We often complain about HMRC’s heavy-handed tactics in collecting tax, but we have it easy compared to what Italian taxpayers will be facing soon in a crackdown on tax evasion. The Italian tax authorities have just released the following mind-boggling data and apparently nobody is disputing its accuracy:
There are 4 million taxpayers in Italy, with 66% claiming a gross annual income of £16,500 or less.
188,000 of taxpayers declaring income up to that level own a Maserati, Ferrari or Porsche and 518 of them own and run a private jet or helicopter.
Tax evasion is estimated to total Euro 275 billion each year.
Spot visits to businesses have resulted in admissions that true profits are 6 times what have been declared.
You’re working really hard but are you really enjoying it all?
Do you have time and money enough to do all of things that you want to do outside of work?
Do your family and friends see enough of you and when they do can you relax and enjoy your time with them?
If you answered no to any of these questions, then perhaps it’s time to reflect on how to make the changes that you need to make to give you the life you want to have.
Many small and medium sized business owners are running very hard at work and find themselves too tired and stressed to enjoy their time outside of work.
If this is you, then what is the point of running so hard?
In my experience many people are too busy to lift their heads and think about how they could make changes which would allow them to spend less time at the grindstone and more time doing the things that they want to do.
The common mistake that people make is to say “I need the money” and so I have to keep working harder and harder. Well, have you ever examined whether or not what you are doing currently is the best way for you to make that money? Have you ever thought about whether there is a way for you to make money from your business without you having to be involved 24/7?
You may well find that investing a bit of time and money now in working through a plan for you and your business, starting with the end in mind, will enable you to achieve your goals and dreams.
And let’s face it, if you don’t achieve your goals and dreams, then what is the point of it all anyway?
Whenever I mention the words “business plan” to people, whether they are just starting up in business or already established and looking to grow or change their business, they look at me as if to say “do I have to?”
A lot of people seem to think that business plans are dreamt up by accountants to allow them to charge a fee to their clients for “added value” services. This couldn’t be further from the truth.
If you are starting up your business and you don’t have a plan, how do you know what that business will do, how it will work, whether it will make money and whether you will get out of it what you want?
If you want to grow your business or need funding to make changes, how do you know how much money you will need and whether you will be able to afford to pay it back if you don’t have a plan?
There has been much reported in the news about how difficult it is to get bank lending nowadays for small and medium sized businesses. If anything is going to help you get this it will be a comprehensive, well thought through business plan with back up for your assumptions and a credible plan for paying back the loan.
If you want to approach an investor, your business won’t even be considered for investment if you don’t have a business plan that you can back up with facts and figures that make you and your business a credible investment.
So in summary, a good business plan will help you to understand where your business is going and how to get there and it will help you to obtain any funding or investment that you need from external sources.
Most importantly, however, if you take the time to think through a plan and then write it down, you are more likely to actually do it than if you keep it in your head.
Are you ready to plan now?
Have you ever stopped the frenetic daily routine for a moment to sit back and think about who your clients are?
Sometimes it can be very interesting to do just that. You might be surprised by what you find out and you may even be disappointed.
Many businesses are so busy going about their business that they don’t find the time to think about their customers, but wouldn’t it be a good idea to ask:
- How many clients do we have?
- What does each client give us?
- What do we give to them?
- How much of a contribution does each client make towards the bottom line?
- Are we maximizing the opportunities from each client?
- Are we over servicing any clients to the detriment of others?
- If we changed the mix of our clients could we make more money?
It’s often the case that the clients who shout the loudest or are the most needy are those that are draining a business of its precious resources which could better be used elsewhere.
Perhaps it’s difficult to face up to this because when you do find out, you then have a decision to make – do you disengage from them or is there an opportunity to turn them into a worthwhile client through conversation and negotiation around what you do for them and for how much.
If you haven’t reviewed your clients for a while I would recommend getting some help to do this by a professional that is qualified to analyse your business and come up with some suggestions as what your options are. It may cost you a bit of money in fees to do this but it could be a very worthwhile exercise and it may change the way that you do business in future.
You may never look back!
The question of whether a business should be incorporated or not is one which comes up often, no more so than now, when tax rates are changing and everyone is looking for the most tax efficient way to run their business.
Incorporation is a big word but basically means that your business operates as a limited company as opposed to a sole trader or a partnership. Why should this matter? It can be advantageous from a tax point of view to be incorporated and with the small business corporation tax rate due to come down to 20% from April 2011, the advantages just get greater.
It’s not just about tax, though, so if you’re thinking about incorporation you should really get some good advice. There are reporting requirements for limited companies that don’t exist for other structures and personal and future plans should also be taken into account, together with legal liabilities.
