HMRC Make RTI Easier for Small Businesses

The requirement for real time information (RTI) to HMRC on payment to employees was phased in on 6 April. This means that details must be sent to HMRC every time a payment is made to a member of staff. The method of doing this is to send this information electronically using payroll software as part of the routine payroll process. The Revenue was aware that this has been causing headaches for many small businesses.

                                                                                                

Those finding it most difficult run a payroll once a month, but actually pay staff more often, so to comply with RTI they would have to completely change their procedures. Many were just not able to do it by 6 April.

Easement Arrangements

HMRC has therefore temporarily changed the rules for businesses with fewer than 50 employees. They can report all payments as and when the monthly payroll is run, as long as it is before the 6^th of the following month.

At present, this just gives organisations an extra six months to get ready for RTI as it only applies until 6 October. It will, however, be reviewed in the interim. The chairman of the Federation of Small Businesses, John Walker, has said that he hopes it will become a permanent measure. This is not a sure bet so, in the meantime, all small businesses need to consider how to be ready by October and be able to take appropriate action.

Reminder of the RTI Requirements

Whether you are subject to the real time requirements or are allowed to report monthly, your business must be registered for PAYE online, and it is no longer possible for the in-house payroll function to be manual unless the details are passed to a payroll bureau to make the returns. If you want your outsourcedbookkeepers to do this, they must be given your PAYE login details. Payroll software providers are building in the RTI function to their products and existing systems have had to be updated to include it.

It is vitally important to have complete and accurate information on each member of staff, however often, and however much, they are paid. Even temporary staff must be included if your business pays them. RTI may mean that additional information is required on your payroll system. Full guidelines on the reporting requirements are posted on the HMRC website.

Even if you outsource your payroll operation, RTI is your own responsibility, so you need to be sure that your provider is RTI ready. If you use your outsourced bookkeepers, they should have already informed you of what you need to do to be ready. Do talk to them if you have any concerns about RTI. 

Taking Part in a Pop-up Shop Project

If you trade online, would you like an opportunity to meet some customers face to face and let them see and touch your products, and recognise their quality? There would be a number of advantages to this, not least the invaluable feedback you could get, and the opportunity to promote your website first hand.

How you Can Do it

PopUp Britain is one of the organisations that recognised all this, plus the fact that at the moment there are lots of empty shops in our High Streets. It was launched in July 2012 by StartUp Britain to try to do something about it. It introduced the pop-up shop project, for which it persuades landlords to make shops available to local small businesses for two weeks at a time. The businesses pay £150 to share the space with, typically, five others, so the landlord gets £450 a week rent instead of nothing for the empty premises.

For those small businesses who don’t want the hassle of long leases or can’t take the risk of renting shop premises long term at present, it’s an excellent way to dip a toe in the water. Those who have had the experience feel it was well worth while.

The Pop up Shop Experience

An entrepreneur who was able to promote her child product business in pop-up shops  reported that people want to see what something feels like and what the quality is like, and then, once they have seen you in the flesh, they’re no longer hesitant to visit your website. She emphasised the importance of talking to the customers and explaining the project and the aims of your business. If they like you they are more likely to do business with you, both at the time and online in the future.

A clothing retailer had been using market stalls for her sales but decided to try a pop-up shop for two weeks. She said that it brought a lot more customers and that more people heard about her, tried on the clothes and looked online. On the first day she had more than covered the fee for the two weeks rent. Another benefit was that she came into contact with other local entrepreneurs that she hadn’t met before. Using the pop-up shop brought them a shared camaraderie they hadn’t experienced before while they operated in isolation.

Preparation Is the Key

Before setting up in the store, it’s wise to prepare carefully. You’ll need to have cards or flyers to hand out, as well as clearly priced products to demonstrate and be available to buy. If possible, organise a launch event with some small freebies to draw people in.

You’ll also need to let as many people as possible know about it in advance. Blog about it and give it a prominent place on your website. Email your local customers and ask them to tell their friends and family. Ask your outsourced bookkeepers to spread the word too. Get your own friends and family committed to attending a launch. Promote it on as many social media platforms as possible.

It’s probably worth a try. What have you got to lose?

Where Does Your Money Go?

Everyone would like to cut their business costs. The starting point is knowing exactly where every penny goes. Your outsourced bookkeepers can help you with this, and when you have this accurate information, you’ll be able to see where you might be able to shave off a few pounds. Here are a few possibilities.

Staffing

If you need more help or someone leaves, instead of recruiting another employee, consider outsourcing to a freelancer. While the hourly rate may be higher, you only have to pay for the time needed, and you won’t have to pay tax, NI, sick, maternity or holiday pay. This also saves on reporting time to HMRC.

The VAT Reclaim

When you make your VAT return, do you know exactly what can be reclaimed on expenses, what is allowable and what is not. For example, if you have to hire a car, as long as it’s not replacing a company car which is under maintenance, and you have it for 10 days or less, you can reclaim all the VAT. Otherwise you can only reclaim 50% of the VAT.

Rules like this on VAT reclaiming are complicated and you need to get them right. Overclaiming can bring costly penalties, but don’t be among those who don’t reclaim because they are not sure what is allowed. Ask your bookkeepers for advice and get your head round the rules. Get your money back where you can. It all adds to the bottom line.

Advertising

If you have a budget for this, there may be ways to cut it. Social media gets the word around and can even be more effective than traditional and expensive advertising. If you have a presence on Facebook or Google+, Linked In and Twitter, and use it wisely, you could find the results far exceed what you get back through the advertising you have been paying for. Of course, using it wisely means taking time to post regularly, or paying someone to do it. Outsourcing it to an expert copywriter could replace some of the advertising in the budget and bring a better return on the investment.

Purchasing

There are almost always ways to save in this area. Do some market testing and keep you suppliers on their toes. Negotiate but be wary of volume discounts of supplies that might lose their quality before you can use them. One way that you could take advantage of these is to join a buying consortium of local small businesses. Not only could you buy amounts that attract lower prices, you’ll be in a much more powerful negotiating position.

Why not ask your outsourced bookkeepers for their ideas. They know your business and may be able to suggest any number of ways that you could cut costs.