The Biggest Shake up to payroll in years – Are you ready?

January 22, 2013 by Georgette Rowland Osborne

Introducing RTI

[youtube]http://www.youtube.com/watch?v=KkN7tp1QAUM[/youtube]

If you employ staff, even if it just you as one employee, you will are affected by one of the most radical changes in your reporting and filing obligations for many years.

Up until 2013 you were required to calculate your payroll, pay your staff, and pay the payroll taxes each month (or every 3 months) for some.

Nothing else needed to be done until the end of the tax year when you, your bookkeeper or accountant then completed an Employer Annual Return (P35 as they are commonly known) which had to be received by the Revenue before 19^th May.

Any money that was due had to be paid up by that date also. The loophole was that if you were struggling to pay the tax each month, as long as something was paid, the Revenue was none the wiser it was behind, until they received the Employer Annual Return. And as long as you had paid everything up to date by then you were usually ok.

Now for the shakeup

From April 2013 you are required to not only calculate payroll, pay staff, and pay payroll taxes but IN ADDITION you must inform the revenue (i.e. file a return effectively) each time you pay someone. Hence the name: Real Time Information (RTI). So no more Annual Returns.

Why are they doing this?

The intention is to modernise the Pay as you earn system to reflect how we live today.
With people moving jobs more regularly and having more than one job the chances of paying the wrong tax was high
Though not advertised as such, let’s tell it like it is, the Revenue needs to find ways to improve its own cashflow and Real Time Information will make accurately identifying outstanding payroll taxes easier.

For those that delayed payment regularly this could cause a cash flow headache so being on top of your money is going to be even more crucial.
Your software also needs to be RTI ready to enable you to do the regular returns.

If the thought of this leaves with a major migraine then a good bookkeeper is what you need.

If you know people who employ staff, send them the link to this page, they may not be as clued up as you and not knowing is not a defence as we know.

Thank you for spending time at the financial gym. Dedicated to helping you be the financial leader in your business without having to be a financial expert.

Leave a comment and if you haven’t already, get my free downloadable tips booklet and access to other free stuff & resources.

Enjoy your day

Propping up your business with personal money – A case study

January 13, 2013 by Georgette Rowland Osborne

[youtube]http://www.youtube.com/watch?v=ZKlQ4kgOBY8&list=PLhWR6eymM1Htkp0DhAws0LF1vpuFIf6d1&index=3[/youtube]

Despite sales increasing many business owners find they still have to inject their own money to cover monthly expenses longer than they had planned; and cannot understand why if they are making more money.
Here I use a real life example to illustrate how this can happen

Why Lack of Money is not the real cause of Business Failure

November 28, 2012 by Georgette Rowland Osborne

[youtube]http://www.youtube.com/watch?v=TUyKXYSWdhM[/youtube]

Businesses don’t go bust overnight

When I talk to people who have lost a business or are going through tough times.

So tough they fear they could go under

So many of them will site a particular situation or milestone that was the thing that caused it.

“The bank withdrew my overdraft, I relied on it”

“I was refused a business loan that I thought was a sure thing”

“ I lost a few good clients due to the recession”

“ We were expecting to land a big deal and it didn’t happen or it is still happening”

“We did get a big deal, but it broke us trying to service it”

I could go on and on

It is not impossible for one big thing to push your business over the edge, it is just less likely. The big thing tends to be the straw that finally broke the camel’s back.

The reality is that most businesses hit financial difficulty due to a slow painful death like a scene from a Quentin Tarrantino movie, as opposed to a Jackie Chan or Bruce Lee quick deadly from out of nowhere Kung Fu blow.

Kung Fu style you die quick, but if you oldies like me remembers Reservoir Dogs or even Pulp Fiction, the poor victim is often tortured or messed with psychologically before they meet their end.

When they are eventually finished off, the obvious cause of death would be what was done to them last, the gun shot, the stab wound, whatever. But they were so wounded by then, despite probably fighting to stay alive that the damage had already been done.

So if we step away from my violent example and put that in a business context. By the time a company or sole trader closes their doors; there have usually been a catalogue of problems, some big but many small that seem almost routine but are the result of:

– Serial inefficiencies,

– Constant fire fighting

– The owner being distracted from the important in favour of the attractive

– An obsession with lack of cash but with little concrete knowledge of exactly why

All too often it is when the liquidators or administrators are called in that the person gets a real snapshot of their true position and factual reasons as opposed to assumptions as to why they have arrived at this place.

And guess what: the majority had accountants.

Getting accurate data once a year is not enough.

