Running a business is never easy, particularly when trading conditions are difficult. For owners and operators of small businesses things can be even more challenging when times are tough, because the problems across the company are all focused on one or two key people. The manager of a small business has to be skilled in the market in which the company trades, but also has to be competent in all the other tasks that contribute to running a company.
For example, the owner of a small building company needs to understand the ins and outs of constructing buildings, but also needs to be familiar with planning regulations, sales, marketing, contracts, controlling projects, employee management and accounting. The chances that any one person is going to be an expert in all of these fields is fairly remote, although many try to be. It is in these situations that companies can start to unwind, with owners focusing on all manner of problems, which result in them becoming distracted from the core operation of the business.
The astute business owners are the ones who recognise their own core abilities and understand exactly where they add real value in their companies. Then they focus on those areas and outsource the remaining tasks to skill area experts like marketing consultants, project managers and accountants.
A classic example in point would be the recent turn of the tax year and wide-ranging changes that anyone with paid staff would have to worry about. An increase in the personal allowance levels and changes to the percentage and application levels of National Insurance contributions necessitate many changes in payroll calculations. A quick glance at the HMRC National Insurance Contributions table is enough to convince any business owner that this is a situation where the assistance of a local accountant would prove very helpful. Other changes were implemented at the turn of the tax year including increased mileage allowances for anyone travelling on business and lower corporation tax levels for small companies (businesses with profit levels below a particular threshold).
The recent budget is another example where numerous changes were announced that will affect many small businesses across the country. Some will be rolled out immediately, while others are planned for a point in the future, giving businesses time to understand the changes and plan for them accordingly. That planning could be made much easier by employing the skill and experience of an accountant.
One key initiative announced by the Government was further progress in a project managed by the Office of Tax Simplification (OTS). This organisation is looking into ways of reducing complexity in the tax system as many are beginning to realise that business is being impaired by the need to operate within a time-consuming tax regime that brings few benefits for its complexity. One key area of investigation is the proposed merger of Income Tax and National Insurance. That project alone is hugely complicated to define and implement, but once it is complete, should ease the administration burden that separate systems bring to any business.
These are just a few example of accounting situations that small businesses need to concern themselves with currently. Working out whether any changes to financial administration rules affect the company and then deciding what exactly is required is often best left to an expert. If a company has competent accountancy staff within the business then that may not be a problem, but for small firms with a narrower range of in-house skills, a local accountant is normally the best and most cost-effective way of addressing the situation.