Content from this article was originally posted by XERO.
While there are many advantages of being your own boss and running your own small business it isn’t always easy and it can come with hurdles you didn’t even know existed. Then throw in 12 months of restrictions, lockdowns and uncertainty. The scale of the impact felt by the self-employed is abundantly clear in research by simply business. They found Covid-19 will cost SMEs an estimated £126.6 billion – double what owners predicted it would cost them. With six million SMEs in the UK – accounting for over 99% of all businesses, 33% of employment and 21% of all turnover – this £126.6 billion hole in the books of small businesses is a huge blow to the economy.
It’s been a lean time for small businesses, and especially the families supporting them.
Xero’s small business trends report shows that 60% of small business owners are worried about their household finances running low. So while 2022 will hopefully be a year of rebounding sales and revenue, owners really need that to carry through to the business’s bottom line.
What the experts say
“Businesses must analyse margins and focus on the products and services that generate actual profits as they try to restore cash to the business,” says Ya Wen How, an accountant at AccountServe, who participated in the report.
While there will be a temptation to withdraw any spare cash from the business as ‘owner’s drawings’, experts say it’s important to be mindful of upcoming and potentially unknown expenses.
“Owners often overlook upcoming business expenses when taking drawings, which creates cash flow issues later,” says David Stephens, an accountant at Stephens Financial Services. These cash flow issues create further disruption to the household budget because money has to be put back into the business.
“Rather than clearing out the business bank account, owners are better off paying themselves a modest amount at regular intervals,” Stephens advises.
Takeaways for small businesses
There are a few things small businesses can do to help support their recovery according to Xero’s small business trends report:
Analyse your business margins and focus on products that generate the most profit
Create a ‘rainy day fund’ within the business so you’re not constantly loaning it money from your personal savings
Schedule regular, sustainable drawings to ease home budgeting
Keep your regular drawings modest, as you can always give yourself a bonus payment at the end of a good year
Over the past few years, it has been difficult to keep up with the ever-changing landscape that is, business finance. There have been several schemes announced by the UK Government to support both businesses and their employees but staying on top of all the changes and keeping everybody informed hasn’t always been easy. There have been several changes that come into effect this year, from the end of the Coronavirus working from home tax concessions to the commencement of tax digital and an increase in HMRC’s late payments interest rates. Not to mention 2021 IR35 announcements. We have discussed some of these changes before but we thought as we are hitting a busy time of the year for accounting, it might be useful to share information and resources about these upcoming changes.
Coronavirus working from home tax concession to stop in April 2022 If you or your teams have spent some time working from home since the start of the pandemic, you probably already know about the Coronavirus working from home tax concessions. From April 6 2020 employees have been able to claim some tax relief if they have needed to work from home because of the pandemic. The tax relief is worth between £62 and £125 pa. This is based on 20% of £312 pa or 40% of £312, depending on whether the employee was a basic rate or higher rate taxpayer in the tax year. The allowance can be claimed in both tax years 2020-21 and 2021/22 if an employee was required to work from home at some point during each of the two tax years. By concession, whilst the amount is defined as £6 per week, it allows the full £312 pa to be claimed for the full tax even if the employee only spent a single day working from home. If an employee chooses voluntarily to work from home then they are not entitled to the concession allowance.
As the UK government are no longer recommending businesses to ask their staff to work from home, the scheme will be ending on 6 April 2022. After 5 April 2022, if an employee wishes to claim tax relief for employment-related expenses they will need to comply with the well-established strict traditional tax rules, and only if they have to work from home. Furthermore, claims can only be made for the actual time they have to work from home and the concession that even working from home for one day permits a whole year’s claim will stop.
HMRC says that to be able to claim tax relief, if applicable, an employee can only consider costs like gas and electricity, metered water business phone calls, including dial-up internet access etc.
HMRC say that you cannot claim for the whole bill, just the part that relates to your work i.e. the extra costs incurred by working from home and that you’ll need evidence, such as receipts, bills or contracts, to be able to claim tax relief.
Making Tax Digital for VAT affected companies From 1st April 2022, all VAT-registered businesses will have to submit their financial accounts information via software that is compliant with the UK governments Making Tax Digital scheme. Since 2019 only businesses which exceeded the VAT threshold of £85,000 have needed to submit their tax details in this way. From next year, however, an additional 7,000 registered VAT businesses will be eligible.
To comply with the new HMRC Making Tax Digital rules, these businesses must have a cloud computer software package – one which is compliant with the government’s Application Programming Interface (API) system. It will no longer be possible for VAT-eligible businesses to submit via the HMRC website.
