay will Whatever structure is ultimately selected,
depend on the business structure. tax is calculated at the appropriate rate on
the profits of the business. The majority of
Essentially you can either be incorporated capital expenditure up to £200,000 per
as a limited company or can operate as an year is also able to be deducted in full
unincorporated sole trader or partnership. from taxable profits.

There are advantages and disadvantages
of both structures, and the choice will
depend on a number of factors. We would
be keen to speak to any new business
owner to identify the most suitable and
tax efficient business structure and
remuneration package.

Rule #7

The dreaded
VAT.

As part of our normal level of service we Businesses have to register for VAT if
will always provide tax planning to arrange their turnover exceeds a certain level
your affairs in the most tax efficient (currently £85,000).
manner, and will prepare all the necessary
financial accounts and tax returns, and Once registered VAT needs to be added
advise of any liabilities. to sales and shown separately on sales
invoices however VAT on most expenses
We always try to be proactive in keeping can then be reclaimed. The main VAT rate
you informed of and responding to any is 20%, but there is a 5% and 0% VAT rate
changes in tax rules which could affect for certain specified supplies.
you and your business.
The VAT on sales to be paid to HMRC less
the VAT to be reclaimed is reported
quarterly to HMRC.

Rule #8

A few specifics
to consider.

Even if your turnover is below the VAT Where businesses in the construction
threshold, voluntary registration is industry, which also covers building
sometimes beneficial if your customers are maintenance, wish to pay sub-contractors
largely VAT registered themselves. they need to register as a contractor with
HMRC online.
We can advise on VAT registration and
prepare quarterly VAT returns for you. Any potential sub-contractors need to
There are also other VAT schemes such be verified with HMRC before they are
as cash accounting or the flat rate scheme paid who then notify you of the rate of
which we will advise if they would tax that needs to be deducted, generally
benefit you. 20%. Sub-contractors need to be given
deduction statements and monthly CIS
returns need to be made to HMRC showing
who has been paid. The tax deducted also
needs to be paid over to HMRC.

Rule #9

A business’s greatest
asset are its staff.

Businesses receiving payments from other Employing staff is a serious consideration
building companies will also themselves if a business is to operate effectively
need to register as a sub-contractor with and expand.
HMRC. Tax deducted is recovered via the
PAYE scheme for companies and via self- A business in this instance would need
assessment for sole traders. a PAYE scheme registered with HM
Revenue and Customs. PAYE and National
We’re experienced in operating the CIS Insurance deductions need to be calculated
system, including producing deduction before staff are paid, and details of these
statements for your sub-contractors. submitted to HMRC electronically as part
of RTI (Real Time Information).

Employer’s National Insurance also needs
to be calculated and paid over to HMRC
along with the deductions of PAYE and
Employee’s National Insurance. However,
in most cases there is an annual exemption
for the first £3,000 of Employer’s
National Insurance.

Our
Approach

All employers now have to operate a work At the end of the day, we’re human as
based pension for their staff. Staff have to are you. We like to believe our down-to-
be auto-enrolled into this unless they earth, straight talking, honest and friendly
opt out. approach matters and helps us to be
different from the rest.
We will work with you to set up the
necessary schemes, advise on the finer We would love to hear about you and your
details of running a payroll, or if it is easier business so please feel free to contact us
we can operate the payroll for you making to discuss the various services we can
the necessary submissions and notifying offer you and for a no obligation
you of what needs to be paid and when. free consultation.

Bennett Kirkhope Smith Ltd.
Chartered Certified Accountants
Suites 5 & 6 The Printworks, Barrow,
Clitheroe, Lancashire BB7 9WB
Tel. 01254 828888 Fax. 01254 825003

All tax rates, allowances and exemptions are correctly stated as at February 2018.
Always seek professional advice before acting – this leaflet is for general guidance only.