This rupture certainly isn’t helped by the many misconceptions surrounding the concept of outsourcing.

In this article, we want to clear a few things up by presenting some of the most common myths about outsourcing, then busting them with the facts so you can decide how outsourcing might help your business.

The myth: Outsourcing means you lose control of project management

Some people find the idea of working with external parties who aren’t part of the in-house team overwhelming.

You can see your colleagues sitting right in front of you. Why would you outsource to someone who might not even be working the same timezone?

For some, this suggests nothing but a loss of control.

The truth

Often, one of the most productive things you can do for your business as an owner or manager is open the door to others more proficiently skilled. Even if they are working six hours ahead or behind, from the comfort of their own home.

With technology working its magic, remote project management and collaboration between geographically distant teams in and external to the business has never been easier.

With the right systems in place, great communication, and the odd tool to help you out here and there, those you’re outsourcing to will simply become an extension of the team.

The myth: Outsourcing is something only big companies can afford

Plenty of business owners see outsourcing as a luxury that only big companies with lots of resources can afford. They see the cost of outsourced work as an added expense on top of the regular salaries and overheads – but what about ditching tradition?

The truth

Outsourcing skills or services can actually be a great way to spend more sensibly and help budgets stretch further.

For example: rather than employing a full-time marketing social media exec to write a couple of social media posts per week, dissolve the role in favour of a freelancer or agency who can do the same, for a fraction of the cost. Plus, you don’t need to pay any employer’s contributions for them.

The myth: Outsourcing causes risks with data and cyber security

Far too often we see businesses shying away from outsourcing due to fears around cyber-attacks and data breaching. We hear you, and you’re right to be concerned about the online security of your business, especially when working with external parties. Just don’t let that be what puts you off outsourcing.

The truth

Sure, if you’re not careful, working with external parties can compromise your data, but this is why contracts are useful. A freelancer or contractor is no more likely to result in a data protection breach than an employee.

The myth: Outsourced work isn’t as high quality as in-house work

Some believe that the best work can only be done by those operating from inside the business. Employers can find it difficult to process the idea that external professionals can do just as good a job as an employee.

The truth

Recruitment is important! This is how you hire, or use the services of, good people who are dedicated to doing the job well. People are motivated in different ways, so one employee might be just as switched on as the next freelancer.

When you outsource to somebody, you’re buying into a specific, fine-tuned skillet that’s been honed. Their expertise can take you to the next level.

Sometimes, full-time employees can become generalists spread thinly, with fingers in a number of pies. The experts you outsource to, however, are masters of their craft. Plus, they’re well-versed in getting to know a business’s brand, tone of voice, culture and identity at super-speed.

Wondering how outsourcing skills might impact your business finances? Use our handy tool to ask a tax-related question for free and let our experts give you a (generous) nudge in the right direction.

The post Dispelling Common Myths About Outsourcing appeared first on The Cheap Accountants.

In some cases this can be where Debtor Protection Insurance swoops in to save the day. In this article we explain what this type of insurance covers, and who might benefit.

What is Debtor Protection Insurance?

Debtor Protection Insurance is a type of insurance cover designed to safeguard a business against customers who don’t pay their debts, or who cease to trade before they’ve settled an outstanding balance.

It enables businesses to insure themselves against the non-payment of invoices but more importantly, protect against the consequences they would otherwise have to face at the hands of customers who won’t – or can’t – cough up the cash.

It also offers reassurance in a situation where your business has to spend money on services or materials upfront in order to carry out work for a customer. If the customer ceases to trade before the work has been carried out, you run the risk of losing a lot of cash and swallowing up valuable finances for nothing.

The benefits of this type of insurance cover

So, why do so many businesses choose to fork out for Debtor Protection cover? Well, because:

• It helps maintain cash flow when customers fail to pay money owed, or cease to trade
• It helps support business-as-usual, even when you are struggling with late payments
• Generally, it tends to be a low-cost, affordable service (so well worth the investment)
• Many services cover both UK and overseas debts
• Gives you reassurance and peace of mind so you can concentrate on more important things

How does it work?

