Finance and Business Blog

Conservative leader David Cameron has announced three new policies to encourage enterprise and those aspiring to start businesses:

• Ending restrictions on people starting a business in social housing.
• Increasing the statutory threshold over which the Government can petition to make a business insolvent.
• Reducing the number of forms needed to register a new business.

Mr Cameron had this to say:

“We are going to get out of this recession by trading our way out, by businesses deciding to create wealth and to go after new markets, to export. It takes 13 to 14 days to start a new business in this country, in America it’s half as long, we have the ambition of making us one of the fastest countries in the world to start up a new business.”

“The insolvency threshold is currently £750 we would lift that to £2,000 because when you look at the figures more small businesses have gone bankrupt in this recession than in previous recessions and a number have been pushed there by the Government itself. It may sound like a small thing but I think it’s significant, a huge number of small business are started in people’s homes but you know what, many social landlords forbid you to run a business from your home, we’re going to change that as well in discussion with social landlords.”

“So, these are three big changes to help small businesses. That’s where the wealth, that’s where the jobs, that’s where the enterprise has got to come from and to help with that we have to get rid of this anti aspiration, anti achievement culture.”

“The message that seems to be coming out of Labour at the moment is don’t start a business, don’t buy your home, don’t try and leave money to your children, don’t try and get on. They’ve made it so difficult to employ people, so difficult to start a business. All of that is going to change.”

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The PCG is encouraging government departments to reserve 10% of their budgets for freelance workers and the self-employed, which would demonstrate that ministers are committed, beyond just words, to ‘thinking small first.’

PCG’s managing director, John Brazier, had this to say:

“Flexibility in the labour market is the key to ensuring Britain’s future economic
success.”

“The next government should encourage freelancing as a flexible, innovative and entrepreneurial way of working that enables business to perform more cost-effectively, especially when recovering from recession.”

“There needs to be a clear recognition of freelancing as a valid way of working,” Mr Brazier added. “We want to see a pro-business climate fostered in the UK, a real commitment from policy framers to think small first, not just say it.”

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Theo Paphitis, the well known panellist from the popular Dragons’ Den TV show, has advised entrepreneurs to wait until after the General Election before starting up a new business venture.

Speaking on BBC2’s Working Lunch programme he said:

“We are in January 2010, there will be an election by May 2010. We are in no-man’s land, no one can make a decision because our polticians whether Labour or Tory won’t tell us what they are going to do about the economy.”

“If you have to invest, you don’t know whether VAT might go up to 20 per cent or what tax effects might be, if interest rates are going up - all this might have an effect on the bottom line or total survivial.”

“This is just temproary. Entrpreneurs spend their lives taking risks but they are calculated risks. When you can’t put the ‘calculated’ in to a risk, that’s a gamble - and you don’t want to be there just yet. Take your time.”

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The Professional Contractors Group (PCG) is calling on Government and policy framers to take a fresh approach to freelancing. 

John Brazier managing director of PCG said:

“All too often Government and policy framers have failed to pay adequate attention to the needs of the UK’s 1.4 million freelancers. Freelance businesses are part of the bedrock of the private sector, bringing a degree of flexibility and a skill set to the economy which is a real asset for UK plc. There needs to be a clear recognition of freelancing as a valid way of working; fairer taxation, better regulation, easier access to the market for the smallest businesses and a proper appreciation of the changing work patterns for millions of people.”

“We want to see a pro-business climate fostered in the UK, a real commitment from policy framers to think small first, not just say it. Fair regulation means regulation that is clear, accessible and not unduly burdensome. Fairness means allowing freelancers easier access to the market for their services. The Government needs to ensure regulatory barriers, burdens and costs to tendering are reduced, so freelancers can truly compete with larger businesses. Heavy handed and senseless laws weigh business down like a ball and chain. This is even more so with nano-businesses. Every hour spent complying with red tape is an hour not spent productively. We need to free up Britain’s talents to create wealth, not stifle them with top down bureaucracy.”

“It is PCG’s fundamental belief that flexibility in the labour market is the key to ensuring Britain’s future economic success. The next Government should encourage freelancing as a flexible, innovative and entrepreneurial way of working that enables business to perform more cost-effectively, especially when recovering from recession. The start of a new decade provides an opportunity for fresh, innovative thinking. We will be continuing to push this message up to the election and beyond.”

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As we all probably know by now, the VAT rate is returning to 17.5% on the 1st January 2010.

Consequently VAT Flat Rate Scheme percentages are also changing. It looks to me as though all the percentages are returning to the same levels as they were when VAT was last at 17.5%.

Here is a link on the HMRC web site, listing all the percentages:

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5a

December 2009 sees the release of Earnings Tracker 5.6.1. This is a maintenance release that addresses an issue with some of the reports whereby the months were not always listed in the correct order.

Earnings Tracker - FREE Accounting and Bookkeeping Software Tool for Contractors and Freelancers

Over the past couple of months I have made a few updates to the JDT website, mainly to change the identity of the site.

Previously, the site was a ’shop window’ for John Dixon Technology Limited, which is the company through which I offer my web development and technical authoring services. What I have wanted to produce over the past couple of years though, is a site that offers resources rather than one that offers services.

To this end, I have re-identified the site, which now concentrates on offering:

• articles,
• tutorials, and
• free software downloads.

By doing this, the site now addresses three subject areas in which I am interested rather than it just being a sales tool.

Obviously, there is a limit to how many articles or tutorials I can write on my own in the evenings. Therefore, I have also introduced the opportunity for anyone to submit an article, tutorial, or a link to a free software download.

