Entries from December 2009 ↓

What is an SME?

• · SME is a shorthand for Small Medium-sized Enterprises and fits into European Community definitions for support purposes.
• · SME’s have less than 250 employees, lower turnover and assets than €50 million.
• · Micro businesses have less than 5 employees but are also SME’s.
• · SME’s can be sole traders, partnerships, companies or some other variations.

Home Based SME’s

Home-based businesses tend to be cheaper to run and more flexible than conventional businesses.

Home-based businesses are popular because costs are lower and commuting is not an issue. You have the freedom and flexibility to work the hours you choose in an environment that you create.

If you are a regular Ebay trader, sell handicrafts or earn money from internet blogs etc you are probably, already an SME and therefore need to understand some issues. Depending on the nature of your business it is a good idea to check with some of the following:

* It is vital you advise HM Revenue & Customs and check to see what your income tax and VAT position is.
* Your mortgage lender or landlord/freeholder – your mortgage or tenancy agreement may prevent you from using your home to run a business.
* Your insurer to see if you need to take out extra insurance.
* The Valuation Office Agency (VOA), to see if you will be charged business rates and the Local Authority planning department if you need to make structural changes to your home
* The Health & Safety Executive or your local authority to find out the health and safety aspects of running a work at home business and how to do a risk assessment.
* Free advice is available in most parts of the UK from Business Link

What Records Must a New Business Keep?

· It is commonsense and a legal requirement to keep full and accurate records of your income and expenses from the start.

· Keeping good records helps you complete your tax returns easier and quicker, pay the right tax and avoid paying unnecessary interest and penalties.

· You should keep invoices and receipts to show what you have bought or sold relating to your business.

· If you are employing others, you must keep records of their wages and tax and National Insurance you have deducted and paid to HM Revenue & Customs (HMRC).

· Keep bank statements and all financial records especially if you don’t have a separate business account.

· You must be able to show clearly what you have spent personally and what is spent on business.

· When you use cash keep till receipts and a record book to keep track of it all.

Tips for Starting A Business

· Have a system and procedures to work on your business.

· Get a cash book or use a good software package that will prompt you to keep good accurate records.

· Have a day book and note everything down as it is easy to forget costs or issues when you are very busy ‘doing your business’.

Some people or businesses are reluctant to switch banks because they think the process could be time-consuming and risk loosing information.  It is easy to stay with the bank you first chose through inertia when but switching your account could help you get a better deal.

The Banking Conduct of Business Sourcebook (BCOBS) which replaced the Business Banking Code on 1 November 2009 commits banks to making the transfer of your account quicker and simpler.

The development of telephone and internet banking, means there’s a range of attractive packages and products available. Most of these are designed to help banks make profits so check that you are getting what you want and what you are willing to pay for.

Your old bank has to send details of your direct debits and standing orders to you and your new bank within three days of a request to do so. Your new bank must then set up these payments and inform the recipients of your direct debits within four working days. If they fail to fulfil their commitments you may be entitled to a payment from the bank concerned.

What should I consider before changing Bank?

* Understand why you are going to change banks eg cost, reliability service, location etc.
* Consider whether you are comfortable using telephone or internet banking or do you need to visit your branch.
* Do you need advice from your bank about credit, mortgages, business or other matters.
* Select your new bank after deciding on the above factors

How do you make the Transfer Smoother?

* Check the terms and conditions of the new account carefully. Contact your new bank and obtain application forms.
* Discuss any concerns you have before returning the forms.
* Complete the mandate from your new bank. This allows them to deal with your old bank on your behalf and request details of regular payments.
* The new bank will arrange for standing orders and direct debits to be switched. Check whether the bank will notify them, or whether you should do this.
* You should tell everyone who automatically sends you money like salary and dividends  your new account details so they can continue to pay you.
* Keep monitoring both accounts carefully to check for errors or problems such as payments being made twice or missing altogether.
* If possible, keep your old account running until you’re sure the new bank can deliver the service you require.
* Your new bank should notify you when they are satisfied they’ve completed their responsibilities for the switch.

What are the Pros of switching bank accounts?

* A new account might offer more attractive interest rates or lower bank charges.
* Many bank accounts come with introductory offers, such as free banking for an initial period.
* If you’re unhappy with your relationship with your current bank, a new one might understand your requirements better.
* Your current bank may not offer 24-hour telephone or internet banking services you might want to transfer your business to one which does. Making payments and transferring funds electronically could also help you reduce bank charges.

What are the Cons of switching bank accounts?

* If your accounts are complex, it can still take time and there’s no guarantee of avoiding problems altogether.
* You will need to assess the impact of switching on other arrangements you might have with the bank such as loans or credit cards Your new bank may want to change the level or refuse them altogether.
* Staying with one bank for several years can sometimes help you demonstrate a certain level of financial stability. This can be important if you ever want a loan or are seeking other sources of finance.
* You will lose the benefits of personal relationships and the understanding of you as a customer that has built up with your current bank.
* Changing cards and documents means time and effort, new passwords and a bit of vigilance on your part during the change over.

Tips For Changing Bank

* When you do change keep your old account open for a while in case of problems.
* I have found it easier to open a new account for new transactions and never close the old account. More bumph but also more control.
* Joint accounts and business accounts are similar in function but make sure every signatory knows what is going on.

1. If it looks too good it probably is – only go in to investments you understand – buyer beware.

2. Keep an eye on all your savings to be sure they are still giving you the best deal and remain appropriate for your circumstances.

3. Diversify your investments and savings. Spread the risk with different providers in different markets and products.

4. Make investments that compound your returns interest on interest mounts up over time and you are not investing for a quick buck.

5. If the return is higher than government bonds there is likely to be a risk The bigger the return the larger the risk.

6. The risk is most obvious when the investment is volatile but still exists before it becomes volatile.

7. Question any ‘low risk investment’ advice that offers superior returns.

8. Do not copy friends or follow the crowd because it seems to be the thing to do. A desire to conform can make for bad investment decisions.

9. Drip feed your investments rather than buying all at the same time to get the benefit of pound cost averaging

10. Do not rely on FSA regulation for a product or company it is only an indicator.

11. If the sums are material use a professional advisor or investment manager who should have experience of minimising risk and exposure to fraud.

12. Listen to advisers particularly if they offer cautious, contrary advice about an investment you want to make. They may know some thing you don’t.