It is the equivalent of driving on the highway with your lights off and only turning them on when you hit trouble.

If you think of the lights as information, as long as they are on and pointing you in the right direction you can see where you are headed and gauge likely trouble spots. While changes can be slight detours business decisions often need to be total changes of direction to get to where you want to be and you can only do this with trustworthy info.

Keep your business out of the dark; don’t wait until you hit something to find out where you are headed.

===================================

I am Georgette Rowland of the Financial Gym saying thank you for your time.

I would love to know your experiences so please leave your thoughts and comments below and I would appreciate it if you could like the video also.

Too many businesses go under so let’s work together to get the number down. Please share this with anyone who you believe could benefit.

If you do not already get my giveaways then download my free booklet and get yourself added to the list.

Have a great day Georgette

Financial Lies We Tell Ourselves

June 9, 2012 by Georgette Rowland Osborne

I am eternally fascinated by the number of ways we sabotage our financial lives by saying we want or believe in one thing while behaving in a way that is completely opposite to that. Not deliberately, we just fail to see the in-congruency. And then wonder how we messed up in areas that seemed so straight forward.

During a conversation with a contact of mine, who I will call Dave; he mentioned that he was struggling to in his relationship with his business partner. who I will call Greg.

Greg had accused him of being difficult and finding fault with him over minor matters. After chatting to Dave it began to emerge that he felt that Greg was not honest about their relationship. Greg described him as not only a business partner but dear friend, however apart from business matters Greg made little effort to engage with Dave. Dave made Greg godfather to his son and best man at his wedding while Greg had an active social life outside of work that rarely included Dave.

Dave was embarrassed to admit that he was hurt by this and unwittingly Greg’s behaviour had ignited a sense of mistrust in Dave which had been slowly building up into resentment. “How can he call me friend, when I clearly am not?”

One of my favourites, is the “I am doing this for my family” Well what’s wrong with that? you ask. Nothing, it is one of, if not the best reason I can think of for doing anything if you have children. However what if this same person has no will, no life cover, very little savings of their own let alone anything saved for the children, and very common – no pension.

Commonly the reason is not enough funds to live and do all those things, which is perfectly understandable. But dig deeper, when money has been a little easier did they engage the services of a financial advisor, or open a little saving account for little Beth? No they bought a car, because they always wanted a BMW and they have “earned it” If they pop their clogs tomorrow, would little Beth be able to live in the BMW, I think not.

Picture them arguing with their insurance company about an increase in premiums for home contents or business interruption that could prevent them losing all they have worked for or even how they make their living. But happily pay through the nose for the BMW insurance. If the BMW goes missing, painful. If the home or business is burgled or destroyed by fire, devastating!

Despite preaching how important it is to look after the family, the irony is the decisions made do little to make this a reality.

In business, how common it is to prescribe to the dream of building a big successful business. Tut Tut at the irresponsibility of people who do not dot the I’s and cross the T’s; while ignoring the fact that the VAT or Payroll taxes have not been paid for months. Having no money is a very real reason for this but what if they had the money but had to make a choice where to use it.

All too often that choice is not in favour of the tax man.

Apart from wages and rent, pretty much everything else should be lower down the pecking order. Granted, needed staff could walk out, your trade may be severely restricted if you are evicted from your premises, but the tax man uses a very persuasive removal firm called bailiffs. And if that does not satisfy outstanding debts they wind up your company. Was buying that stock because it was a great deal instead worth it?

How we prioritise is what gives us away, but we are all too often the last to see the discrepancy.

Money and figures tell a story.

Over years of building relationships with business owners I have uncovered depression (very common), alcoholism, huge personal debt caused by a strong sense of entitlement because of unresolved neglect issues, to name a few.

I am no trained counselor and my remit is strictly professional, but when people confide in me it is difficult to separate the business issues from the person. All too often the theme seems to be people living lives that are in conflict with who they are and what they really want, frequently to please others or live up to expectations.

Or worse because they have created a life that does not support them, personally and or financially and are at a loss how to change it.

I have a process I call I.C.R.A which I have used for years to get me out of a rut and help keep it that way.

Identify – Where am I now

Clarify – Why is this the case and what needs to change

Rectify – How am I going to fix it

Ask – Find the best people to help you

Nothing new, just my way of remembering, steal it with my blessings.

Have a great day!!

It is not just alcoholics that have enablers – directors do too

February 18, 2012 by Georgette Rowland Osborne

We all love the come back hero.

It is reassuring to know that major set backs and obstacles may only be blips along the path to arriving where we want to financially. The rise and fall and rise again of people like Donald Trump and Anthony Robbins are greatly inspirational to the rest of us mere mortals.