So Windows 7 is finally out, and the verdict is in – so far, so good. The new operating system from the Microsoft stable has won more bouquets than brickbats, and perhaps, ironically, it owes this success to the debacle that Windows Vista was. Not since Windows Millennium in 2000 did Microsoft have to bite the dust so badly; but with Vista, it was disaster from the word GO. Coming close on the heels of the stupendous success that was Windows XP, Vista played havoc with Microsoft’s already fragile reputation (the software giant was already being talked about negatively because of its tendency to come out with operating systems that were bloated and overpriced but which still enjoyed a monopoly the world over).

The future and prestige of Microsoft was indeed riding on Windows 7, and now, with the worldwide release of this OS on Oct 22, 2009, Microsoft has redeemed its reputation, something that was flagging and in dire need of rescue especially since its founder Bill Gates stepped down as CEO and moved to follow a more philanthropic life. And yes, the votes are in now, and they favor Microsoft and Windows 7. For one, the OS is faster than Vista, and surprise, drivers are available for all your applications instead of being developed hurriedly after the complaints start to mushroom.

But for those in the dark, Windows 7 is not an entirely new OS; in fact, it’s an effort to rebuild the mess that was Vista. It is basically the same OS in a different avatar, one that is more easy and quick to operate. It costs less than Vista, it is easy to upgrade to whichever version you want, and it looks and feels just fine, just like Windows XP was in its heydays. It is a million times better than Vista and has succeeded in keeping Microsoft’s detractors quiet for the moment.

The bottom line is that Microsoft’s business will be booming again with all the positive publicity that Windows 7 is generating. But only until their next OS is released; after that, it’s a whole new process of gaining the ordinary computer user’s confidence. Yes, the company has vindicated itself after the debacle that was Vista, but even now, it’s too soon to predict how Windows 7 will change the fortunes of Microsoft, and we have to wait and watch for the feedback to see how well this OS stands the test of time.

By-line:
This guest article was written by Adrienne Carlson, who regularly writes on the topic of executive mba programs. Adrienne welcomes your comments and questions at her email address: adrienne.carlson1@gmail.com

Dividend payements can be taken out of company profits after corporation tax has been paid. For example:

Turnover = £100,000
Salaries and other running costs and expenses = £30,000
Net Profit = £70,000 (£100,000 - £30,000)
Corporation Tax = £14,700 (21% of £70,000)
Amount Available for Dividend Payment(s) = £55,300 (£70,000 - £14,700)

To prevent double taxation (where both corporation tax and income tax are charged on the same profits), the dividend received carries a tax credit. This effectively states that the net dividend has been taxed at the basic rate of taxation.

This means you don’t pay any further tax on your income if you are a basic rate tax payer - your taxable income is less than the higher rate tax threshold (about £36,000)

How Much Is The Tax Credit?

The tax credit is 10% of the gross dividend.

The dividend paid to shreholders is the net dividend.

With reference to the above example:

The net dividend payement is £55,300.

Therefore, the gross dividend is £55,300 x 1.111111 = £61,444.44.

Therefore, the tax credit is £6,144.44 (£61,444.44 - £55,300).

If you are a basic rate tax payer, you pay 10% of the gross dividend in tax, which is considered already paid via the tax credit. Therefore, you have no more tax to pay.

If you are a higher rate tax payer, you will be charged tax at the rate of 32.5% of the gross dividend in tax.

For our example, this is 32.5% of £61,444, which equals £19,969.44.

From this figure you need to deduct the tax credit of £6,144.44.

£19,969.44 - $6,144.44 = £13,825.

This equates to 25% of the net dividend of £55,300.

You can use Earnings Tracker to calculate your tax credits and generate dividend tax vouchers.

Businesses often pour huge efforts in reckoning and managing various transactions including, company revenues and expenditures like invoices, salaries, expenses, etc. Any snag in these calculations would ultimately result into misinterpretation of financial results and thereby present a false picture of company’s growth. Hence, a proper handling and analysis of the financial data is highly called for. Well, you can now delegate most of your account handling troubles to Earnings Tracker 4.0. It helps the users in managing different types of transactions including, dividends, salaries, taxes, pensions, etc. Earnings Tracker is extremely easy to use and its features help in easy calculations.

Using Earnings Tracker 4.0, you just need to follow a simple process and store the transactions. To start with it, first you need to register and form an account to work with it. Log-in and you will be prompted to set the static values to carry out further calculations. With the ‘Set Static Values’ you’re required to enter the Gross Monthly Salary, VAT Flat Rate Percentage and Monthly Accountancy Fee, and then press to Update/Confirm Values to get them applied to the records. You can update your profile and start on working further. With the given ‘Add Month’ feature you can select the year, month, and record the money coming in and going out. This includes Amount Invoiced, Income Tax, Expenses, Pension Contribution, Dividend Taken, etc. With the View/Edit Spreadsheet feature first you need to select the columns like Month, Amount Invoiced, VAT Charged, Accountancy Fee, Gross Monthly Salary, Income Tax, Bank Interest, Other Revenue, Expenses Taken, Corporation Tax Due, Maximum Dividend, etc, to be displayed on the spreadsheet and enter the relevant values in it. You can even easily create and edit the dividend tax vouchers.

Earnings Tracker 4.0 application helps you in recording and managing the revenues and expenditures of your business and makes your calculations extremely easy. For its instrumental feature-set, optimal performance and purposeful assistance it offers in carrying out easy calculations, the software is rated with 3.5 points.

http://www.dixondevelopment.co.uk/earningstracker.htm