If you invoiced a customer and they fail to pay you, Debtor Protection Insurance means any financial loss can be absorbed by your provider. You won’t have to suffer the fallout of the financial blow yourself.

In terms of how payments are made, how long it takes to fulfil a claim and other granular details of the process, you’ll need to ask each individual insurance provider as this can vary from policy to policy.

Who needs this type of cover?

Debtor Protection Insurance is something businesses of all shapes and sizes can benefit from. It’s particularly useful for small businesses and start-ups who need to keep an eye on every single penny that goes in and out of the accounts.

For larger, established businesses with a more solid cash flow, late payments might not be such a pressing matter, so insuring debtors may not be top of the priority list. It’s still best practice if budgets permit.

How much does Debtor Protection Insurance cost?

You won’t need us to tell you that the cost of business insurance can vary quite significantly from provider to provider. That makes answering this particular question a little tricky and for that reason, we suggest doing your own research to find out.

How much you pay for your Debtor Protection Insurance cover will depend on a number of variable factors such as how old your business is, your typical monthly turnover, how much is owed to you in invoices, your history of bad debt, as well as any information you provide about outstanding aged debtors.

As with any insurance cover, it’s always a good idea to do your homework and shop around before signing your name on any dotted lines.

Get a few quotes and go through all of the small print with a magnifying glass to ensure you’re working with a reputable provider who will be able to protect your business when it comes to the crunch.

 
Looking for more support with your business finances? Use our resource centre to find cheap accountants and more business support.

The post Should I Get Debtor Protection Insurance for my Business? appeared first on The Cheap Accountants.

Every sale you make and every penny of profit you achieve all started with one spark of an idea. In legal terms that idea is known as your Intellectual Property (IP).

In this blog post we’ll be exploring why it’s so crucial to protect your IP and your creative assets at all costs, covering:

• What Intellectual Property actually is
• Why it’s so important to protect IP
• At what point you should protect an idea
• The best ways to protect your business ideas
• What to do if your IP has been infringed

What is Intellectual Property?

Intellectual Property is anything original you create, covering all sorts from music or artwork to software or a product invention – and so many more things in between. It also includes your business name, logo, products, or services.

Owning IP makes sure it’s only the creator(s) who can legally profit from their work by preventing other people or businesses using it unlawfully.

There are a number of ways you can protect your work – your IP – and we explore each of these in more detail further down.

Why it’s so important to legally protect your IP

There are a number of reasons why protecting your IP and creative assets is so important, including:

• Safeguarding your income and preventing anybody from profiting from your ideas without your explicit permission
• Shielding what helps you stand out from the competition and preventing your competitors replicating whatever brings you success
• Helping you avoid costly legal action further down the line if you find yourself in a situation where your IP has been infringed. It’s much better to prevent a problem than to have to deal with its consequences.

At what point should you think about protecting an idea?

In general, it’s important to think about protecting your ideas and your IP as soon as possible. The point at which you can do this very much depends on the circumstances.

If you’ve just got an idea for a business that hasn’t started trading yet, applications for IP protection aren’t typically accepted. So, if you want to safeguard an idea for further business development later on, you might consider:

• A Non-Disclosure Agreement (NDA) so you can talk to other people about your idea, but they can’t disclose it elsewhere
• Setting up a company (and leaving it dormant) so it can ‘hold’ your IP until you’re ready

If you’re looking to protect a practicing idea or creative asset for a business that is already trading, on the other hand, you should do so sooner rather than later. So, if your business is registered and you’re ready to start trading, there’s no time like the present to start protecting your IP.

The best way to protect a business idea

When it comes to safeguarding your ideas and Intellectual Property, there are a number of routes you can take, depending on the nature of your asset(s).

Non-Disclosure Agreement (NDA)

If your business isn’t trading yet and your idea isn’t in practice, the best way to protect yourself is with NDAs. Anybody who signs is under contract not to discuss or share your ideas without your permission.

If you’re talking to a client or a supplier about your idea, for example, you can get them to sign an NDA to keep your plans under wraps.

Patent

Patents are most commonly used to protect inventions. A patent gives the inventor exclusive rights, granted by the government, which mean nobody else can replicate, sell, or make money from that invention.

