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Week 5. moat. management and accounts

The document provides guidance on managing a business, including aspects of formation, advantages and disadvantages of various structures, and essential legal considerations like contracts, licensing, and data protection. It emphasizes the importance of early legal protections for ideas and assets while highlighting the specificities of partnerships and limited companies, especially related to liability and taxation. Additionally, it discusses employment obligations, health and safety, and GDPR compliance, advising to seek professional legal and financial assistance when necessary.

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Managing your business
Why this stuff matters
Fines
The positives • Protect ideas • Protect property • Protect assets • Protect reputation • Protect employees • Protect YOU
Better to do it early rather than regret it later on. Business and the law • Formation • Trading • Employment • Health and Safety • Licensing • Contract law • Data protection • Intellectual property • Financial record keeping Caveat – I am not a lawyer, an accountant or health & safety expert. If in doubt please use the professional most suited to your concern. It may seem that you are having to jump through hoops
Formation Advantages • Easy in – Easy out - just go online • Profits yours after deductions and tax • Simple financial reporting • National Insurance – Class 2 (£6,025) and Class 4 (£8,164) • You are the business https://www.gov.uk/national-insurance/what-national- insurance-is-for
Formation Disadvantages • The debts are all yours • It’s down to you • It’s harder to get investment • How do you sell something that’s all you?
Formation A way two or more people can run something together Advantages • Easier to bring in more money • Shares the workload • Ideal for bouncing ideas around • Share the costs Have a legal partnership agreement drawn up https://www.gov.uk/set-up-business-partnership
Formation Disadvantages • Share the profits – each pay their proportion of tax • Each partner personally liable for there own debts • Two tax returns – partner return and personal return • You must include all the partners’ names and the business name (if you have one) on official paperwork, for example invoices and letters.
Formation Congratulations you have just had a baby! It’s not a bad metaphor Advantages • Credibility – want to win a contract? • Looked upon better for finance (after 3 years) • Exit strategy – that little bit easier • Liability limited to your investment – rather than any debts the company may have • Tax advantages – less so • Better continuity in transitioning
Formation Disadvantage • Annual accounts more complex • Articles of Association and Memorandum of Association required • NI obligations potentially greater – employers and directors • Harder to exit – shareholders to consider, cessation of business accounts • If company can’t pay the bills involvement of insolvency practioner may be needed Please consult an accountant of good standing if you are unsure https://www.icaew.com/about- icaew/find-a-chartered-accountant
And there is more! Limited Liability Partnership Trades as a limited company (same protection for all) and is flexible like a partnership so make sure you have a solid partnership agreement in place. This is more than a % holding this is a statement of working practices, accountability and considers future events. A good agreement is one that considers the unpalatable before it becomes the unspeakable. Community Interest Company (CIC) Trades as a limited company and reports additionally to the CIC Regulator . There is no rule that it cannot have shareholders, or that it must by limited by guarantee (i.e. have members). It is held to a higher reporting standard with directors remuneration to be visible in the reporting also it must report social outcomes. A limited company can become a CIC but not the other way round. There are restrictions on the transfer of assets (asset lock) and dividends can be taken but these are capped. The main reason why you would want this structure is to highlight the social nature of the enterprise. It does not entitle you to grant funding but it opens the door to greater opportunity More details look at https://www.gov.uk/government/organisations/office-of- the-regulator-of-community-interest-companies
Decision time What would you suggest? Dawn and David, a married couple, are opening a tea room in their local village. Both were teachers, Dawn maths and David, history, they have taken early retirement and want to work within their village. They have found the property and are renting it on a short term lease. They are investing their own savings into the venture and will be running it themselves, though they expect to have to employ someone on a Saturday. What company formation should they consider and why? What advice would you give them as a couple working together? Who might they know in their immediate networks who could help them get a leg up?