What’s important is that you find a structure that fits your needs for now and for the future, so don’t just jump in with two feet until you have thought it through and got some good advice to make sure that you do what’s best for you.
Recently I’ve been contacted by a number of people who are starting up their own business. Naturally, they are all really excited about the prospect of working for themselves, being their own boss, making the decisions and being able to directly enjoy the results of their efforts.
However, I find that when I start to talk them through the statutory and taxation requirements, they start to get really worried and some even start to question if they are doing the right thing.
If you think about it, it’s no wonder, really – companies house, accounts and annual returns, corporation tax, PAYE, national insurance, VAT, returns of benefits and expenses, construction industry scheme filing………..
It seems a shame that budding entrepreneurs out there can be stopped in their tracks by all the bureaucracy that surrounds a business, and I would urge any aspiring business owners not to be put off.
If you are thinking about starting up your own business, you should really go and talk to an accountant who can explain what is required, help you understand your duties and responsibilities and then take away as much of the fear and worry from you so that you can get on with the exciting bit!
Provided that you find someone that you trust, you should be able to rely on them to guide you through the legal requirements, deadlines and rules and regulations.
For some people starting up their own business this won’t be an issue, but remember that the best entrepreneurs are surrounded by the best people for each and every part of their business, so do your new business a favour and find someone who can be the best for you.
Then go and enjoy running your own business!
Today I attended a New Media Breakfast (#NMB) presented by FatBuzz (@fatbuzz) and Attacat (@Attacat).
If none of this makes any sense to you, perhaps the time has come for you to be starting to look into social media because, like it or not, it’s not going away.
I started going to New Media Breakfasts in March this year and I have to admit that I was very skeptical about it all when I first went along.
However, at the very first presentation I was absolutely blown away by the enormity of this phenomenon which was pretty much passing me by.
I had a facebook page and a linkedin account, but other than personal chat and photos I didn’t make any use of social media.
I decided that it was time for me to do something about this and so I went about finding out what I could and pretty much launching myself into it on a trial and error basis.
Today, inspired by the presentation this morning, I have started the set up of my business facebook page which is called, unsurprisingly, Beyond the Numbers. If you are on facebook, it would be great if you would “like” my page as it would help me get started and spur me on to further communication.
I suppose that all this really leads on to what I have said in my earlier blog posts about accountants and relationships – social media is a way of having a greater number of people to engage with, and for me that can only be a good thing.
Don’t you think that it’s worth a try
I was at a seminar last week called How to be a World Class Accountant, to try and understand what differentiates an excellent accountant from an average accountant. I’m not sure, however, that this is something that can be taught. I believe that the ”excellence” must come from having clients that are bowled over by the service they receive and, even more importantly, by the relationship that they have with the person that provides the services.
All (or most) accountants can do the technical stuff – sets of accounts, tax returns, cash flows, management reporting information etc are the basic level tasks that you would expect your accountant to do for you easily and smoothly. Is that enough though?
I would suggest that your accountant should be so much more than this. Many accountancy firms have now cottoned on to the fact that they must distinguish themselves from the competition in order to retain and attract more clients in this competitive world. There is a flurry of offers of value added services such as wealth management, tax strategies, strategic planning etc.
I think that it has to go further than this though. More people now trust their accountant to give them good advice than their bank manager, according to recent surveys - is anybody surprised by this? But why do they trust their accountant?
Surely an accountant has to make an effort to get to know who the client is, understand them, figure out what makes them tick and what drives them to get out of bed in the morning? It’s all very well understanding how a business works, but I think that without trying to understand the person driving that business then there will always be a piece of the puzzle missing.
I’m always hearing that we accountants are not naturally good at the personal part of our business and that we prefer to be shut in a dark room with a lot of numbers and a really complicated tax return. Well, those days are over, and accountants now have to have a personality too. Without understanding what makes people tick, how can we properly advise our clients or help them to achieve their goals?
So, for me, to be a world class accountant, I think I have to listen to my clients, to get to know them and to help them to realise their dreams. For some, this may result in extra services, such as strategic planning etc, but for many it may just be that a cup of coffee and a chat about business, life and the universe is really all that they need.
What to blog about? Well, I could bore you all with tax updates and warnings of the latest HMRC penalties but I think that my blogs will be slightly alternative to what you may expect.
Believe it or not, accountants have personalities and opinions and yes, lives outside of crunching numbers. So, I thought that I would try to show everyone that it doesn’t have to be all bean counting and pin stripe suits, but that an accountant is a person too.
My blogs will therefore be my thoughts, as they come to me and as and when I have the time and the inclination. So, apologies to those who hoped that they might pick up some tax saving tips here – you will just have to sign up to my monthly newsletters for that!
As this is my very first blog, I will leave it short and sweet, but will be back soon with some thoughts that I want to share.