There are two different types of patents:

• Utility patents (the way something works)
• Design patents (the way something looks)

Both types require the inventor to go through a rigorous application process to check criteria. If an invention is just a modification of something that already exists, for example, a patent cannot be granted.

Top tip: Patents are only applicable in the country which grants them, so always try to secure a Worldwide Patent wherever you can.

Trademark

Trademarks are most commonly used to protect a business’s brand. They can cover elements such as a company name and logo, and sometimes even specific words and colours. Trademarks are designed to protect your business’s unique identity by preventing others replicating it too closely.

Once you have a trademark in place, you can start using the registered (®) symbol to demonstrate that your IP is protected. As with patents, trademarks only apply in the country which grants them, so it’s vital to apply for trademark registration anywhere you plan to do business.

Copyright

Unlike trademarks and patents, you don’t actually apply for copyright. Instead, copyright applies automatically to any original works or ideas that have been expressed.

The following assets are automatically protected by copyright, meaning you don’t need to take any action:

• Original literature, drama, music, and art
• Sound and music recordings
• Film and TV recordings (including broadcasts)
• Original illustration and photography
• Original software, web content and databases
• Original layouts

You can – and should – mark your creative assets with the copyright symbol (©) to indicate the protection. This isn’t a legal requirement and not using the symbol won’t impact the copyright protection, but it is best practice.

Copyright expires after a certain period of time so make sure you do your research to ensure your ideas stay secure. Most copyright is in place for 70 years but there are some instances where this is much shorter.

You can license or sell your copyright to third parties via a legal contract that passes usage rights over to them. You can then start reaping the rewards of royalties. To do this, you’ll need to register your work with a licensing body.

Trade secret

Trade secrets conceal confidential business information from the public domain. This could be a formula, a process, a technique, or even a secret recipe that you don’t want the world to know about.

You cannot officially register a trade secret and instead they’re protected by common law under the law of confidence. However, this is where Non-Disclosure Agreements come back into play, to prevent anybody sharing your secrets unlawfully.

What to do if your Intellectual Property has been exploited

There are several actions you can take if you find your IP being used without permission.

1. Take a deep breath and sleep on it

Any correspondence you have with somebody regarding infringement can be used in legal proceedings, so be mindful about what you say or do in the heat of the moment.

2. Issue a cease-and-desist letter

This should outline the problem and how you wish for it to be resolved, as well as detailing all of your IP rights.

3. Negotiate a resolve amongst yourselves

Sending a cease-and-desist letter will, hopefully, be enough for you to come to an agreement without the need for legal support. In most cases an IP violation will be an honest mistake which you can quickly resolve. You can also ask someone to mediate on your behalf if you prefer.

4. Seek legal advice

If step 3 doesn’t solve the problem, it could be time to take further legal action. A solicitor will be able to assist you but just be aware of the potential costs before committing to anything.

Can an accountant help me with IP?

Navigating Intellectual Property protection can seem daunting so if you’re feeling overwhelmed don’t worry, you’re not alone. Whilst they might not offer legal advice per se, accountants can help you deal with the financial impact it might have on your business. They can also help you set up a limited company to offer your ideas more legal protection.

So, if you’re looking to protect your business, speak to an accountant who will be able to help guide your strategy and finances. They’ll also be able to advise you on what level of protection best suits the various elements of your business and its Intellectual Property.

 
Find more help and accounting support in our online hub, or learn more about finding an accountant.

The post How Do I Protect an Idea? appeared first on The Cheap Accountants.

Outsourcing can do more more than just save you money, though. In this article we’ll look at the benefits of outsourcing tasks, and how to find freelancers to do the work.

What is outsourcing?

Outsourcing work means specific business tasks or functions are given to external service providers (usually freelancers) to handle, rather than the work being completed in-house.

It often gives you more choice and flexibility, allowing access to specialist skills if and when you need them.

Different types of outsourcing

There are actually a few different types of outsourcing to be aware of, such as:

• Outsourcing key business-related functions like marketing
• Business Process Outsourcing (BPO) (for example, payroll or customer support)
• Information Technology Outsourcing (ITO)
• Knowledge Process Outsourcing (KPO) – usually highly specialised functions such as accounting or research

Why outsource?