Some food for thought • No borrowings • Just the two of them • They are married • No dependents • Leasing rather than buying This Photo by Unknown Author is licensed under CC BY-SA My suggestion - Partnership – might be a good option in respect of tax*. I wouldn’t suggest incorporation at this stage. If the business were to develop – maybe? What should partnership agreement contain? * Accountant
What’s in a name? Three Golden Rules • It’s not already in use – search engines and company house • It does not contain words that can be misconstrued, does not form an unpleasant anachronym or imply Government connection • Means something completely different in another language
It’s a confusing issue • Buying a website domain is NOT registering a company • A sole trader or partnership does not have to register a trading name • Trade marks – if they are important to you then do a search (https://www.gov.uk/sea rch-for-trademark) for what’s out there and register. (https://www.gov.uk/ho w-to-register-a-trade- mark/apply) • If you incorporate, the name you provide Companies House does not have to be the Trading Name (https://www.gov.uk/limi ted-company- formation/choose- company-name)
Trading – The Sale of Goods Act 1979 & Supply of Goods and Services Act 1982 In general the Acts say • You must have the right to sell the goods • They are fit for purpose • Of satisfactory quality • You are reasonably skilled at delivering the service with care • Packaged appropriately and described accurately • Commercially fair • Never sold by misleading the buyer • Never aggressively sell with fear or malice • Can be delivered in a reasonable time (unless otherwise agreed) • Have a reasonable charge (unless otherwise agreed When we sell in a persons home or at a distance there must be a cooling off period (7 Working Days) Never a bad idea to have T&C’s in writing that cover delivery, terms of trade, mutual obligations. Any questions go to http://www.legislation.gov.uk/
Terms and Conditions “Ts & Cs” They help reassure your customers, they provide some certainty and set expectations, avoid confusion and give you some protection. • B2B – negotiation tends to be case specific • Bring them to the customers attention • Encourage the reading of them • Explain the complaints procedure Remember as soon as you ‘sell’ a good or service a contract exists regardless of any paperwork or communication
Decision Time Dawn and David like the name The Ye Olde Tea Room but they know that the next village there is a Ye Olde Gift Shop and they are concerned that this might be considered wrong. What advice might you offer? They are both keen only to serve ethically sourced goods, including Fairtrade beverages, organic dairy products and locally sourced cheeses, hams and meats. They are also aware that they want to stand out from the crowd and want to put together some Ts&Cs. What might they include and how might they display these?
Invoicing Limited Company Sole Trader VAT registered Full company name as it appears at Companies House A business name if used – if you are not using your surname A unique invoice number Trading Name (must not include Ltd or Limited) An address where contact can be made and legal documents sent Customers name and address Registered address and contact details Total amount due Total amount owed excluding VAT & amount including VAT Company letterhead including registration No & place of incorporation When payment is due Applicable % rate – zero, exempt or outside scope When payment is due Optional & recommended Name and address of business Optional Unique number VAT Registration number Directors names (all) A unique number https://www.gov.uk/invoicing-and-taking-payment-from-customers
• Threshold for compulsory registration an annual turnover of £85,000 • Benefits of early / voluntary registration • Downside of early / voluntary registration • VAT rate – 20% standard goods & services; 5% reduced rate • VAT flat rate – for small businesses with a very low cost of sales and VAT turnover below £150,000 This Photo by Unknown Author is licensed under CC BY-ND Seek professional advice – getting it wrong can cost you a lot https://www.gov.uk/vat-businesses/vat- rates https://www.gov.uk/vat-flat-rate-scheme
Decision Time Dawn and David have now started to set up their café / restaurant and they are going to have to make some assumptions. As a cafe they know that they will have to register for VAT but think this a long way away. There is room for 12 tables each accommodating 4 people giving a maximum capacity of 48 people per sitting. They have decided that they will do just one breakfast sitting, two lunch and two afternoon teas. They have worked out there menu and based on their experience they have calculated an average cover price of £6-00, for breakfast, £9.00 for lunch and £5.00 for afternoon teas. They know they will have to work hard. They will work 6 days a week but at the moment they think, so long as they give warning to their clients, they can close in off peak times for 6 weeks of the year, that way they can get in a cruise and a trip to see the family. So they will be open for 46 weeks of the year or 276 days David is a bit of a jazz buff and wants to run Jazz night - once a month and offer a meal - he anticipates the ticket price as £25-00 per person. They need your help - should they register for VAT?
