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Sorting out those key decisions

Running a small business isn’t the easiest of gigs. By the time you’ve dealt with the VAT man, HMRC, staff, pensions, and decided on the best coffee machine, it’s a wonder there’s time left for the day job. Here’s some practical tips and ideas from us to help you get some of those monkeys off your back!

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I like this tribe – nice to know I’m not alone!

Auto enrolment

The law has changed and from 2018, every employer has to offer their staff a pension. You will have a “staging date” – this is D-Day and the day you need to have sorted this all out by. It’s time to get that monkey off your back!

As a boss, this means you need to choose a pension and set it up, if you haven’t already. You also need to tell your staff what this means for them. Between your staging date and April 2018, you, the boss, will pay 1% into a pension for your staff. This will be topped up by another 1%, which is siphoned off your staff’s wages with a smidge coming from the Government. So that’s 2% all-in. But this snowballs. After April 2019 you will be paying 3% of wages (or ‘qualifying earnings’ which may be less) into a pension with another 5% from a combo of your staff’s wages/ a Government top-up.

So don’t forget to factor these extra payroll costs into the Masterplan.

We are recording a series of video blogs as we go through our auto enrolment journey here at Boring Money.  To date these cover how to get started and share an idea of the sums involved. You can watch these below or on YouTube. Read our small business case study from Ubisan about their auto enrolment journey.

Boring Money’s Tips

  • You should really get cracking and start to sort this out 4 months before your “staging date”. Don’t know your staging date? Grab your PAYE reference and head here. The People’s Pension also has a handy timeline here which will help you plan.
  • If you have lost your letter from the Pensions Regulator with that all important “letter code” needed, this link will help.
  • You need to get cracking on choosing a pension scheme – check out our independent view on who we like below. These are all providers who will deal with us smaller businesses, who offer OK investments and who have fair pricing.
  • Your life will be a lot easier if your payroll software talks to your pension provider’s software. HMRC’s freebie payroll services won’t let you do this #nightmare #yougetwhatyoupayfor. Again we share some ideas on decent payroll options below.
  • People can opt-out if they don’t want to set aside this amount of their salary. But this way they miss the top-ups from you and Number 10 so it’s generally a bad idea. And as a boss you are not allowed to try and have a quiet word to encourage ‘opt-out’ – that’s not kosher.

Payroll

Most people who leave the world of paid employment to set up their own business soon realise something pretty quick: they have to be the finance guy as well.  From VAT, to tax returns, payroll and now auto enrolment, if you don’t keep on top of it, you could be looking at a chunky fine. Fortunately, there are several online software tools that can help. You can now get software to send invoices and chase people up if they don’t pay, ‘talk’ to your bank and HMRC, complete accounting and tax returns, while also looking after expenses, bills, sending estimates and producing reports. Magic, eh? But which is the right one?

Boring Money’s Tips

  • When choosing accounting software, start by making a list of the features you need so that you don’t end up paying for stuff you don’t use.
  • Make sure the data is in the UK and the company is UK based.
  • Can your accountant access it? There are times when he or she will need to have a dig around.
  • Check out the support available. With some it’s a real DIY approach, but others have superb support provided by real life accountants which can be extremely helpful.
  • Our suggestions for good payroll solutions include SageOne Payroll, Freeagent and XERO

For more information on the pros and cons of various providers, and for an independent opinion, and check out what payroll software by paraplanner Richard Allum. We’ll also tell you how much these guys cost a month and what you get for your money.

Business Banking

Unless you’re a sole trader, you obviously need a separate bank account for your business. Unlike a normal bank account, banks charge for pretty much everything on a business account – paying in cheques, paying out cheques, withdrawing cash, talking to you, and so on. There will also be lots of ancillary services on offer, from tax advice to business funding. The key is to work out what you are going to need, what’s extra fluff and pick your bank account accordingly.

Boring Money’s Tips

  • Many banks offer a free intro period – Santander, RBS and HSBC for example. Current deals can be seen here.
  • How are you going to get paid? And how are you going to pay people? If you are a cash-based business, you don’t want an account that charges for every transaction. See here for a comparison of fees.
  • If you need to borrow, make sure the bank you choose has competitive rates. Ditto if you’re going to hold large amounts of cash in a linked savings account (say, for a tax bill). See here for some options.
  • Ask your friends. At Boring Money we asked a few other small business owners we know and (based on a very small poll!) chose Santander. So far, so good.
  • Life’s moved on since the 50s when a bank manager might approve a business loan. Today we have more options around funding than ever – have a read of the article below for quick ideas and tips.

3 Min Reads

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Boring Money’s Auto Enrolment X-Factor

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Check out our weekly vlog as we go on our auto enrolment journey and choose our pension provider. Who will we pick….and why?
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Most firms in Britain are now starting to set up a compulsory pension scheme for employees. This article tells you how much is involved and gives small business owners some pointers.
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Business Banking – what exactly is it?

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Business banking - charges, interest rates and the bells and whistles. Who we like and the latest rates.
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Funding for small businesses

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How can you get funding if you're a small business?
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Payroll software: what and who?

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Paraplanner Richard Allum shares some insight into payroll software.
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Auto Enrolment: Case study of a 2 person firm

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Read the case study of Ubisan's Auto Enrolment journey

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Holly's blog offers helpful tips, thoughtful ideas and her latest news and events.

Important stuff!

Holly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice, nor are we regulated by the industry watchdog (although we do talk to them a lot). For every story on this site about a good investment, or something which went up by 10% or made someone £200, we could share a story about a bad investment, something which fell by 10% or lost someone £200. Nothing’s certain when investing so if you’re really unsure, or dealing with complicated stuff like working out what to do with a pension when you retire, we’d really suggest you get some financial advice. Here are some tips on  how to pick a good financial adviser. Or check out Unbiased or VouchedFor. Just remember, commission has been banned now so advisers need to be very clear with you about what you are paying them and when.