Like anything, there are pros and cons to outsourcing. It can be more cost-effective than hiring a full-time employee, particularly if it’s only for a short-term project.

You won’t need to worry about additional costs or responsibilities (like making pension payments and National Insurance contributions, or arranging Employer’s Liability Insurance).

It can also be faster. Outsourcing a task to someone who specialises in that specific function is likely to mean they’re highly experienced and able to be very efficient.

More broadly, outsourcing gives you access to a large range of skills, many – or even most – of which may not be available to you in-house.

Can I outsource for long-term projects?

Lots of businesses outsource tasks on a long-term basis – such as accounting or legal services, or you might have longer projects which you need help with. Just be careful around the IR35 rules if you do hire a freelancer who comes to sit in your office every day as if they were a regular employee. It can muddy the waters around disguised employment, and that can have tax implications for both of you!

How do I find freelancers?

Most online job sites will simply let you advertise for freelancers, but there’s always the option of looking on freelance marketplaces..

For example, if you’re looking for project-based services you can check out Fiverr, or if you’re looking for a few freelancers that work in a wide range of fields, you might look at Upwork.

These can be a great resource, providing access to hundreds – if not thousands – of available freelancers looking for work.

Most freelance marketplaces even allow you to filter for the exact skills and experience level you’re looking for.

How do I choose a freelancer?

Even once you’ve found some potential options, you still have to make a choice between them. Generally speaking, it’s important to consider things like cost and flexibility.

The idea of selecting the right expert to work with can be daunting if it’s not an area you’re familiar with. After all, that might be why you’re hiring them! It’s usually worth looking at their portfolio or other examples of clients and work, and asking for any testimonials.

Check their portfolio

If you’re struggling to decide whether or not to hire a particular freelancer, previous examples of their work can be very helpful, giving you a tangible idea of what they’d bring to the table.

While a more generalised approach to freelancing may work for those with a diverse set of skills, you typically want to pick someone who specialises in exactly the kind of work you’re asking them to do.

In other words, you want a specialist, not a generalist.

A solid portfolio serves as proof that a freelancer knows what they’re doing, whereas an absent one may be a sign that they’re relatively new (and therefore lack experience).

Look at their track record

In a similar way, testimonials from previous clients are a good sign a freelancer can be trusted to follow through and get the job done.

Hiring someone obviously comes with a high degree of risk, and so any reassurance you can get is vital. If a freelancer is able and willing to give you past case studies to look over, that’s an even better sign.

Get in contact with them

This is a good way to test how responsive they are. Simply shoot them an e-mail and see how long it takes for them go get back to you.

If they take a while, that could be a sign they’re either too busy or don’t see freelance work as a priority. But be fair – they might be away, or this might be a one-off! Either way, it’s a window into how your communication could go if you were to hire them.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post How Outsourcing Can Help Your Small Business appeared first on The Cheap Accountants.

Nobody expects Mary Berry to be able to make waves with her mind, in the same way you’d never ask Aquaman to bake you a birthday cake. We’ve all got our own skills and superpowers but it’s crucial that we also accept our limits. One of the many myths of outsourcing is that the quality won’t be as good as doing it yourself, but this isn’t always the case.

Outsourcing can often help you hire in talent which you might not otherwise be able to afford (or need) on a long term basis.

We’ll share some tips on how to hire an expert if you need to outsource tasks from your business or as part of a project.

Decide where to look

The first step in looking for an expert? Look in the right place! For example, you might go to a freelancing platform like Fiverr if you need a content writer, or use Checkatrade for a roofing contractor.

It will help focus your search, which is a starting point.

Describe what problem you’re trying to solve

Giving the solution to the problem you’re hiring someone for can suggest you already have a very particular goal in mind. If this isn’t the case, and you need their expertise to work out what the best outcome could be, describe what you’re trying to achieve and any constraints instead.

That way, it becomes their responsibility to design the solution – which is exactly what you’re hiring an expert for!

How do you know you’re hiring an expert?

So, you’ve acknowledged a gap in your skillset, and recognised you need help from somebody more qualified or experienced. How can you identify a field expert when you aren’t one yourself? As a business owner or employer, this can become a bit of a stumbling block when it comes to finding the right person.

