When you start up a new venture, there are a couple
of organisations you'll need to deal with that are very strict when
it comes to getting what they're entitled to out of entrepreneurs
and their businesses.
The Inland Revenue and Customs and Excise.
These people won't give you an inch, and don't muck
around when it comes to dealing with people who fail to make their
returns on time, falsify their records, 'hide' payments, or fail
to keep records for inspections required by law.
And why should they? After all, the law is the law
and this is an area of business management and admin that every
entrepreneur has to get right throughout their business lifetime.
The rules and types of tax are slightly different
depending on the legal structure of your business, but the principle
is the same: you have to pay your tax and pay it on time. If you
don't, you'll face financial penalties, can be forced to cease trading,
and in extreme cases may face imprisonment.
Scary stuff, eh? Well, it doesn't have to be if
approached properly, and there's plenty of assistance and advice
out there to help you get it right, even from the Inland Revenue
itself.
But before we point you in the right direction with
information about tax compliance and where you can go to get help
with your tax, try this short test to see if you are currently as
clued up as you ought to be on this subject.
1) What is the current reduced rate of VAT?
a) 7.5%
b) 0%
c) 5%
d) 17.5%
2) If you are self-employed (as a sole trader or
in a partnership), how many times a year must you assess your own
tax and pay it to the Inland Revenue?
a) one
b) two
c) three
d) four
3) What is the last date for providing the statutory
form P60 (which shows employees how much they have been paid and
how much tax and NI has been deducted) for each employee who has
worked for you up to 5 April 2004?
a) 30 April 2004
b) 31 May 2004
c) 30 June 2004
d) 30 September 2004
4) National Insurance Contributions (NICs) on wages
are deducted at source under the Pay As You Earn (PAYE) scheme.
True or false?
The answers to this test can be found at the end
of this bulletin.
To help you get this side of your business right,
keep the tax people happy and ensure you are trading legally, you
should certainly talk to an accountant. If you think you have a
tax problem or don't understand an aspect of your tax liability
you should do this immediately, before it's too late to do anything
about it.
For useful information and guidance on NI, PAYE
and VAT, contact:
The Inland Revenue's Employers' Helpline
Tel: 0845 714 3143
The Inland Revenue's Helpline for New Employers
Tel: 0845 607 0143
The Inland Revenue
Website: http://www.inlandrevenue.gov.uk
Customs and Excise
VAT National Advice Service
Tel: 0845 010 9000
Website: http://www.hmce.gov.uk
For those of you who are new to the subject of tax,
NI and VAT or just need a refresher, we've included a factsheet
that provides a general explanation of these taxes and how they
affect your business.
Here is the factsheet:
An Introduction to Tax, National Insurance and VAT
Weekly
business tip
Boost your profits by up-selling
What's the best way to increase your profitability?
We'll place our bets that your confident answer
will be: "By attracting more customers."
And you'd be right. Of course, attracting new customers
is an essential part of making a business succeed. But there's another
equally important way to increase your profits without spending
loads of time and money on the advertising and efforts needed to
bring your business to the attention of new buyers.
Up-sell your existing ones.
Up-sells are offers made to customers for bigger,
better, and of course, pricier products and services, premium versions
of the same product or service, or an extra premium package of products
and services. The up-sell products and services cost more, so the
key is to add enough to the up-sell offer that it becomes irresistible.
The 'science' behind up-selling relates to the 'value
quotient'. This can best be expressed by the following equation:
Value = perceived benefits divided by price.
Successful up-sells increase the benefits that customers
believe they will get from a product or service more than they increase
the price. The customer then believes they are getting better value
for money by taking advantage of the up-sell offer.
Here are a few ways to offer up-sells to your customers:
- Create an up-sell web page on your website that
visitors are directed to after they click on the 'buy' link. The
page could contain a snappy sales pitch designed to persuade them
to upgrade their choice to a premium version, or information about
an additional, complementary product or service.
- Use direct mailshots to up-sell by putting your
up-sell offer in a second envelope inside the main envelope. Customers
considering responding to your main offer will be intrigued enough
to investigate.
- Every time you make a sale to a customer, include
a sales letter or catalogue in the packaging to encourage customers
who are happy with their initial purchase to buy more from you.
- Follow up previous customers with regular mailshots
that include offers to upgrade their product or service or buy
additional goods to go with it.
- Make sure your customers have incentives to respond
to your up-sell offers. For example, create a premium package
of products and services that collectively cost more than the
customer's original choice, but represent a discount on what they
would normally cost, or would cost when bought separately.
- Experiment to find an up-sell formula that works.
Remember and record the up-sell speeches, mailshots and web pages
that got the best responses and tailor these winning formulas
to use again and again on all your products and services.
New
business idea
Each week we provide you with summaries of some
popular or emerging business ideas in the UK.
Here is this week's idea:
Just
one word
Regularly improving your vocabulary is not just
about learning a new word and its meaning. It will improve your
general knowledge and make you feel and act smarter in all sorts
of personal and business situations.