But what about those that seem to rise and fall repeatedly even in the absence of major set backs? And even more fascinating are those that do it with the full acceptance of those around them, despite the dire consequences.

It is impossible to ignore the impact of the economic situation on small businesses; and I am desperate for owners to make understanding what their money is doing on a monthly basis a priority,

However even when armed with all the information required, the person with the information still may continue in exactly the same way as before; even though it is obvious to them what the consequences could be. Even threatened bankruptcy may still not be a big enough incentive for change.

I have witnessed over the years many a falling out between directors or really damaging; a director or owner who is killing company finances and the staff are powerless to do anything about it?

“there was £1000 in that tin at the beginning of the week and now it’s gone and and there are no receipts”

I have seen hundreds of pounds spent on children’s toys and clothes from a business account, with the intention of replacing the money, but it never happens.

I have seen businesses close because they owed money to the VAT man that they couldn’t pay because they spent the money. They open up again as a new business. Go through the process of setting up separate bank accounts so they can transfer money each month for VAT and PAYE. Then 6 months into the new business these additional accounts are still at zero, 2 VAT quarters have passed and there is no sign that any VAT or PAYE has been paid to date.

But there are countless invoices for SatNavs, MacBooks and large amounts of stock from suppliers that want payment up front for clients that pay late.

How do you tell a business owner that the business is fine just as long as they are kept away from the money. To show my age. In the days when writing a cheque was the main way to make payments. It and requiring 2 signatures before an expense could be authorised was commonplace. It was a good way to keep some semblance of control. Though not infallible.

The advent of online banking kiboshed this to some extent; as I found to my cost. There were a number of businesses I worked with in my days of naivety and blind trust where I would log on to the bank account in trepidation at what I would find. It was a regular occurrence to see large sums of money transferred out for non business items, while I knew the VAT and rent was due. Or there would be large advance payments for bulk stock items, before they knew if they had orders for them, because “it was a good deal”.

And in true enabler fashion, I would question the expenditure, make disapproving sounds, may even point out the knock on effect, but with no real conviction or hope of being listened to. The avoidance of conflict was always paramount. I was too inexperienced then to have the guts for tough love.

The ego has a lot to answer for. Many a business owner has ignored the fact that the big client they crave could actually be the worst thing that could have happened to them; because their monthly accounts show they do not have the money or capacity to supply or service them without putting themselves in difficulty. The kudos of having that client appears – on the surface – more important than the very survival of their company.

As the saying goes “If you keep doing what you’ve always done, you’ll keep getting what you’ve always got”

Yet how many of us after nodding in excited agreement, promptly go off and do just that. Clearly having knowledge is not enough in many cases.

To tackle the deepest depths of our psyche in order make great changes can be a long as it is arduous, and in the meantime money and financial security is being lost.

In the early days I was very sceptical about coaches who focused on the emotions in terms of business. My attitude was always make enough money and you will feel better anyway. But then it is clear the possibility of losing it all again never really goes away for many, so the need to address the emotion or subconcious began to make more sense to me.

And lets face it, not all millionaires are happy.

Though I still believe that we can put in place and follow through on plans of action that keep us on the straight and narrow despite our own shortfalls.

Accountability is a very sexy word in business circles, but it’s impact is indisputable in helping to keep otherwise poor decisions to a minimum.

Just the fact that a business has hired Precision or Financial Gym to do their figures is in itself a big step for an owner who only ever had to divulge their private affairs to their accountant. In the case of annual accounts the accountant is often is only seeing the overall picture. Where I would be seeing the deepest darkest detail of how that picture came about.

The lovely thing is that initial reticence is replaced by relief that they are no longer alone and they can discuss their issues with no fear of anyone else knowing.

I have had my own setbacks and used techniques and unrelenting energy to turn things around, but no man is an Island. Do not fight alone, even if you are a sole trader. Hire and get the support of experts. Be part of networking groups with a view to give and get business support and encouragement, rather than just to get business.

Try to stop gravitating towards people who blindly allow you to get away with murder, but court those who will be honest with you. It may be a great network as above or the no-nonsense mentor or business coach.

And as fellow business people, if a colleague of business owner is finding it tough;

Even with lots of money in the bank problems still arise.

Get in there and be a support system.

You never know when it could be you who needs it.

PAY IT FORWARD

Better than the 4 Hour Work Week?

December 31, 2011 by Georgette Rowland Osborne

You decide….