A common example of this is SEO. You know you need it to climb the search ranks and boost your small business marketing, but you don’t know where to start. When something feels like one big mystery or a foreign language, it can then be hard to work out whether the person you’re hiring knows what they’re talking about.

Fortunately there are several steps you can take to make sure you’re hiring the right person.

Ask for references and a portfolio

This is where it’s so important to do some research! Check out their portfolio, reviews, and reputation in as much detail as you can. You might not become an expert in the field within the hour but you will at least have a better understanding of the basics.

The best way to build a character profile and get a good idea about whether somebody is the expert they claim to be is to experience what they do first hand. Ask to see some examples of past work, case studies and testimonials from previous clients or employers before committing to anything. This is particularly useful for creatives like marketing experts.

Check their qualifications and professional memberships

In some cases it’s a legal requirement that the person carrying out a particular task is accredited or qualified by a professional body. For instance, gas appliances can only be installed by a gas safe engineer.

Some professions, such as accounting, aren’t a protected industry. Unfortunately this means that anyone provide accountancy services, so make sure they have the type of qualifications, accreditations, and experience that you need. Read our guide to hiring a qualified accountant.

Get a second opinion if you need one

Outsourcing doesn’t tie you to using one firm or person forever after. If you need to get a second opinion or several quotes, then you’re well within your rights to do so!

If you do end up using someone for a larger project, why not split the job up into smaller milestones – each with their own milestone payment? That way you can get out of there if you need to, without committing too much upfront or getting tied up in a contract.

Beware of sales patter

Most genuinely experienced and knowledgeable experts will be very honest that they don’t know everything – how could they? With that in mind a few potential red flags could include:

• An aversion of “not sure but I can find out”. This raises all sorts of questions about whether they actually know what they’re looking for, or what sort of value they might be able to offer you.
• Not giving you options, or explaining what the trade-offs might be to reach a particular outcome
• They use a lot of jargon without explaining what any of it means. Okay, so you’re hiring an expert – it’s their job to understand this stuff! They don’t need to dazzle you with science.
• They don’t ask any questions at all. You might have given a supremely detailed brief, but if they jump straight into sales mode rather than asking about your own unique circumstances, then they might be selling something more formulaic than the expertise they’re claiming to have.

 
Find more business guides and resources in our information centre, including help with finding a cheap accountant.

The post How to Hire an Expert When You Aren’t One appeared first on The Cheap Accountants.

Taking money from the business as a sole trader versus as a limited company

As a sole trader, your business and personal finances are effectively one and the same. That means that any profits the business makes are simply yours to keep, so withdrawing money from the business is pretty straightforward in terms of accounting.

With limited companies it’s different. The business is a separate legal entity, so you can’t just take money out without following a set process. Normally you would take money out of the company:

• As a salary
• In the form of dividends
• To reimburse business expenses that you paid from your personal account
• As a director’s loan

As you can see, taking cash isn’t illegal, but it’s crucial that you have clear cut audit trails. Otherwise, mixing up personal and business transactions can easily get you in a muddle. In this quick guide, we’ll briefly look at why and how you might take money out of your business for personal use.

Drawing a salary from your business

Paying yourself a salary a common way to take money out of your limited company regularly. It’s up to you how much you pay yourself, but lots of directors tend to pay themselves a tax-efficient combination of a lower salary and then dividend payments.

As a sole trader you can still pay yourself a regular salary, but it’s usually not necessary to set up payroll if you’re the only person in the business. Instead, you could just take the money on a regular basis. You’ll still pay tax and National Insurance on all of the business’s profits, even if you don’t ‘withdraw’ them from the business.

Director’s loans in limited companies

As the name implies, director’s loans are just that; a loan the director makes to the company, or vice versa, which is recorded in their director’s loan account. It’s not a facility that’s available to sole traders, but sole traders can simply keep the profits from the business anyway. There’s no need to account for taking money in this way.

Directors might borrow money from the company for unexpected personal bills, loan money to the company to fund growth, or move funds back and forth for all sorts of other reasons. What’s important is that there are accounting and tax implications for using your director’s loan account, so it’s essential you record everything to show why money is moving between the company account and your personal bank account.