Analysis Sittings Max Capacity Cover Price Max Daily Revenue £ Max Yearly Revenue based off 276 days Breakfast 1 48 people £6.00 £288 Lunch 2 96 people £9.00 £864 Afternoon Teas 2 96 people £5.00 £480 Total £1,632 £450,432 Events 12 per year 48 £25 £14,400 Total £464,832 12 Tables x 4 People =a maximum of 48 People per sitting
Excited or what! Dawn and David nearly fell off their chairs when the did the numbers – they couldn’t stop laughing. But then the realisation kicked in this was ‘maximum’ – too much and not realistic. They started to work the numbers again and realised that they were going to be a lot less busy than that. At what % of capacity do they meet the VAT registration threshold?
Analysis Ann. Revenues Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 % of Max 18% 35% 45% 65% 70% Breakfast £ 14,904 £ 28,152 £ 36,432 £ 51,336 £ 56,304 Lunch £ 44,712 £ 84,456 £ 109,296 £ 154,008 £ 168,912 Afternoon Teas £ 24,840 £ 46,920 £ 60,720 £ 85,560 £ 93,840 9 People Per event 17 People Per event 24 People Per event 31 People Per event 34 People Per event Events £225 £5,100 £6,600 £9,300 £10,200 Total £ 84,681 £ 164,628 £ 213,048 £ 300,204 £ 329,256 Plenty of assumptions here not least that they can cover the workload. These numbers are not profit they are revenues (inc. VAT)
Employment You have an implied ‘duty of care’ as an employer this means YOU are responsible for their physical and emotional welfare. You need to consider the following: • Written contracts • Employer liability insurance • Employee regulations • Duty of care (H&S) • Paying the National Minimum Wage • PAYE Scheme and Auto Enrolment • Maternity and Paternity pay • Gender equality • Never discriminate An employees statutory rights www.acas.org.uk
The Employment Rights Act 1996 You must provide a written contract within a two month time frame of staff start date. This information must include: • Name and address of employer • Name of Employee • Job title and a brief job description • Place of work • Hours of work • The pay, frequency of payment • Holiday pay and entitlement • Sick pay arrangements • Pension arrangements • Length of notice • Expected length of employment for non- permanent staff • Fixed term – show end date • Grievance and appeals procedures • Any expected or desired antisocial working practices • Social media policy – what’s expected
Use of Independent Contractors Growing your business with contractors can make great sense – initially. But be careful you do not fall counter to IR35 – a piece of legislation designed to stop employers avoiding tax and circumventing employment law. In essence if someone working for you is being treated as self-employed, or delivering services to you through a limited company, just make sure they are NOT an employee by any other name. Make sure you have a contract, keep accurate records and do not blur any line – fines can be heavy and backdated https://www.gov.uk/employment-status/selfemployed- contractor
Some advice to stay legal Here are some pointers you should consider prior to starting the relationship with a contractor: 1. A good contract will have all the legal or tax requirements to ensure that you satisfy the rules on substitution, level of controls, who pays tax etc. It should also have an indemnity if the worst happens and HMRC come after you as the business for contractor’s taxes. 2. The emphasis is on the contractor as much as possible, to get their tax situation clear implications. 3. Require invoices for work done. Have a project based payment system that relates the payment to stated outcomes and delivery 4. Where appropriate you should make sure they carry their only professional insurances. 5. Do not provide them the tools to do the work – they must provide these themselves 6. Lack of work, a clearly identified end of a project should enable the contract to lapse and the relationship be mutually terminated 7. They should never be restricted from earning income elsewhere, if suitable encourage them to seek another revenue stream 8. Do not force working times on them of course they must be able to work to the clients time table. 9. Providing them with uniforms or an employee handbook with policies in them is not permitted 10. Do not pay them holiday or sick pay. 11. Allow them to be able to substitute themselves for someone else if suitable.
A Final Word on Employing People Treat people fairly, build advocates for your business, educate, encourage and promote. Your business is not your business it’s THE BUSINESS and employees carry this forward. Having good policies in place, a great induction process, rewards and structures that create engagement means your talent pool is that much bigger than all those others.
Health and Safety You are liable for the wellbeing of people whilst at work – that means providing a safe and secure working environment. 1. Identify possible hazards – carry out assessments 2. Train people – gain competent advice 3. Identify who might be harmed and how 4. Evaluate the risk, likelihood and degree of hazard, measure to reduce 5. Keep a documented record of accidents, hazardous events 6. Induction must include H&S practices This Photo by Unknown Author is licensed under CC BY-NC-ND Look at the HSE website www.hse.gov.uk
Some advice Dawn and David think that with a couple of staff on the books the prospects for revenue and working at a higher capacity are good. As retired teachers they have never employed someone directly. What do you think they should consider? How would you suggest they progress? Dawn knows there is person in the village who bakes amazing cakes. She has spoken to them and they are interested in the work but they do not want to work for anyone else. Should Dawn employ them or ask them to set up as a business themselves. What might they have to consider in either case?
