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Managing Cashflow in Your Small Business

Managing Cashflow in Your Small Business

It is no exaggeration to say that cashflow is the lifeblood of your business. You can be as profitable as you like, but without ready cash in the bank to fulfil your obligations, your business could run into serious trouble. In this article, we cover the basics of cashflow management for businesses. You will learn about the main elements which affect cashflow, and how to use them to draw up a cashflow forecast, which you can use to deal with problems before they occur. Finally, we look at how you can use credit control, cost control and sales to improve cashflow, and the various external finance options available to boost your financial health. What makes up my business’ cashflow? Essentially, your cashflow refers to your actual cash balance at any one time. When looking at cashflow, you a... »

Government clarifies what VAT MOSS ruling will mean for small businesses

HMRC confirms small firms will not be forced to charge UK VAT on domestic sales but will still need to register for “Mini One Stop Shop” from January 1 The government has confirmed that the controversial VAT “Mini One Stop Shop” (VAT MOSS) EU ruling, to be introduced on January 1 2015, will not force sole traders and small businesses to charge UK VAT on domestic sales. The clarification from HM Revenue and Customs (HMRC) follows several recent lobbying campaigns by organisations and entrepreneurs calling for exemptions to be made for the country’s small firms after issues were raised about the ruling penalising digital businesses selling in Europe. From January 1, the new EU regulation would have required all UK firms selling digital services and products in Europe, including e... »

UK Businesses Owe £2.6bn in Overdue VAT

The HMRC are owed £100m more in arrears this year as UK businesses struggle to pay their taxes UK businesses owe the HMRC £2.6bn in overdue VAT, according to figures released by specialist finance provider LDF. The deficit has increased by £100m in comparison with last year, causing concern for UK businesses struggling to fund tax payments. For companies with a turnover in excess of £1.35m, VAT bills are issued on a quarterly basis and calculated on a company’s invoices, not the amount that has actually been received from customers over that period. Businesses are therefore often unable to keep up with their taxes as they are still awaiting payment from customers. This struggle to meet VAT payments could especially be an issue for small and mid-sized businesses as a recent report by the As... »

VAT: An Introduction

VAT (Value Added Tax) is a tax on spending. Businesses must charge VAT if their sales are higher than a certain threshold when supplying goods or services to customers in the UK or the Isle of Man. It is also charged on goods and some services imported from outside the European Union, or coming into the UK from the other EU countries. This guide looks at: VAT: the basics Importing and exporting Special cases: secondhand goods, selling on the web and property Accounting for VAT VAT inspections There are no financial thresholds in this guide because they change regularly – contact HM Revenue & Customs (HMRC) – www.hmrc.gov.uk – for up-to-date information. VAT – the basics In essence, if you are registered for VAT, you add VAT to all your invoices where VAT is char... »

VAT: Top Tips to Prepare for the VAT Rise in January 2011

In an attempt to raise revenue and reduce government borrowing and debt, the UK VAT rate is set to rise on 4th January from 17.5 percent to 20 percent. To avoid an administrative headache, small business can prepare for a smooth start to 2011 with some year-end planning. Intuit UK has some top tips to help small business owners avoid mistakes and possibly even see some short-term benefits from the VAT changes. 1. Get a head start to the New Year To make sure that you can quickly adjust to the new changes, it makes sense to start planning for the change now. There are a number of rules surrounding advance deposits/pre-payments received before 4th January 2011 for goods or services made after this date. And it’s worthwhile being clear on these new rules as getting it wrong could be costly. T... »

ACCA Says SMEs Should Defer VAT Payments

VAT rise – it’s not just consumers who have to pay, says ACCA The recent VAT (Value Added Tax) hike has repercussions for small businesses, says Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants (ACCA). Chas Roy-Chowdhury says: “All businesses – whether small or large – must now pay an extra 2.5% more for their purchases from their suppliers. This will be more of a problem for those that are not VAT-registered. However, most firms that are over the VAT threshold – those that have a turnover of at least £70,000 – can recover the costs.” “But for those firms under the VAT threshold, they will end up paying more for their goods. As a result, there is a chance that they will increase prices to recoup these costs. SME owners will no doubt ha... »

Small Businesses Divided on How to Deal with VAT Increase

Businesses are split about how they will deal with the increase in VAT due to come into effect on 4th January 2011. 6 in 10 businesses believe that the increase in VAT from 17.5% to 20% will affect their organisation’s cashflow to some extent. Nearly one tenth (9%) think cash flow will be affected to a significant degree. The Institute of Chartered Accounts in England and Wales (ICAEW) is urging companies to start preparing for the VAT rise before the Christmas rush. Businesses affected by the VAT increase are divided in their approach as to how to deal with it – over a third are likely to absorb the costs within the business (36%), under a third expect to increase their prices (30%) and the remaining third (34%) plan to do both (absorb some costs and increase some prices). Furthermore, th... »

New QuickBooks Simplifies VAT Returns

Intuit UK has today launched the latest version of its QuickBooks software. The new product is designed to make small business bookkeeping quick and easy, helping small businesses take control of their finances. Packed with new features and improvements the new product includes the new VAT Exception Report which makes it easy for small businesses to manage the changes that might occur after filing VAT. The report automatically adjusts calculations, ensuring the next VAT report is accurate and provides a transparent audit trail for both the small business owner and HM Revenue & Customs (HMRC). In addition, the new One Step VAT Returns feature allows small businesses to automatically populate their quarterly VAT returns and to file them instantly and securely online with HMRC. This great... »

FSB wants NI and VAT Freeze

FSB wants NI and VAT Freeze

Freezing National Insurance Contributions (NICs) and suspending VAT increases must be priorities for the next Government to help small firms out of the recession, the Federation of Small Businesses (FSB) has said. Launching its 2010 manifesto (149k PDF) to coincide with the run-up to the general election, the FSB has made several recommendations which it says will help small firms create jobs, get access to finance, innovate and set up new businesses. One of the key proposals is a shake-up of the current payroll tax regime, including a freeze on NICs and a rebate for firms taking on new staff over the next two years. “Two critical areas for small firms are job creation and broadening access to finance,” said an FSB spokesperson. “Small businesses hold the key to tackling ... »

From 1st April 2010, if you have an annual VAT exclusive turnover of £100,000 or more you will have to submit your VAT returns online

VAT is Moving Online

From 1st April 2010, if you have an annual VAT exclusive turnover of £100,000 or more you will have to submit your VAT returns online and pay your VAT electronically. Also, if you register for VAT from 1st April 2010 onwards, you’ll have to file online from the start, whatever your turnover. But don’t worry, nothing else has changed; it’s the same form and the process is secure. Doing your return online also helps reduce errors, provides automatic calculations and with an on-screen acknowledgment that it’s been received you don’t have to worry. What’s more, its available 24 hours a day, seven days a week, so you can do your return at a time that suits you. If you’re using HMRC Online Services for the first time, you will have to register for ... »

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