You should try to repay your director’s loan prior to the end of your financial year. If not, it may be seen as additional income, so you’ll pay extra tax, known as S455, on any balance still outstanding.

Receiving dividends

Another way to withdraw money from a limited company is with dividend payments. For a tax-efficient way of taking money out of your business, you’d be hard pressed to do better than dividends.

Dividends are paid from any profit left over after Corporation Tax and are often paid in addition to a salary. They’re usually taken at the end of the company’s financial year (so that you know for sure how much is available to take safely).

There aren’t any rules which prevent you taking them more frequently, but it’s a good idea to pay them at regular intervals. It reassures HMRC that you’re managing the company’s finances appropriately!

If the company has other shareholders, they should receive dividends at the same time. The amount everyone receives is based on the proportion of the company they own. This means there may be less for you to withdraw than it first appears.

Withdrawing cash for personal expenses

If you want to take money from your limited company, via cash or cheque for instance, to be spent on personal items, make sure you keep absolutely accurate, watertight records. You should be able to see at a glance when the cash was taken out, and how much was withdrawn.

At the end of the financial year, any outstanding amounts could well be deemed as income by HMRC, which will mean paying tax and NI on it.

Business expenses reimbursement

Any business expenditure should really be paid from your business bank account wherever possible. However, you might decide to pay for certain incidentals from your own account. For example, train tickets or a coffee, but you don’t have a company credit card.

As long as the expenditure is entirely for business purposes, you’re well within your rights to claim back the cost. It’s not new personal income and will mean you’re not out of pocket when the payment was for something business-related.

As long as you make it very clear what the expense is for, and record everything meticulously in your accounts, it will be fine!

Keeping things simple

At this point there are a few tips we wanted to point out around keeping your accounting straightforward.

Firstly, bear in mind that if you make withdrawals pretty frequently from your business account to your personal account, you or your accountant will probably end up spending more time on record keeping. This is why we really recommend only withdrawing cash if you absolutely have to.

Plus, don’t forget that banks and accountants must, by law, inform the National Crime Agency if they think any transactions are suspicious. It’s part of their duty to help prevent money laundering or fraud.

Withdrawing cash regularly can also make it trickier to get an accurate idea of your cash flow. Understanding exactly what cash you’ve got where makes it easier to meet your commitments to creditors and suppliers.

As a final point, it’s possible that any money you do withdraw from your business for personal reasons will attract certain interest charges or penalties for late payment on business expenditure.

Benefitting from personal liability protection

Setting yourself up as a limited company means protecting yourself against your company’s debts. In other words, you’ll never have to sell your own assets like your home should your business end up in financial hot water.

However, it’s worth pointing out that if your company does unfortunately start to struggle, avoiding any legal action could prove difficult if too much cash has been withdrawn for personal spending, and therefore funds aren’t available.

Presenting a clear, accurate financial picture

Healthy businesses grow, but financing that growth can be difficult unless you’re able to show a clear financial picture. Potential lenders and investors will always want to examine the business accounts very closely indeed. Too many personal withdrawals may make them uncomfortable, and suggest that the business’s finances aren’t be managed correctly.

Potential clients may also want to see financial stability when assessing suppliers – for instance if you tender for a larger contract. Again, this makes it well worth keeping personal withdrawals to a minimum, so your cash flow is accurately presented.

 
We always recommend seeking the guidance and expertise of an accountant. That way, you can be sure that you’re doing everything by the book, and in the most tax-efficient way possible!

The post Can I Move Money from a Business Account to A Personal Account? appeared first on The Cheap Accountants.

Don’t focus on a franchise which needs minimal investment

As the old saying goes, you get what you pay for. The more well-established a brand is, the more likely you are to be successful promoting the business, but that does come at a cost.

The flipside of this is that smaller franchises might be able to offer more support. Every business is different so shop around for the set up which is most likely to fit your needs, rather than simply on price alone.

Missing out on support and mentorship isn’t really ideal as it’s one of the pros of opening a franchise in the first place.

Relying on your instincts

There will be a lot of people out there, successful entrepreneurs included, who will tell you to trust your gut and listen to your instincts.