Licensing You might need a license to trade. For food businesses regulations are strict so look at the Food Standards Agency. You need to register 28 days before trading, so you need to be prepared (https://www.food.gov.uk/business- guidance/registering-and-managing-a-food- business) If you in doubt check out the following website https://www.gov.uk/licence-finder It is scary stuff given how many licenses exist. This Photo by Unknown Author is licensed under CC BY
Contract Law Complicated and undeniably obscure for many of us. That is why the legal profession exists. Even if you think you know the answer still consult a solicitor http://solicitors.lawsociety.org.uk/ Sometime their initial advice can be free or subsidised. Have a word with Colbea or become a member of FSB
Data Protection GDPR You must have a lawful bases for processing personal data – this will likely depend on the relationship you have and the purpose for the data. If you could achieve the same result without accessing the data – why are you storing and accessing it? The lawful bases for holding and accessing data are: 1. Consent 2. Contract 3. Legal obligation 4. Vital interest 5. Public task 6. Legitimate Interest Two good resources - https://www.fsb.org.uk/first-voice/a-small-business- checklist-for-gdpr and the original source https://ico.org.uk/for- organisations/guide-to-the-general-data-protection-regulation-gdpr/lawful- basis-for-processing/
GDPR (Cont.) • If you hold data you need to have someone who is the Data Protection Officer (that’s you!) • Everyone has more ‘rights’ than before – the right to cancel, the right to be informed, the right to object etc. How will you deal with these? • Where is the data stored and how are you protecting it? Encryption, cloud based CRM, suitably robust virus software etc. • Do you have a GDPR policy document – well at least a well thought through document that says how you will handle a data breach • Register with the ICO – it’s cheap and a resource. • If you are doing a lot of data management it might not hurt to get an expert in to audit and suggest how you can become more compliant.
Protectors - Patent A patent for an invention is granted by government to the inventor, giving the inventor the right to stop others, for a limited period, from making, using or selling the invention without their permission. https://www.bl.uk/business-and-ip-centre/articles/what-is-a-patent
Protectors – Trade Mark Trademarks are badges of origin that distinguish the goods or services of one trader from another. They can take many forms; for example words, slogans, logos, shapes, colours and sounds. There are 45 classes that exist to distinguish between different groups that could share the same name. For example it is possible for others to register an identical or similar mark as long as it is in a different, unconnected class. An example could be Swan Matches, Swan Electricals and Swan Cars – The IPO is the official government body responsible for granting Intellectual Property rights in the United Kingdom. Can be contacted by phone - 0300 300 2000
Protectors - Copyright This protects original works whether they are written, visual, audible – they do not protect an idea. If you write original content then make sure you document its origins. Equally if you contract out work to another then, unless the contract says otherwise, the contractor will likely have the copyright. If you have an employee and you pay them to write content, design things, then as the employer you should have the copyright.
Protectors - Design Registration It is a cheaper means by which you can protect the appearance of your product. You will need proof of when you created your design also to register you must meet certain criteria Worried about your designs and IP? Then start the process early with an Patent solicitor. See also https://www.gov.uk/design- right
Financial Record Keeping Rules 1. Set up a bank account for all your business expenses and revenues. 2. Set up a cloud based bookkeeping and accountings system – Xero, Quick Books – there are others. 3. Get in the habit of saving information 4. You are responsible for keeping records – that’s not an accountants job Go to HMRC website – register for webinars – they are really informative www.hmrc.gov.uk
Some advice Please offer Dawn and David some advice on their entrepreneurial journey. How should they market their business? Should they register for VAT? What do you think the most difficult things to manage a food business are?
Good Luck! Stay Connected with Moat Foundation and Colbea. Connect with me at: LinkedIn Facebook Twitter

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Week 5. moat. management and accounts

  • 1.
  • 2.
  • 3.
  • 4.
    The positives • Protectideas • Protect property • Protect assets • Protect reputation • Protect employees • Protect YOU
  • 5.
