Coming of age
Q. When will the new laws outlining age discrimination come into effect?
A. New regulations are planned for October. They are expected to have more impact on employment relations than any legislation in recent years, particularly unfair dismissal and new rights to redundancy and promotion.
Types of spending
Q. What is the difference between revenue expenditure and capital expenditure?
A. Revenue expenditure covers what you spend for business purposes on those items likely to have no lasting value after the year-end. These include rent, insurance, certain building repairs, wages and salaries, stationery, heating and lighting. You can set the cost of these against your taxable income.
Capital expenditure covers semi-permanent or permanent items that you use in earning the profits of the business and which will have a value beyond the end of the financial year.
Depending on the size and nature of your business, the year in which you spend your money and the nature of the expenditure, you can claim valuable capital allowances. Your accountant should be well aware of these.
Q. Are shareholders and partners liable for the debts of their enterprises?
A. Shareholders take no such risks, as creditors have recourse only to the assets of the company. However, partners are personally liable for the debts of the partnership down to the shirts on their backs.
Advertising without consent
Q. I have it in mind to erect advertising signs outside my premises, but am worried about being taken to court if I skip the planning application process. Is there a way around this?
A. Unless you do something quite outrageous, you can get on with your promotional work under what is termed ‘deemed consent’. However, you must be prepared to alter the material or remove it should the planning authority require you to do so.
Deemed consent does not cover the display of advertisements for goods and services not available on the premises, although posters detailing charity events are allowed.
Q. I have a lady who ‘does my books’ once a week. She has recently started to help me out as a part-time computer operator for which I pay her by the hour. For tax purposes, is she employed or self-employed?
A. It appears that your book-keeping lady has a business of her own and so is self-employed when looking after your accounts. However, this does not mean she is self-employed in any other jobs she takes on for you, so you must treat her as an employee whether you and she likes it or not. If you are in any doubt, seek advice from your local tax office or a solicitor.
Q. I am due to set up in business and have been advised I should take my entitlement to capital allowances into account before buying equipment. Why should this be so?
A. These allowances will enable you to deduct a proportion of your expenditure from your taxable profits and so reduce your tax bill. You can claim on the cost of vans and cars, machines, scaffolding, computers and similar items, as well as plant and machinery, and as a small business just starting up these benefits should be considerable.
In some cases, you will be able to claim 100%. However, the size of these allowances vary from tax year to tax year, and on the size of your business, so ask your local tax office to keep you up to date on this.
Q. What does reciprocal service mean?
A. Experts agree that the most loyal customers are those who feel they are contributing to the business activity and not just buying. It is argued that employees need to be trained to learn from customers and customers encouraged to share more of their experience with employees. Bearing in mind it costs a lot more to acquire new customers than to retain the ones you’ve got, this could be an idea well worth thinking about.
Q. I am looking for an injection of cash into my business, but my applications are turned down, mainly because I’m new and lack
security. What can I do?
A. The rules governing the Small Firms Loan Guarantee Scheme, a joint venture between the Department of Trade and Industry and approved lenders, have recently been changed to provide loans of up to £250,000 for companies with a trading record of less than five years.
Although plenty of money is available, getting it will be no walkover. Lenders will want to see a carefully prepared business plan and an accurate description of the market and its size, customers, competitors, sales forecasts supported by hard evidence, and financial projections of at least one year’s future performance.
The help of a bank manager or accountant will be essential.
Q. An employee failed to turn up for work and a week later a rival employer wrote
asking me to provide a reference. Am I obliged to do this?
A. There is no legal requirement for you to provide references. However, if you feel so inclined you can respond with a ‘statement of employment’ giving details of how long the employment lasted, the job title and a description of the duties. It is unwise to comment on competency or suitability for any future role.
Avoiding late payment
Q. A large company is becoming worryingly slow in meeting my bills, but continues putting valuable business my way. How can I obtain what is owed without causing offence and possibly missing out on future contracts?
A. Future jobs will be worthless if you don’t get paid, so consider taking advantage of new rules and start charging interest on what is due. State your terms clearly on all invoices, consider introducing an early payment discount, and always follow up on an invoice. There’s plenty of advice on the Small Business Service internet site at www.sbs.gov.uk
Q. I want to protect my company’s trading name. Will use of the ‘TM’ symbol or the letter ‘R’ in a circle be enough to ward off the vultures?
A. The symbols you mention are used by companies which have already registered their names, so they are not for you. For real protection, you should apply for trademark registration yourself. This isn’t easy. The Patent Office examiners will question you closely and it will cost £200 minimum. You can expect a full examination report within two months of your application. You can read all about it at www.patent.gov.uk/tm/howtoapply