While your instincts might be great, that doesn’t mean they should be your only basis for measuring a business decision. That’s a sure way to make a mistake and leave you disheartened with a failing franchise. Instead, base any business decisions on solid research and comb through the data available.

Poor choice of location

Just because a brand is doing spectacularly well in one place, it sadly doesn’t mean it brand will do well everywhere. Different areas might have different tastes, needs, and income profiles, so factor this isn’t your decision making.

Location is also an important part of your service and marketing. A retail store selling childrens toys might struggle in the middle of a business park. A garden centre specialising in fruit trees will probably need a car park rather than a city centre location.

Having a building in an obscure business park isn’t going to get you much business if you rely on passing traffic, though it might be fine for an online-based business.

In order to pick the right location you’re going to need to do a lot of research. It’s not a simple case of the place feeling right or having good facilities (although that’s important). You need to look at every possible angle, for example:

• What is passing traffic like?
• What are the other businesses around doing well/not so well?
• Is there enough parking space?
• Is it easy to get to via public transport?
• What’s the local recruitment pool like if you need to hire staff?

Going it alone

You started a franchise for a reason; so that the company had your back. Ignoring their advice or procedures when you don’t agree is unlikely to be in your best interests! You could end up harming the reputation of the brand, but you’re also missing out on their experience. Treat the relationship as a conversation, rather than simply following orders or going off-plan.

Being the first franchisee can be risky

Every organisation is different of course, but it’s often more risky to be the one who goes first. If you’re going to be the guinea pig franchisee for a brand, then it’s more likely you’ll both have a steep learning curve to deal with.

They won’t have the experience of supporting another business owner meet their expectations, and might not be prepared for the level of guidance they need to provide. Likewise, you won’t have other franchisees within that brand, so they’ll be your only contact. This isn’t necessarily an issue depending on what they’re like to work with, but it’s certainly something to be wary of.

Underestimating costs

Franchises can be expensive business, because you’re partially paying for the element of safety and support and also for the brand’s reputation. There may also be more than the franchise fee alone, including legal costs of getting the whole thing set up. You could end up with a nasty surprise if you don’t prepare for these.

Like with any business venture it’s important to have an emergency fund that you can fall back on should an unexpected cost or repair threaten to slow you down.

 
Running your own business as a franchise means you’re responsible for recording, reporting, and paying tax on your profits. Learn more about tax for franchisees in our article.

The post Common Franchising Mistakes to Avoid appeared first on The Cheap Accountants.

Some businesses also use referral incentives as part of their wider marketing strategy, rewarding clients who recommend them.

What are referral incentives?

A referral incentive is something you offer to an existing customer to encourage them to recommend your product or service to their network in exchange for a reward. This strategy turns your existing customers into brand advocates. For example, you might reward them with:

• Cash
• Account credit
• Gift vouchers
• Lower fees
• Money off
• Points in a loyalty scheme

The reward you offer for recommendations depends on the type of referral programme you want to run.

Do referral incentives work?

Recommendations from friends are often touted as one of the most reliable forms of advertising, with many of us allowing this to influence our purchases.

A global marketing study carried out by Radius suggests word-of-mouth is particularly powerful amongst millennials. This group placed word-of-mouth at the top of the list of what influences them when it comes to purchasing apparel, financial products, travel, electronics, and consumer packaged goods.

Is a referral incentive an allowable marketing expense?

Yes, referral incentives do qualify as an allowable expense which you can deduct from your profits before tax.

In short, including allowable expenses on your tax return means you pay less tax. Other allowable marketing expenses might include:

• Website costs, such as development, hosting, and domain name
• Print advertising
• Mail shots
• Free samples

Just be aware that entertainment and hospitality, on the other hand, are not allowable marketing expenses because they’re not business critical.

How to record referral incentives for accounting purposes

You’ll need to document the referral incentives you issue as part of your regular bookkeeping process. Experts at The Accountancy Partnership recommend the best way to do this is by setting up a new expenses category specifically for referral fees.

That way you can clearly see what it costs you (so you can check it’s worth it!), as well as making it easier to claim everything against your tax bill later. It’s just another reason why accountants are so keen on good bookkeeping!

