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Should my business be VAT registered
March 29th, 2010
It’s a question we get asked many times by our clients, ‘should my small business be registered for VAT?’. The simple answer is either yes or no – but there is a slightly grey area which is decided by HMRC. The current VAT registration threshold is when your business exceeds sales of £68,000 in any twelve month period, or if you believe your sales will exceed this threshold within the next 30 days. So, if you’ve started a new business and you are selling around £6000 of ‘taxable’ goods or services per month, then around eleven or twelve months after you start trading then your business should be VAT registered. If you are an existing business, you should be looking at your turnover for the past twelve months to see if you’ve gone over the VAT threshold – to do this, at the end of each month, take off the oldest monthly sales figure and add the month that has just ended – as soon as the figure you’ve got reaches the vat threshold, you need to register.
The grey area of becoming vat registered
As with most things in life, whether your business should be registered for VAT isn’t quite as simple as yes or no. In theory, as soon as you breach the £68,000 limit (which will increase on 1st April) in any 12 month period your business should be vat registered – but if you can prove to HMRC that this is only a temporary breach i.e. you will fall back below the threshold in the next 12 months, then they may grant you an exemption from registration – this is done on a case by case basis and it’s all about whether they believe your reasons for not needing to be registered for VAT. The process is the same as registering for VAT, except that you need to tell them why your business doesn’t need to register – keep in mind that if you fail to convince them, then they will automatically register your business for VAT.
Advice for VAT registration
Getting your business vat registered is not something to take lightly – if you fail to register for VAT when you should and are investigated at a later date, HMRC can back-date the VAT you should have collected from your customers and make you pay it – this could be 17.5% of all of the sales you have made dating back a number of years, plus a fine for not VAT registering your business. The costs of getting your VAT registration wrong can be very high, so if you are in any doubt, please contact a qualified accountant to advise you.
Choosing a small business consultant
March 15th, 2010
‘How do I choose the right small business consultant?’ can be a very difficult question for any small business owner, but the first question we need to answer is why would they need one in the first place?
Running any small business is difficult these days, from retail to manufacturing and anywhere in-between, the number of rules and regulations to comply with seems to be growing by the week. From health and safety to employment law, if you’re not on top of everything, you stand to take a very big fall when things go wrong. In addition, you might well know how to carry out the main aspects of your business, but are you getting the maximum benefit from your marketing? Are you managing your business data and records well and benefiting from the information they contain? Are you concentrating your efforts on the customers who actually generate profit instead of just increasing your turnover? A good small business consultant should be able to take away the difficulties of running a small business, allow you to concentrate on the things you do well and ultimately increase the turnover, profit and efficiency of your business.
So how do I choose a good small business consultant?
Unfortunately, there’s no magic formula to choosing a small business consultant, but the first thing you need to decide is ‘What do I want to achieve?’ Some consultants specialise in one particular area – marketing, health and safety, human resources, management systems, web design, etc – while others offer a complete package of small business consultancy so that you only need to deal with one company. Narrowing down your requirements should allow you to focus on a handful of companies, either locally or nationally, who look to be able to handle the work you require.
Once you have a specific target in mind, make contact with the companies that you’ve shortlisted and ask them about what they can do to fulfil your requirements and what the likely cost will be. Also, and very importantly, ask them for the contact details of companies for whom they have done similar work for in the past – any small business consultancy that isn’t willing to do this, should be taken off your shortlist. Speak to the past clients to get an idea of how well things went, were objectives met, etc to build up a picture of the consultants you’re looking to deal with.
Limited company or sole trader for new business start-ups – part 2
March 8th, 2010
Onwards to part two of which is best: limited company or sole trader for small business start-ups. The first part of this story looked at the benefits of sole trader status for small business start-ups, this time we’ll have a look at the benefits (and drawbacks) of limited company status.
For those that don’t know, a limited company is essentially a new legal entity that is created when the company is registered with companies house. It means that unlike sole traders, the company exists in its own right – the owners can change, the name can change and so can many other things while the bit underneath remains the same. It’s fair to say that many of the good bits about going down the limited company route are the opposites of the bad things about being a sole trader (if that makes sense!!). So, to get started:
The benefits of limited company status for small businesses
The company is a ‘legal entity’, not you as a person. This means that in most cases, should things go wrong, it’s not you as a person who would be prosecuted or sued (although this is sometimes the case!!) and it also means that the officers (directors) have ‘limited liability’ to the company (hence the name) and can’t have their personal belongings taken to pay off company debts.
The tax payable is by the company on profits made, therefore it’s always at the corporation tax level (currently 21%) and has nothing to do with personal allowances i.e. as a sole trader, if you generate more than £36,000 in profit (or there abouts) you would pay at the higher tax rate above that level, as a limited company, it’s always 21% – you can also choose when to take profits from the company to suit your own taxation issues.
Many larger companies will only deal with limited companies not sole traders – you could be prevented from tendering for work as a sole trader. It’s also generally easier to insure a limited company than a sole trader.
The drawbacks of limited company registration.
There’s always bad to go with the good – the main one being the additional paperwork involved. Each year a limited company has to make returns to Companies House based on thier accounts, which are also more complicated and will almost certainly need to be prepared by an accountant.
The small business SEO results are in
March 2nd, 2010
Just thought I’d do a quick post about our small business SEO results. We’ve done plenty of SEO work for various small businesses (and some larger ones too), but we thought we’d treat our new site as a bit of an experiment.
SEO is still a bit of a mystical art – there are tried and tested techniques, but the fact is that no-one really knows exactly how the search engines work, we just know enough to make things happen. So, here is the experiment, the results and a conclusion (ish).
- New website launched late January 2010 – approx 5-10 pages, submitted to major search engines, no backlinks. Around a week or so later, indexing started with all the major engines.
- Pages gradually added to the main site over the next two or three weeks – crawl rate fairly high, pages generally indexed within a couple of days. Total page count now around 30 or so.
- Added this blog to the site in the middle of February, began writing posts and added more content to the main site. Began building some backlinks. Most pages now crawled every couple of days and showing up in search results.
- End of February – probably around five or so backlinks from fairly average sites (PR3 front page, page with link not ranked) and front page (top four ish) ranking in Yahoo and Bing for our key terms. Google still being a bit stubborn, but we do come up in some slightly bizarre search results.
- Traffic to the site is steady, if not huge (around 10 unique visitors each day).
It’s been an interesting thing to watch – we’ve done it many times for customer small business SEO work, but never watched it in such detail. At the minute, Yahoo and Bing seem to really like the site, returning it on the front page for quite a few search terms, Google knows it’s there but seems to be spending a bit more time working out where it fits into the bigger picture – which makes sense as Google is renowned for returning more relevant results.
The conclusions for small business SEO. A bit difficult this, but here goes. Search engines like unique, readable content – if the search engines like what they find, they’ll come back, if they find nothing, they don’t. The quality of your on-site SEO can have a massive effect on your results