Many Latin words and phrases have infiltrated 21st-century
English, and a lot of them are used in business communication. Do
you know what the phrase 'quid pro quo' means?
a) something for nothing
b) borrowed money
c) tit for tat
d) on the face of it
Answer at the end of Bulletin.
Did
you know?
There's a new virus wreaking havoc
A new Internet virus, known as Sasser, is plaguing
millions of businesses worldwide. The virus spreads directly from
the Internet, and affects recent versions (Windows 2000, Windows
Server 2003 and Windows XP) of Microsoft's Windows program. Microsoft
has released a software patch to fix the flaw, and has published
guidance on its website covering how to protect your computer against
Sasser and what to do if you do get hit.
To get Microsoft's guidance, go to:
http://www.microsoft.com/security/incident/sasser.asp
Domain name scammers targeting small businesses
The Office of Fair Trading (OFT) has warned businesses
not to be duped by cold callers trying to bully them into buying
domain names. It has received complaints from small businesses that
have been targeted by registration agents making unsolicited calls
and pressurising them into paying registration fees by telling them
that their name or its close variants are on the brink of being
bought by a third party. The best thing to do if you receive this
sort of call, or have doubts about the reliab ility of a domain
name offer, is to contact your Internet Service Provider (ISP) for
advice.
For more about the scam, go to:
http://www.oft.gov.uk/News/Press+releases/Consumer+alerts/domain+names.htm
For guidance on choosing a domain name registration
agent, go to:
http://www.nominet.org.uk/RegisteringYourDomainName/ChoosingARegistrationAgentisp/
Postal charges might go up
The price of business post could soon change with
the cost determined by the size, rather than just the weight, of
the parcel. Royal Mail has told the postal regulator Postcomm that
charging by size would be a fairer reflection of the cost of handling
mail. It claims the proposal would simplify the current pricing
system.
Find out more about the proposal at:
http://www.royalmailgroup.com/news/expandarticle.asp?id=1304&brand=royal_mail
To read Postcomm's consultation paper, go to:
http://www.postcomm.gov.uk/documents/competition/SBPpublication.pdf
BT is expanding rural broadband
Small businesses in rural areas should be able to
get faster connections to the Internet by summer 2005. BT has announced
that it will extend its broadband service to a further 1,128 telephone
exchanges around the UK. The additional exchanges are mainly in
locations outside the larger urban areas.
To find out more about this, go to:
http://www.btplc.com/News/Pressreleasesandarticles/
Corporatenewsreleases/2004/nr0421.htm
Worth
a visit
Are you security savvy?
This is a great quiz for checking out how much -
or how little - you really know about Internet and computer security.
Covering the scale of risk in the average business and the legal
issues involved, it will certainly teach you something, and might
shock you into beefing up your knowledge.
Check out:
http://www.infosec.co.uk/page.cfm?HyperLink=http://www.pointsec.com/securitysavvy
How scumware might affect you
Browse the Frequently Asked Questions and articles
at this website, which focuses on a problem affecting business websites
across the world. Scumware and other malicious and aggressive software
programs are designed to hijack traffic to your website and, as
a result, drive visitors away. Get definitions and advice on what
to do about scumware and the scumbags that distribute it by clicking
on:
http://www.scumware.com/
Free software for your PC
Loads of free stuff to protect, upgrade or just
generally boost your computer is available at this site. It includes
free downloadable business software, clip art, PC health checks
and spyware scans, and much more. Go to:
http://www.2000freeproducts.com/goodiesbuis-software.shtml
Search Engine Strategies 2004
Find out more about the hot topic of search engine
marketing at this event, which takes place in London on 2 and 3
June. The conference will teach you how to get free traffic, how
to generate more and better traffic, and what's coming soon in the
world of Internet searching. Click on:
http://www.jupiterevents.com/sew/london04/index.html
Worth
a read
A few weeks ago, we told you about the value of
managing and organising your time effectively, prioritising what
is really important and not letting the small stuff dominate your
time. This book focuses on just that, and builds on the skills outlined
in a best selling business book that we've recommended to you before,
The 7 Habits
of Highly Effective People.
Check out:
Tax
quiz answers
1) The answer is c).
The current reduced rate of VAT is 5% (and the standard rate
is 17.5%).
2) The answer is b).
You have to assess your own tax and pay it to the Inland Revenue
twice a year, by 31 January and 31 July.
3) The answer is b).
You must provide employees who were working for you up to 5
April with their P60s by 31 May 2004.
4) True.
You must deduct your employees' income tax and NI contributions
at source and pay them to the Inland Revenue each month. |
Just
one word answer
The answer is c)
Quid pro quo literally means 'this for that', and has come to
mean 'tit for tat'. In a legal context, it can mean a consideration,
or something that will be expected in return for something else.
|
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Good luck
The EnterQuest Team
This
information is meant as a starting point only. Whilst all reasonable
efforts have been made, the publisher makes no warranties that the
information is accurate and up-to-date and will not be responsible
for any errors or omissions in the information nor any consequences
of any errors or omissions. Professional advice should be sought
where appropriate.
