Prepare for the VAT Rise

As of January 4^th 2011, VAT will rise from 17.5% to 20%, bringing the UK in line with other major European nations such as France and Italy. Although businesses up and down the country will be bracing themselves for the effects to hit, what are you actually going to do to combat it? Has your business tweaked its plans and budget to help deal with the rise?

Most businesses might be wondering what this VAT increase will actually mean and what the options are. Consider the following ideas:

Let the Business Bear the Brunt

One option is to let your business shoulder the rise in VAT. By doing so, it is imperative that marketing and sales focus is increased so that the rise does not result in your business losing money. If you decide to take this option it is probably a good idea to contact a professional bookkeeper so they can go over your accounts and work out what level of sales increase is needed to cover the VAT rise.

Pass the Rise onto Customers

If it costs more to run your business as a result of increased VAT charges you may consider passing the rise onto your customers. Nobody likes to do this, especially if you have a number of loyal customers, but it may be necessary in the long run. You may be able to swallow the VAT rises for a year or two, but the pressure to do so year after year may be too much for many businesses. Management accounts are often the speciality of local bookkeepers so invest in their services to ensure all accounts are totally accurate throughout the year and that your business does not lose any profit made to tax at the end of the year.

There are contradictory claims in the business world presently as to what the best option is to take. Whatever you decide, remember to get your numbers and calculations right with the help of a bookkeeper. Do not underestimate the effect this rise could have on your business and your customers.

Avoid Staff Entitlement Confusion in Your Business

Whether a fresh recruit in a small family run business or the CEO of a large company, everyone needs time off for holidays as well as the occasional sick day. It is a right that you and your employees deserve and should use.

But if you run a small business, how do you know what your employees are entitled to? How do you pay somebody who is on maternity leave? What about sick pay – who qualifies and for how long? These are common questions that can be easily answered if you know who to turn to.

Holiday Rights

If you employ somebody who works full time, five days a week they are entitled to a minimum of 28 days holiday a year. But this is only the basic entitlement. For part time workers this needs to be calculated separately by taking into account how long they have been working for you and how many hours they work each week. It can take detailed knowledge of the rights of workers as well as a head for figures to calculate this.

A qualified bookkeeper will be geared up to help you in this area.

Sick Pay

Employees who are unable to work because of illness are entitled to Statutory Sick Pay. It is paid by the employer and can last for up to 28 weeks. Tthe standard rate of payment needs to be worked out and eligibility depends on the length of time the employment has lasted. The person who is sick needs to earn over £97 per week to qualify and must be ill for 4 days continuously before sickness payment can start.

According to small business experts, calculating statutory annual leave entitlements is a confusing area for most small business leaders. Remember that a local bookkeeper will be an expert in all matters relating to personnel and that it’s worth seeing what they can offer you in terms of outsourced assistance.

Shortage of Accounting Staff Affecting Small Businesses

Finding trained, qualified and reliable accounting staff is always difficult. No matter your sector, finding somebody perfect for a role that involves number crunching can be a real slog.

In fact, according to a survey of staffing in finance and accounting by recruiter Poolia, 38 per cent of employers have had problems finding the right person for the job in the past. This is worrying, especially as the survey also revealed that 30% of those interviewed were actually looking for an accounting or finance employee.

But why are accounting employees important and what should you do if you cannot find someone to fill the void?

The Problem: Payroll

Every business calls for some form of accounts or finance assistance; whether it’s to manage the payroll, take care of the bookkeeping or control the sales and purchase ledger.

Payroll

If you are struggling to complete the payroll every month you will need to employ someone who can. This could be an accounts manager who you employ to carry out this type of work. Alternatively, it often works out cheaper and more reliable to outsource this work to a local bookkeeper.

Cash Flow

Knowing how much money is coming in and going out is a vital part of any business. Fail to get a grasp of this and your business may not survive for as long as you envisioned. Ideally, you should have someone on board whose job it is to keep on top of income and expenditure so each month you know just where your business is and how healthy the accounts look.

Again, do not despair if you cannot hire a full time member of staff to take care of it. A local bookkeeper will have many years experience in doing this kind of work and can do so offsite on your behalf. Sometimes they even provide a special service for sole traders and owner managed businesses that have little time to do anything but work and earn money.

Look out for an outsourced bookkeeper if any of these problems are currently affecting your business. Remember that you are not alone – there are services out there that can help you.