Free Copy here: http://www.workthesystemacademy.com/

PAYE Tax Penalties for Doing Nothing!

December 13, 2011 by Georgette Rowland Osborne

GYM tips (Grasping Your Money)

How is the already stretched business owner supposed to run a profitable business if they keep tripping over stumbling blocks they don’t see coming?

For those accountants here, this is old news, but for those of you who are busy running your businesses and have no time to become experts on taxes and fines – Beware!

In recent weeks I have had a couple of conversations with recent start ups business owners trying to understand why they have been charged a fine by HMRC.

One was for not paying tax when they had no employees and were not yet trading and the other was running payroll but were not liable for payroll taxes for a particular month.

Let me deal with the first one:

Company one, received a letter informing them that they would face penalties for not filing a P35 (Annual Year End Return for Employers) by the deadline for the last tax year.

This particular organisation only started trading during the new tax year so did not think about last year at all. Their first reaction was that it must be incorrect.

However when I asked them to show me their New Employer Letter, it showed that they had been registered as an employer the previous year.

Regardless of whether you have had employees, were or were not trading; HMRC does not know this and penalise you, not just for non-payment but for non-information. As a new employer there is a chance you can appeal to the better nature of the tax man who may well take into account that you are a start-up with no history of defaulting, but this is not guaranteed.

In the second instance:

If may be you either have not processed payroll in a particular week, month or quarter. Alternatively there may be no payroll taxes due, if your salaries are under the tax threshold for that period.

You were always required to inform the tax office if nothing was due. In the days of the Employer Payment Booklet, you would have filled in one of the payslips showing Zero payments due and posted it to HMRC.

However, in the past if you did not do this, there were good odds that there would have been no problem; as it would all be reconciled at the end of the year when you filed your P35.

With the movement toward doing PAYE all electronically, you are now expected to let them know each month or payroll period or again face penalties.

Those who have never done it or want to know how, here is the link http://www.hmrc.gov.uk/payinghmrc/paye-nil.htm

Traditionally it has been easy to manipulate PAYE returns as long as by the end of the tax year the Annual Return was completed and any outstanding payments received.

In the same way companies are feeling the pinch and need to ensure they collect money quicker, the tax office is no different.

Don’t give money you don’t have to:

Payroll is a tax minefield, if you going to run your own system ensure you understand what you are doing. Being able to enter details into a software package is not enough. The software cannot compensate for lack of understanding
Keep track of timings and deadlines. Not paying on time is not the only transgression that the tax man will punish you for, they hate not knowing.
Even when your records are correct it is still not unusual to receive reminders and penalties and the dreaded request for a visit. Have the information and ammunition to dispute unfair or incorrect demands.
A letter from HMRC is not the end of the world, take advice if worried, get it dealt with before they chase you again.
Shore up your systems and knowledge to avoid having them on your case again unnecessarily.

Am I Being Unreasonable?

December 1, 2011 by Georgette Rowland Osborne

Like so many people in business, trying to juggle all the balls of life is a constant battle. I thought when my children started further education they would need me less, but not so.
I still have that ” I have not spent much time with them” voice in my head even though grunting has become their preferred means of communication.

Well just to further drive myself crazy I now have the added pressure of planning a wedding from start to finish within the next three months.

Now as someone, who unlike so many of my female friends, had not been planning their wedding since they were five, the ridiculously short length of time is not the only challenge.

I was not doing so bad until it came to organising the wedding cake. When husband to be asked if it mattered what the cake tasted like, I knew I was on my own.

I made some enquiries and one of the suppliers called me back.

She did a great selling job, and in the spirit of comraderie I gave her loads of information, in fact some rally strong buying signals buying signals so she would know how to service me.

I explained time was of the essence and that while there is a budget, it is more important for me to be able to tick things off my list and I did not have much time to shop around as my diary was busy up until Christmas.

We agreed she would come to me on an agreed date with samples.
She asked about table decorations and it turned out some items in her standard package were already provided by the venue. I let her know this. However I said if she could put together something a little different I would be happy to look at it.

Now this where I need to know if I am being picky.

A week before our meeting I emailed her to confirm. Now I would normally do that with my supplier head on not as the customer, but with a week to go before our meeting, I still did not know what time she would be able to get to me.

She is some distance from me – but not the venue – and I begun to suspect that she only realised that after committing herself.

She had emailed me pictures and other info but not a time.

Second point of irritation: the quote for the table decorations still included the items provided by the venue for free. “Were you not listening?”

Then the next day I get an email asking if I could go there instead; to which I replied I couldn’t so would have to get back to her.

