Small business compliance can be the bane of an owner’s life, and most have little or no idea about how their accountants or bookkeepers can help.
With so many small business owners operating with very limited knowledge of financial compliance, any accountant or adviser that can help them with this confusing and often stressful part of their workload should see increased referrals and certainly a truly appreciative client base.
Key advice and pointers to help small business owners comply with financial regulations and data protection laws represent genuine added value. And, aided by tools like online accounting software, steering clients in the right direction about their legal obligations can save both you and your clients time and hassle.
HMRC requires businesses to keep documentation to back up their tax returns. For example, records documenting corporation tax include sales invoices, bank statements and receipts to show outgoings. It’s largely a matter of common sense: keep everything that proves their income and outgoings and assets and liabilities.
These records need to be kept for six years. Outlining these basics to clients, or providing a factsheet, can be a brilliant way to help them organise themselves.
The penalties can be steep for non-compliance. If there is a mistake in the tax return as a result of not keeping proper records, small businesses can be fined up to 30 per cent of the extra tax due, with deliberate concealment carrying higher penalties. Emphasising this to clients helps all parties from the start. Pointing out such penalties will encourage your clients to keep tidy records, which makes everybody’s jobs easier.
Checking in with your clients from time to time to check if they are up to speed with their record keeping is a fantastically thoughtful nudge, which many will appreciate.
Small Business Compliance: VAT
Keeping track of VAT liabilities is also crucial, enabling the small business owner to track the amounts owed to them and how much they can claim back from their purchases if they are VAT registered. Many small business owners inadvertently go over the VAT threshold when some more careful planning could have prevented it – clients may need reminding that VAT is calculated on a rolling annual basis, and not from tax year to tax year. A VAT calculator that keeps track of their rolling turnover may help here, or providing them with software suggestions or tools to help them keep on top of it.
Small Business Compliance: PAYE
For pay as you earn records, your clients will need to keep accurate payroll records so that they can prove their employees are paying the right amount of tax and national insurance, and that they are getting any statutory pay that they may be entitled to.
For most, a good PAYE software package may be enough to help but advice from their accountant may also be useful here, even if it is only to suggest which programmes you have found most helpful in your own practice.
As you may know, there are no rules about how SMBs keep all of these records but accounting and payroll software programmes are a tidy solution which you may suggest to them.
Small Business Compliance: Data protection
Then there are data protection regulations, which need careful monitoring. These govern where and how SMBs can keep information about individuals, for how long, and how securely. Essentially, they need to keep as little information stored as possible and only that which they need for their business purposes. It must be kept secure.
For more information you could refer them to the Information Commissioner’s Office.
To see how online accounting software can help your small business clients and their small business compliance, sign up for QuickBooks Online Accountant for free.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
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