    Better to doit early rather than regret it later on. Business and the law • Formation • Trading • Employment • Health and Safety • Licensing • Contract law • Data protection • Intellectual property • Financial record keeping Caveat – I am not a lawyer, an accountant or health & safety expert. If in doubt please use the professional most suited to your concern. It may seem that you are having to jump through hoops
  • 6.
    Formation Advantages • Easy in– Easy out - just go online • Profits yours after deductions and tax • Simple financial reporting • National Insurance – Class 2 (£6,025) and Class 4 (£8,164) • You are the business https://www.gov.uk/national-insurance/what-national- insurance-is-for
  • 7.
    Formation Disadvantages • The debtsare all yours • It’s down to you • It’s harder to get investment • How do you sell something that’s all you?
  • 8.
    Formation A way twoor more people can run something together Advantages • Easier to bring in more money • Shares the workload • Ideal for bouncing ideas around • Share the costs Have a legal partnership agreement drawn up https://www.gov.uk/set-up-business-partnership
  • 9.
    Formation Disadvantages • Share theprofits – each pay their proportion of tax • Each partner personally liable for there own debts • Two tax returns – partner return and personal return • You must include all the partners’ names and the business name (if you have one) on official paperwork, for example invoices and letters.
  • 10.
    Formation Congratulations you havejust had a baby! It’s not a bad metaphor Advantages • Credibility – want to win a contract? • Looked upon better for finance (after 3 years) • Exit strategy – that little bit easier • Liability limited to your investment – rather than any debts the company may have • Tax advantages – less so • Better continuity in transitioning
  • 11.
    Formation Disadvantage • Annual accountsmore complex • Articles of Association and Memorandum of Association required • NI obligations potentially greater – employers and directors • Harder to exit – shareholders to consider, cessation of business accounts • If company can’t pay the bills involvement of insolvency practioner may be needed Please consult an accountant of good standing if you are unsure https://www.icaew.com/about- icaew/find-a-chartered-accountant
  • 12.
    And there ismore! Limited Liability Partnership Trades as a limited company (same protection for all) and is flexible like a partnership so make sure you have a solid partnership agreement in place. This is more than a % holding this is a statement of working practices, accountability and considers future events. A good agreement is one that considers the unpalatable before it becomes the unspeakable. Community Interest Company (CIC) Trades as a limited company and reports additionally to the CIC Regulator . There is no rule that it cannot have shareholders, or that it must by limited by guarantee (i.e. have members). It is held to a higher reporting standard with directors remuneration to be visible in the reporting also it must report social outcomes. A limited company can become a CIC but not the other way round. There are restrictions on the transfer of assets (asset lock) and dividends can be taken but these are capped. The main reason why you would want this structure is to highlight the social nature of the enterprise. It does not entitle you to grant funding but it opens the door to greater opportunity More details look at https://www.gov.uk/government/organisations/office-of- the-regulator-of-community-interest-companies
  • 13.
    Decision time What wouldyou suggest? Dawn and David, a married couple, are opening a tea room in their local village. Both were teachers, Dawn maths and David, history, they have taken early retirement and want to work within their village. They have found the property and are renting it on a short term lease. They are investing their own savings into the venture and will be running it themselves, though they expect to have to employ someone on a Saturday. What company formation should they consider and why? What advice would you give them as a couple working together? Who might they know in their immediate networks who could help them get a leg up?
  • 14.
    Some food for thought •No borrowings • Just the two of them • They are married • No dependents • Leasing rather than buying This Photo by Unknown Author is licensed under CC BY-SA My suggestion - Partnership – might be a good option in respect of tax*. I wouldn’t suggest incorporation at this stage. If the business were to develop – maybe? What should partnership agreement contain? * Accountant
  • 15.
    What’s in aname? Three Golden Rules • It’s not already in use – search engines and company house • It does not contain words that can be misconstrued, does not form an unpleasant anachronym or imply Government connection • Means something completely different in another language
  • 16.
    It’s a confusing issue •Buying a website domain is NOT registering a company • A sole trader or partnership does not have to register a trading name • Trade marks – if they are important to you then do a search (https://www.gov.uk/sea rch-for-trademark) for what’s out there and register. (https://www.gov.uk/ho w-to-register-a-trade- mark/apply) • If you incorporate, the name you provide Companies House does not have to be the Trading Name (https://www.gov.uk/limi ted-company- formation/choose- company-name)
  • 17.