You are probably wondering whether the government is recommending a particular piece of software, they are not. But businesses that don’t have an accountant will be required to find their own third-party provider to provide the appropriate software and meet the new regulations. The majority of current desktop accounting software won’t be compatible with the government’s system and will likely need to be updated. The same applies to older accounting software packages. Cloud-based software packages should automatically update for HMRC’s Making Tax Digital system. At Designated Medical we are already helping our clients transition to Tax Digital. If you would like accountancy and compliance support, please don’t hesitate to get in touch with our friendly team at Designated Medical.
The changes to IR35 and how it could affect you or your employees
Not necessarily a change for 2022, however, it is something we are still being asked about and something people are still getting their heads around. IR35 is tax legislation that ensures that contractors who are knowingly or not working as ‘disguised employees’ pay the correct tax.
You may have applied for contract jobs in the past where the company said they wanted to pay you under an ‘umbrella company,’ i.e., an agency. This is because it is more tax-efficient for them to do so. You become what is termed a ‘disguised employee’, and the company doesn’t have to pay your National Insurance contributions, nor do they have to offer sick pay or holiday leave. That’s because the agency pays it.
Equally, when you’re a contractor working as a limited company, you can pay corporation tax at 20 per cent on your profits, claim business costs against your tax bill and avoid making National Insurance Contributions (NIC) by paying yourself through dividends.
Gordon Brown introduced IR35 back in 2000 when he was Chancellor of the Exchequer. That’s because when working as it should, HMRC IR35 tax can protect both the contractor and company. Crucially for the government, it also means HMRC won’t lose out on tax. This year though, changes to the rule have come into place.
When you are determining whether or not IR35 applies to you, you will either be found to be ‘inside IR35’ or ‘outside IR35’. These phrases are crucial to defining and understanding your status, and considering whether or not the legislation will impact your future contractual work.
At Designated Medical, our objective is to allow you to focus on growing your business whilst we provide the business support services you need. We offer a full range of services including Medical PA, marketing, accountancy HR and Recruitment.
We provide you with the expert financial support you need for your business, flexibly and cost-effectively, so that you can ensure you deliver the greatest client experience. Our team of Designated Medical Accountants are fully qualified and licenced and will take responsibility for the professional management of your finances. They will be supported daily by our team of qualified bookkeepers who will handle the day-to-day transactions.
If you would like to know more about our Accountancy services, please don’t hesitate to reach out to our friendly finance team who will be more than happy to answer any enquiries you may have.
Send us an email at firstname.lastname@example.org or call us on +44 (0) 207 952 1008.
When does the recruitment process end? Is it considered done and dusted as soon as an offer of employment has been made and accepted, once the contract has been signed or when the new recruit arrives for their first day of work?
The reality is that the recruitment cycle continues well into the employee’s first 3-6 months of employment whilst they undergo a thorough onboarding process. During this time, they will undertake any necessary training and have regular conversations with their line manager to discuss and review their performance.
The recruitment cycle concludes once the new recruit has successfully completed and passed their probationary period. Therefore, when establishing a stable, long-term working relationship, the first few months are critical.
Embarking on a new career can be an exciting, albeit daunting experience for new joiners. They are motivated, enthusiastic and keen to learn and to perform well.
Induction is the most important part of forming the employee relationship. Welcoming a new joiner and making them feel included, respected and valued reinforces their feeling of wellbeing and alleviates any anxieties or concerns they may have.
In addition, as more organisations are working remotely because of Covid-19, it is especially important to tailor induction programmes so new joiners have a positive experience and additional support to connect with new colleagues.
However, induction can often be overlooked and rushed, leaving the new employee feeling unproductive and demotivated. Statistics show that up to 40% of new recruits leave within the first 6 months of starting a new job and the cost of a replacement, including fees and loss of productivity, can be up to £30,000* per head. After all the time and effort spent sourcing the right candidate, it is disappointing, costly and damaging to the business to have to start the whole process again.
Like the strong foundations of a new high-rise building providing a safe and solid base for construction, a robust, well-planned and thoroughly executed induction will form the basis of a fully engaged and motivated employee who performs well, is highly productive and shows long-term commitment.
Therefore, it is important to take time to carefully plan the induction process, ensuring that all key aspects regarding the business, the office, the role, the teams, the systems and processes are covered, that training is provided and regular feedback encouraged.
By setting a good first impression, new joiners will feel confident in their choice of employer and in their new role.
Start the induction before they come on board by sending a welcome pack with some goodies such as a personalised company mug or t-shirt, creating a positive feeling in connection to your company. Provide an outline of what they can expect on their first day/week/month of employment, so there are no sudden surprises. Include any company literature or media that gives the employee an informative and engaging introduction to the company, the business and its people. Avoid bombarding the employee with too much information and ensure that any information you do provide is relevant to the employee and their employment with the business.
