With the introduction of Real Time Information (RTI), a clear understanding of accounting processes is more essential than ever. Are you prepared?
As an integral part of the UK’s economic landscape, small businesses are routinely described as the main driver behind financial growth and performance – but what do they need to do to maintain this position?
Overcoming financial challenges
A recent study into start-up mentalities found that a number of those with their own businesses experienced some challenges during their journey to self-sufficiency; most notably around finances. Although this can be seen as an inevitable part of setting up a business, the truth is that money worries do not need to hold you back.
Research published on International Business Times and generated via a poll on VoucherCodesPro.co.uk found that while 82% of small business owners would not want to work for anyone else there was a startling number who were already encountering financial hardships.
More than half (52%) confessed to spending too much on supplies and equipment with a similar number of people (48%) paying over the odds for an expensive property purchase or rental. Although staff are the most important commodity for any small business, nearly two fifths (39%) blamed hiring too many employees too early on as the source of money problems.
While these challenges can obviously cause difficulties for small businesses, they can all be easily overcome. Education on financial matters is the key here and with the right knowledge start-ups can enjoy healthy profits and big margins.
The trick is educating yourself on the different financial procedures involved in running a business and acting appropriately. This means understanding the expectations placed on you with regards to tax and wages as well as hunting for the best deals when contacting suppliers.
A clear understanding of your budget and strong familiarity with numbers is crucial – especially considering recent news that HMRC will begin fining businesses for late Real Time Information (RTI) returns.
Real Time Information (RTI) education
RTI returns was introduced to make this area of financing both more convenient and more accurate and all small businesses need to ensure they are complying with the requirements to stay on top of their finances and stand the best chance of sustaining business growth and success.
The Association of Chartered Certified Accountants (ACCA) warned that the new fines could come into place from as early as 01 October this year with real-time reporting an important part of the small business landscape since last year.
As well as late fees, employers can also face penalties if they make errors or fail to complete their RTI reporting in the correct manner. An article published on the Sage One blog outlines a number of ways in which businesses can avoid these costs by sticking to a rigid schedule and reporting errors as soon as they are detected – proving once again that there is no excuse for businesses to fall behind when it comes to sustaining their finances.
Sage One hypothesise that spotting an error before HMRC and reporting it without being prompted could mean you face no penalties for the error at all and they also have plenty of information on what RTI is for payroll or PAYE which can help start-ups brush up on their knowledge and avoid costly mistakes. Simply taking a proactive approach towards your business’ finances and using appropriate software which streamlines your accounting can make all the difference.
With RTI set to become an even bigger priority within their financial reporting, education on this particular aspect is naturally a priority but small businesses should be encouraged by the news mentioned above – not disheartened by it.
Although some financial challenges are to be expected from every new business venture, the above commentary proves that all of this can often be overcome with just a little education. By brushing up on money matters and learning what is expected of them, start-ups can put themselves in prime position for high returns and lucrative business dealings.
The widespread availability of information on the subject makes this process even easier: allowing small businesses to stay strong and enjoy their success free from finance worries.