    Trading – TheSale of Goods Act 1979 & Supply of Goods and Services Act 1982 In general the Acts say • You must have the right to sell the goods • They are fit for purpose • Of satisfactory quality • You are reasonably skilled at delivering the service with care • Packaged appropriately and described accurately • Commercially fair • Never sold by misleading the buyer • Never aggressively sell with fear or malice • Can be delivered in a reasonable time (unless otherwise agreed) • Have a reasonable charge (unless otherwise agreed When we sell in a persons home or at a distance there must be a cooling off period (7 Working Days) Never a bad idea to have T&C’s in writing that cover delivery, terms of trade, mutual obligations. Any questions go to http://www.legislation.gov.uk/
  • 18.
    Terms and Conditions “Ts& Cs” They help reassure your customers, they provide some certainty and set expectations, avoid confusion and give you some protection. • B2B – negotiation tends to be case specific • Bring them to the customers attention • Encourage the reading of them • Explain the complaints procedure Remember as soon as you ‘sell’ a good or service a contract exists regardless of any paperwork or communication
  • 19.
    Decision Time Dawn andDavid like the name The Ye Olde Tea Room but they know that the next village there is a Ye Olde Gift Shop and they are concerned that this might be considered wrong. What advice might you offer? They are both keen only to serve ethically sourced goods, including Fairtrade beverages, organic dairy products and locally sourced cheeses, hams and meats. They are also aware that they want to stand out from the crowd and want to put together some Ts&Cs. What might they include and how might they display these?
  • 20.
    Invoicing Limited Company SoleTrader VAT registered Full company name as it appears at Companies House A business name if used – if you are not using your surname A unique invoice number Trading Name (must not include Ltd or Limited) An address where contact can be made and legal documents sent Customers name and address Registered address and contact details Total amount due Total amount owed excluding VAT & amount including VAT Company letterhead including registration No & place of incorporation When payment is due Applicable % rate – zero, exempt or outside scope When payment is due Optional & recommended Name and address of business Optional Unique number VAT Registration number Directors names (all) A unique number https://www.gov.uk/invoicing-and-taking-payment-from-customers
  • 21.
    • Threshold forcompulsory registration an annual turnover of £85,000 • Benefits of early / voluntary registration • Downside of early / voluntary registration • VAT rate – 20% standard goods & services; 5% reduced rate • VAT flat rate – for small businesses with a very low cost of sales and VAT turnover below £150,000 This Photo by Unknown Author is licensed under CC BY-ND Seek professional advice – getting it wrong can cost you a lot https://www.gov.uk/vat-businesses/vat- rates https://www.gov.uk/vat-flat-rate-scheme
  • 22.
    Decision Time Dawn andDavid have now started to set up their café / restaurant and they are going to have to make some assumptions. As a cafe they know that they will have to register for VAT but think this a long way away. There is room for 12 tables each accommodating 4 people giving a maximum capacity of 48 people per sitting. They have decided that they will do just one breakfast sitting, two lunch and two afternoon teas. They have worked out there menu and based on their experience they have calculated an average cover price of £6-00, for breakfast, £9.00 for lunch and £5.00 for afternoon teas. They know they will have to work hard. They will work 6 days a week but at the moment they think, so long as they give warning to their clients, they can close in off peak times for 6 weeks of the year, that way they can get in a cruise and a trip to see the family. So they will be open for 46 weeks of the year or 276 days David is a bit of a jazz buff and wants to run Jazz night - once a month and offer a meal - he anticipates the ticket price as £25-00 per person. They need your help - should they register for VAT?
  • 23.
    Analysis Sittings Max Capacity Cover Price Max Daily Revenue£ Max Yearly Revenue based off 276 days Breakfast 1 48 people £6.00 £288 Lunch 2 96 people £9.00 £864 Afternoon Teas 2 96 people £5.00 £480 Total £1,632 £450,432 Events 12 per year 48 £25 £14,400 Total £464,832 12 Tables x 4 People =a maximum of 48 People per sitting
  • 24.
    Excited or what! Dawnand David nearly fell off their chairs when the did the numbers – they couldn’t stop laughing. But then the realisation kicked in this was ‘maximum’ – too much and not realistic. They started to work the numbers again and realised that they were going to be a lot less busy than that. At what % of capacity do they meet the VAT registration threshold?