Any pre-employment matters such as the right to work and starter forms should be dealt with before the start date.
Prior to their arrival, ensure their workspace is set up and fully equipped, with all the necessary resources they need to hit the ground running. Where applicable, ensure their PC is connected and working properly, their email is set up and all furniture and equipment are in good condition.
Some new employees have been known to spend their first few days setting up their own workstations, chasing logins and passwords and setting up accounts. This is time-wasting and unproductive. It is also frustrating and demoralising for the new joiner.
Depending on the nature and size of the company, induction can be conducted by HR and the line manager as well as other directors and team members. The induction can be delivered in many ways, via a combination of individual and/or group talks and presentations, social media and/or other media resources.
Some companies prefer to address practical matters as a priority, such as on-site health and safety, workplace compliance, facilities and IT, company benefits and policies. Others prefer to focus on organisation information, culture and values, role-specific information and learning and development in the first instance, as this is the more interesting and engaging part of induction. In any event, avoid treating induction as a tick-box exercise and keep it as informal and engaging as possible.
There are many tools available to facilitate the sharing of information and improve internal communications and interactivity. An intranet app such as Actimo can be uploaded onto smartphones and used as an effective social media and company communication tool, introducing new joiners, sharing knowledge, company news and information.
Implementing a peer buddy system enables new joiners to integrate and settle in more quickly. Introducing new joiners to key employees will also help them to better understand the organisation’s structure and key responsibilities across all teams. Organising regular social events encourages newbies to meet their colleagues and make new friends in a relaxed and informal setting. Some companies like to arrange fun activities specifically aimed at encouraging new recruits to meet the teams, such as inviting them to distribute beers and drinks during Friday night socials.
The induction process should be evaluated to determine whether it is meeting the needs of the new recruits and the organisation. Providing opportunities for feedback at the end of the induction process and inviting ideas and suggestions for improvement is always good practice.
As well as gathering feedback from new employees, it’s important to identify key measures of success of the induction process and evaluate the process against these metrics. Information from turnover statistics or employee feedback can also be used, particularly from those who leave within the first 12 months of employment.
The kind of start they get off to is crucial to shaping their attitude to the company and their job, so planning an induction will be more than worth the effort involved.
*ACAS – Oxford Economics
* Work -force insights arm of credit-reporting agency Equifax 2013
In a new series, Jane Braithwaite turns troubleshooter to answer independent practitioners’ frequently asked questions on business matters. This month, she takes up issues related to employing a medical PA.
I need to employ a medical PA, but I have never employed anyone before. What are my responsibilities?
Becoming an employer is an exciting part of the journey in establishing a private healthcare business and creating good processes as an employer from day one will ensure a positive experience.As an employer, you have responsibilities from a financial and accounting perspective as well as from an HR and management point of view.You must register with HM Revenue and Customs (HMRC) as an employer before you are able to pay your first employee. You will need to decide what salary to pay and ensure you adhere to the Government rules regarding minimum wage.You will also need to check if you are responsible for registering your employee for a pension. Check that your employee has the right to work in the UK and also arrange any checks; for example, a Disclosure and Barring Service (DBS) check.All employers must have employers’ liability insurance with a minimum cover of £5m.
Every employee must have a written statement of employment or contract of employment. This should confirm salary, holiday entitlement, sick pay arrangements and all other relevant terms and conditions.You must state clearly if the offer of employment is subject to any checks, which may include qualifications and reference checks.It is very important to ensure the contract is signed by your employee as soon as possible. Many employers produce a solid contract but then fail to follow through to the signature.
As an employee and manager, you are legally responsible for providing a safe and secure working environment and you should check whether you are responsible for having a first aider. You must also ensure all of your employee’s personal data is stored securely.
Given all of these responsibilities, you might wonder whether you are better to employ someone on a self-employed basis, but be aware that you need to take care to avoid falling into problems.
Employed or self-employed?
HMRC advises that you must check whether an individual is self-employed in both tax law and employment law. You can be held responsible for unpaid tax and penalties if a mistake is made. According to the HMRC website, an individual is probably self-employed if most of the following statements are true.
The individual is:
In business for themselves, responsible for the success or failure of their business and can make a loss or a profit;
Able to decide what work they do and when, where or how to do it;
Able to hire someone else to do the work;
Responsible for fixing any unsatisfactory work in their own time;
Paid a fixed price for their work by the employer – it does not depend on how long the job takes to finish;
Using their own money to buy business assets, cover running costs and provide tools and equipment for their work;
Able to work for more than one client.