Now I may not be Kim Kardasian I know, but for some reason it annoyed me to the point that I made an appointment with another supplier. They offered to meet with me early on a Saturday so that I could “get on with the day”

Generally I take things in my stride, it takes a lot to bother me so I am surprised at my own lack of patience with the situation. It is not as if she was rude or anything.

I have told myself that it is due to a lack of customer service; but there is another possibility altogether – could it be I am turning into a bridezilla?

Having more than one source of income

November 23, 2011 by Georgette Rowland Osborne

While getting ready this week, John Cleese appeared on the tv doing a stand up comedy routine.

It seemed odd to me, so I turned up the volume to hear him end with the punchline “I needed the money”.

The clip was actually part of an interview in which he explained that he was no longer being offered as many acting parts and he decided to find an alternative way of earning an income. (I am paraphrasing; I can’t remember the exact words). So he wrote material for a series of Stand Up shows, and the inevitable DVD.

Taking into consideration he has also fairly recently been through a tough divorce that really hit him in the pocket; it got me thinking.

Here is a man who has achieved the type of success most business people can only dream about achieving in their own industries. The belief being that once they get there they will be set for life. Yet at the time in most peoples’ life when they are looking at the retirement or enjoying the fruits of their many years of labour; he is in the position where he is not as secure as he thought he would be and is having to shift gears.

Thankfully he is so established and respected enough in his industry he can turn to another revenue stream that is totally within his area of expertise, rather than looking outside, as so many business people do and end up no better off.

John Cleese has always had a number of products he could bring to market. His acting, writing, videos, to name a few. Consequently when one dropped off and he was facing trying times, he could pull on the others.

How many business people who if faced with the same scenario in their life could genuinely say they would be able to bounce back in the same way?

If demand for their main product or service were to decline, or circumstances depleted ready cash, what do they have in place to reduce the risk of financial meltdown?

If you question your accountant you won’t be sent to the gallows

November 14, 2011 by Georgette Rowland Osborne

Remembering you’re the boss

A client of mine referred one of their business associates to me recently who was in the same business as them and was having no luck finding the right bookkeeper for their business.

Even the one employed by their accountant had not worked out. I had to conclude that this business was either very demanding and difficult to please or they were just not getting their needs met.

Even during the initial conversation on the telephone I could sense the desperation to get themselves sorted as they had no idea where they were financially other than what they saw in the bank.

I visited them at their premises and it is a lovely little business, offering a prestige service that has been held back by uncertainty and the director feeling overwhelmed.

The first thing the director did was get their accountant on the telephone to discuss what he believed they needed. As it turned out he felt they should have a part time bookkeeper that worked from their premises a few days a week.

I explained that my business was an outsource service and on site bookkeeping was a different type of service altogether but I was happy to have an informal chat about their situation, maybe I could give them some pointers they could use in the meantime.

As the discussion progressed, it turned out that they personally did not want to use up precious desk space, as office space was tight. The software they had was inadequate and they preferred to spend the money on software specific to the operations side of the business. Not to mention that they had never received regular updates on their financial situation. In addition they had a VAT Return due and they had no idea whether it had been done and if they were supposed to pay anything to the VAT man.

I was then introduced to the lady who ran the office and as we talked I knew they needed a service like mine and so did she. But even as they asked me when could I start sorting them out, charges, etc I could sniff the sense of disloyalty in the air brought on by doing something opposite to the instructions of their accountant.

It is amazing how we make crucial, often life changing decisions in our businesses all the time, but can be so susceptible to the opinions of others just because we believe we are out of our depth in an area.

As with any service or advice from professionals, listen to what they have to offer, respect their experience and then make your own decision. Ultimately all roads will lead back to you no matter what anybody else says.

If you are uncomfortable with a situation or do not think it is really meeting your needs; feel free to express it, you are the boss, you are the client.

We in professional services are sometimes so convinced of our expertise in an area that it can be easy to lose sight of the simple task of making a client happy and assume that a client does not know what is best. In fairness to the accountant I think he believed it was what they wanted because they had never expressed anything else. All it took was a conversation where they felt free to express themselves and a wealth of information came out.

Your accountant has much to offer, not just in compliance, but in expertise and guidance. And if you get a really good one they are worth their weight in gold as business advisors.

But remember you are an entrepreneur and while you may not be a tax expert, you are the expert when it comes to your business, trust yourself.

Have any of you found yourself feeling like the child in your business when dealing with professionals and consultants, how did you handle it?

GYM tips (Grasping Your Money)

Remembering you’re the boss

Testimonials