  • 25.
    Analysis Ann. Revenues Yr. 1 Yr.2 Yr. 3 Yr. 4 Yr. 5 % of Max 18% 35% 45% 65% 70% Breakfast £ 14,904 £ 28,152 £ 36,432 £ 51,336 £ 56,304 Lunch £ 44,712 £ 84,456 £ 109,296 £ 154,008 £ 168,912 Afternoon Teas £ 24,840 £ 46,920 £ 60,720 £ 85,560 £ 93,840 9 People Per event 17 People Per event 24 People Per event 31 People Per event 34 People Per event Events £225 £5,100 £6,600 £9,300 £10,200 Total £ 84,681 £ 164,628 £ 213,048 £ 300,204 £ 329,256 Plenty of assumptions here not least that they can cover the workload. These numbers are not profit they are revenues (inc. VAT)
  • 26.
    Employment You have animplied ‘duty of care’ as an employer this means YOU are responsible for their physical and emotional welfare. You need to consider the following: • Written contracts • Employer liability insurance • Employee regulations • Duty of care (H&S) • Paying the National Minimum Wage • PAYE Scheme and Auto Enrolment • Maternity and Paternity pay • Gender equality • Never discriminate An employees statutory rights www.acas.org.uk
  • 27.
    The Employment Rights Act1996 You must provide a written contract within a two month time frame of staff start date. This information must include: • Name and address of employer • Name of Employee • Job title and a brief job description • Place of work • Hours of work • The pay, frequency of payment • Holiday pay and entitlement • Sick pay arrangements • Pension arrangements • Length of notice • Expected length of employment for non- permanent staff • Fixed term – show end date • Grievance and appeals procedures • Any expected or desired antisocial working practices • Social media policy – what’s expected
  • 28.
    Use of Independent Contractors Growing yourbusiness with contractors can make great sense – initially. But be careful you do not fall counter to IR35 – a piece of legislation designed to stop employers avoiding tax and circumventing employment law. In essence if someone working for you is being treated as self-employed, or delivering services to you through a limited company, just make sure they are NOT an employee by any other name. Make sure you have a contract, keep accurate records and do not blur any line – fines can be heavy and backdated https://www.gov.uk/employment-status/selfemployed- contractor
  • 29.
    Some advice to staylegal Here are some pointers you should consider prior to starting the relationship with a contractor: 1. A good contract will have all the legal or tax requirements to ensure that you satisfy the rules on substitution, level of controls, who pays tax etc. It should also have an indemnity if the worst happens and HMRC come after you as the business for contractor’s taxes. 2. The emphasis is on the contractor as much as possible, to get their tax situation clear implications. 3. Require invoices for work done. Have a project based payment system that relates the payment to stated outcomes and delivery 4. Where appropriate you should make sure they carry their only professional insurances. 5. Do not provide them the tools to do the work – they must provide these themselves 6. Lack of work, a clearly identified end of a project should enable the contract to lapse and the relationship be mutually terminated 7. They should never be restricted from earning income elsewhere, if suitable encourage them to seek another revenue stream 8. Do not force working times on them of course they must be able to work to the clients time table. 9. Providing them with uniforms or an employee handbook with policies in them is not permitted 10. Do not pay them holiday or sick pay. 11. Allow them to be able to substitute themselves for someone else if suitable.
  • 30.
    A Final Wordon Employing People Treat people fairly, build advocates for your business, educate, encourage and promote. Your business is not your business it’s THE BUSINESS and employees carry this forward. Having good policies in place, a great induction process, rewards and structures that create engagement means your talent pool is that much bigger than all those others.
  • 31.
    Health and Safety You areliable for the wellbeing of people whilst at work – that means providing a safe and secure working environment. 1. Identify possible hazards – carry out assessments 2. Train people – gain competent advice 3. Identify who might be harmed and how 4. Evaluate the risk, likelihood and degree of hazard, measure to reduce 5. Keep a documented record of accidents, hazardous events 6. Induction must include H&S practices This Photo by Unknown Author is licensed under CC BY-NC-ND Look at the HSE website www.hse.gov.uk
  • 32.