The use of the words ‘probably’ and ‘most’ by HMRC make it hard to have 100% clarity and so it is best to proceed with caution. If you are in any doubt, please take professional advice.Becoming an employer for the first time is an involved process and it is important to make sure you get everything right from day one to avoid issues later on.
If you are uncertain about the best way forward for you, then you would be wise to take expert advice which could save you time and money in the long term.
How do I interview for the role of medical PA? What questions do you suggest I ask?
When interviewing for a medical PA, it is important to ask questions to understand experience and expertise.
You need to ensure an individual is qualified to do the role, but also to focus on the softer skills relating to dealing with patients, working with others on the team and dealing with the wider community, including insurance companies and hospital booking departments.
Interviewing a PA
Ideally, you are looking to find the best medical PA to suit your practice, with the skills that you need and the attitude and behaviours that fit well within the culture of your team and in line with your values.
Every individual in your team has an impact on the quality of patient experience that you deliver and choosing the right team members is of the highest priority.
But an initial word of caution. In my experience, many employers assume the medical PA role can be managed by an individual with general PA or receptionist skills and I have seen numerous new employees thrown in at the deep end. This has resulted in a stressful outcome for both employer and employee.
The medical PA role is a very specialist role and completely different to a general PA role. If you are interviewing a candidate who has limited experience of the medical PA role, you will need to devise a thorough training plan to implement once your PA is on board.
Prepare for the interview by re-reading the candidate’s CV, highlighting any areas where you would like to explore in more detail or any gaps between employment that you would like to understand.
Write a set of questions that ensure you explore the candidate’s CV. This will also provide a gentle opening to the interview by focusing on the individual’s past experience.
Secondly, consider your job description for the medical PA role and highlight areas that have not been addressed by the CV.
Start by ensuring the candidate has an adequate level of expertise and experience to undertake the role. Is there evidence of working in equivalent roles?
Does the candidate know the systems you use?
If typing is required, has the candidate confirmed their capabilities? You may want to test typing skills separately. Create a list of questions that allow you to check thoroughly for experience and expertise.
The final part of questioning should relate to the attitude of the potential medical PA, their approach to patients and teamwork to allow you to assess whether the individual would be a good fit in your practice and within your team.
Are your values aligned? I believe the best way to assess this is to use the competency-based interview technique. You should ask relevant questions about past experiences and how the individual handled them.
For a Medical PA, no day is exactly the same. Although we do have the standard setup of checking emails, answering phone calls, booking appointments etc, we have to be prepared for any eventuality that is thrown at us, whether that is a consultant going sick and having to reschedule clinics and surgeries at last minute, an urgent scan appointment, organising last minute surgeries/ procedures and trying to find a anaesthetist at short notice can be tricky.
We also help cover other Medical PA’s if they are suddenly off sick or on annual leave.
Throughout our day we also have inbound phone calls from patients, hospitals and consultants, which can alter/determine the order of our day depending on the query that comes in at the time. We find ourselves swapping and changing between consultants depending on the queries that come in.
9am to 09:30am– I log in all of the practice management systems, log into my phone and open my emails up. I would start off by working my way through each of my consultants inbox’s and have a read through what emails have come through. I can then prioritise which consultant’s emails need to be actioned first off of urgency and work my way through from there.
09:30am to 12:30 – I would use this time actioning all emails from all my consultants and patient enquiries, booking appointments, booking surgeries, completing booking forms, sending appointment letters. I try to focus on one mailbox at a time and get them up to date before moving onto the next mailbox.
12:30 – 13:30 – Lunch – I try and go for a short walk to get some fresh air and stretch my leg and of course food! 😊
13:00 – 13:30 – I would catch up on any emails/ phone messages from the team that have come in from lunch and action accordingly.
13:30 – 14:30 – actioning emails/calls while other PA’s are on lunch answering phone calls.
14:30 to 15:30 – Typing – I would focus on typing up any consultant letters from Speechlive and get them uploaded onto headed paper and practice management systems. I would also send out any letters that have been approved by the consultant.
15:30 to 16:30 – double checking hospital diaries and making sure they match against our practice management systems to ensure the consultant clinic lists are up to date. I would then scan and upload any correspondence that has come in on email and ensure they are correctly filed onto the patient records. I will ensure that each patient who is booked into the next clinic has all their relevant paperwork assigned to their patient record. I will then send the consultant an up to date clinic list for the next day along with any necessary correspondence required.
16:30 – 17:00 – I will input my daily hours onto Workflow and ensure that all my emails are up to date before signing off for the day.