While many sole traders may think they are saving money by carrying out their own bookkeeping, research carried out by Unbiased.co.uk has shown over half might actually be missing out on tax savings because they are not using professional accountants for their bookkeeping. Of those surveyed, just over half admitted to doing their own accounts and a fifth of micro-businesses (which consist of 1-9 employees) were also taking a DIY approach to bookkeeping. Clearly it is a risky route to take, especially with the HMRC crackdown on poor small business accounting, which could land business owners with a hefty fine.

 

Banks believe SMEs are, for the most part, receiving the finance they require, while SMEs often feel it's not even worth applying for finance in the belief that they will be turned down anyway. A recent study from the Business Finance Taskforce has actually shown that over half of SMEs who applied for bank credit during the past year were, in fact, successful. Similarly 72% of SMEs had overdrafts approved and 59% of SME loan applicants were successful.

 

While all this sounds good, it's all relative to the number of applications, and the reality is that only 15% of SMEs applied for new credit. Another important point is that the smallest SMEs are losing out to medium-sized companies in the finance stakes.

Small businesses are being targeted again with the news that HMRC is contacting over 40,000 sole traders and one man companies who they believe should be paying VAT, which is presently set at a threshold of £73,000.

 

Businesses need to ensure they are fully aware of the financial situation of their company or risk facing fines up to 100%. At present businesses that aren’t VAT registered, but should be, are being offered a partial amnesty with reduced penalties on the outstanding VAT until 30^th September, 2011. However, the HMRC has reserved the right to hand out fines up to 100% where it believes a business knew it should have been registered but didn’t come forward. How the HMRC will decide whether they believe a business knew they should have been VAT registered is not clear.

Send invoices immediately - Why wait until the end of the month to send invoices when you can invoice as soon as a job is completed. If you wait 15 days to invoice you've already lost 15 days when you could have had the money in your account. Businesses need to be paid as soon as possible, so why wait unnecessarily.

Using online software – The benefit of online software to send invoices is that you can invoice your customers when ever and where ever. In addition, you have the security that all your invoicing information is safe and secure.

Provide a detailed description - All invoices provide a field to write a description of the work you are invoicing for. Not only does fully completing this give customers a feeling of value for money, but it can prevent payment disputes - whether to simply delay payment or due to confusion over what is being invoiced for.