    Some advice Dawn andDavid think that with a couple of staff on the books the prospects for revenue and working at a higher capacity are good. As retired teachers they have never employed someone directly. What do you think they should consider? How would you suggest they progress? Dawn knows there is person in the village who bakes amazing cakes. She has spoken to them and they are interested in the work but they do not want to work for anyone else. Should Dawn employ them or ask them to set up as a business themselves. What might they have to consider in either case?
  • 33.
    Licensing You might needa license to trade. For food businesses regulations are strict so look at the Food Standards Agency. You need to register 28 days before trading, so you need to be prepared (https://www.food.gov.uk/business- guidance/registering-and-managing-a-food- business) If you in doubt check out the following website https://www.gov.uk/licence-finder It is scary stuff given how many licenses exist. This Photo by Unknown Author is licensed under CC BY
  • 34.
    Contract Law Complicated and undeniably obscurefor many of us. That is why the legal profession exists. Even if you think you know the answer still consult a solicitor http://solicitors.lawsociety.org.uk/ Sometime their initial advice can be free or subsidised. Have a word with Colbea or become a member of FSB
  • 35.
    Data Protection GDPR You musthave a lawful bases for processing personal data – this will likely depend on the relationship you have and the purpose for the data. If you could achieve the same result without accessing the data – why are you storing and accessing it? The lawful bases for holding and accessing data are: 1. Consent 2. Contract 3. Legal obligation 4. Vital interest 5. Public task 6. Legitimate Interest Two good resources - https://www.fsb.org.uk/first-voice/a-small-business- checklist-for-gdpr and the original source https://ico.org.uk/for- organisations/guide-to-the-general-data-protection-regulation-gdpr/lawful- basis-for-processing/
  • 36.
    GDPR (Cont.) • If youhold data you need to have someone who is the Data Protection Officer (that’s you!) • Everyone has more ‘rights’ than before – the right to cancel, the right to be informed, the right to object etc. How will you deal with these? • Where is the data stored and how are you protecting it? Encryption, cloud based CRM, suitably robust virus software etc. • Do you have a GDPR policy document – well at least a well thought through document that says how you will handle a data breach • Register with the ICO – it’s cheap and a resource. • If you are doing a lot of data management it might not hurt to get an expert in to audit and suggest how you can become more compliant.
  • 37.
    Protectors - Patent Apatent for an invention is granted by government to the inventor, giving the inventor the right to stop others, for a limited period, from making, using or selling the invention without their permission. https://www.bl.uk/business-and-ip-centre/articles/what-is-a-patent
  • 38.
    Protectors – Trade Mark Trademarksare badges of origin that distinguish the goods or services of one trader from another. They can take many forms; for example words, slogans, logos, shapes, colours and sounds. There are 45 classes that exist to distinguish between different groups that could share the same name. For example it is possible for others to register an identical or similar mark as long as it is in a different, unconnected class. An example could be Swan Matches, Swan Electricals and Swan Cars – The IPO is the official government body responsible for granting Intellectual Property rights in the United Kingdom. Can be contacted by phone - 0300 300 2000
  • 39.
    Protectors - Copyright This protectsoriginal works whether they are written, visual, audible – they do not protect an idea. If you write original content then make sure you document its origins. Equally if you contract out work to another then, unless the contract says otherwise, the contractor will likely have the copyright. If you have an employee and you pay them to write content, design things, then as the employer you should have the copyright.
  • 40.
    Protectors - Design Registration It isa cheaper means by which you can protect the appearance of your product. You will need proof of when you created your design also to register you must meet certain criteria Worried about your designs and IP? Then start the process early with an Patent solicitor. See also https://www.gov.uk/design- right
  • 41.
    Financial Record Keeping Rules 1. Setup a bank account for all your business expenses and revenues. 2. Set up a cloud based bookkeeping and accountings system – Xero, Quick Books – there are others. 3. Get in the habit of saving information 4. You are responsible for keeping records – that’s not an accountants job Go to HMRC website – register for webinars – they are really informative www.hmrc.gov.uk
  • 42.
    Some advice Please offerDawn and David some advice on their entrepreneurial journey. How should they market their business? Should they register for VAT? What do you think the most difficult things to manage a food business are?
  • 43.
    Good Luck! Stay Connectedwith Moat Foundation and Colbea. Connect with me at: LinkedIn Facebook Twitter