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’.