Advice on managing a referral programme

Not sure whether you should be considering running a referral programme to help promote your business? We’ve gathered some of our top tips on how to run a referral campaign efficiently, and successfully.

Set clear goals around what you want to achieve

Are you looking to accelerate business growth? Perhaps you want to supercharge revenue? Maybe you’re searching for ways to improve customer retention? Whatever your goal might be, keep it in mind when you’re thinking about your referral scheme. It might affect what sort of incentive you offer, and who you offer it to. Some people might not offer the sort of brand rep you want!

Regularly report and review progress

Like any aspect of running a business, it’s essential to take stock of where you’re at on a regular basis, so you can see what’s performing well and what’s not. That way, you can adjust your strategy moving forward.

Setting up some sort of tracking for your referral campaign will show you the progress and success of each referral incentive. There are lots of ways to do this, such as issuing specific people with a discount code which identifies customers they’ve referred, or getting technical with unique referral links or coded URLs on your website.

This sort of tracking will also help you understand what a new customer is worth in comparison to the referral costs you incurred to engage them in the first place.

Involve your accountant in the process

Whenever money coming in or going out is involved, it’s always a good idea to ensure your accountant is involved too. Where referral incentives are concerned, they’ll be able to advise on what kind of reward is affordable and make sure you remain tax-efficient and compliant in the process.

Show your appreciation

Okay, so, a customer might be getting a nice little reward for any recommendations they make but still, it’s polite to show your gratitude for their efforts. Contact your referees to say thank you – it’s a small gesture that will have a big impact.

Are referral incentives the same as affiliate marketing?

It’s easy to see how referrals and affiliate marketing can be confused or used interchangeably because both use incentives to drive new customer engagement. When it comes to strategy and management, the two are quite different.

The main difference is the audience who drives this new engagement. While referral incentives call upon existing customers to entice their friends, family, and contacts to purchase your product or service, affiliate marketing campaigns rely on third-party activity.

This third-party comes in the form of brand advocates who are paid a fee to drum up business for you. Normally, the brand advocate will be recommending your brand to an audience which doesn’t know them in person, but who may be influenced by their opinion.

They’re often paid in commission, which comes from a percentage of each sale they directly motivate. This commission is something that can be agreed upon between you and any affiliate you deploy. Yep, this is how influencers make money!

Although it is a different form of marketing from referral incentives, the fees attached to any affiliate campaign you run will also be classed as an allowable expense.

 
Find more help in our guides and faqs, or ask a tax question for free!

The post Are Referral Incentives a Marketing Expense? appeared first on The Cheap Accountants.

More importantly, what’s the best way to go about it if you’re on a budget?

Well, more and more people are taking the route of outsourcing their marketing (as opposed to handling it in-house with a dedicated team). This can be a great, cost-effective option for start-ups though it’s not without its downsides, too.

Let’s take a look at the pros and cons, as well as what to look out for when choosing a marketing agency. But first…

What is outsourced marketing?

Outsourced marketing basically involves using an external agency to manage your business’s marketing activities.

You can either get them to oversee all aspects of your marketing, in which case they’ll likely develop a strategy for you, or just a few select areas that may require specialist knowledge (e.g. your social media presence or SEO and website development).

What’s the difference between in-house and outsourced marketing?

It’s important to understand how the two differ so that you can make an informed choice, and ultimately one that’s right for you and your business.

In comparison to outsourced marketing, marketing which is in-house typically involves a small, dedicated team – or even a single person. It might even be you, as the business owner!

This means you’ll either need to employ someone to do the job (yes, even if you’re a sole trader), or find time to fit it into your schedule.

What are some of the pros of outsourcing marketing?

One of the main benefits is being able to work closely with an agency that has access to the latest marketing tools and technologies. Your business will benefit from all this without you needing to purchase any of it yourself.

You’ll also get access to different perspectives than if you were to simply do it yourself. This can be really beneficial, as being too close to the business can mean you lose the ability to be objective and spot potential issues.

Outsourcing to freelancers or other companies also frees you of the duties and responsibilities you would have if you chose to employ a dedicated marketing team instead. These include things like recruitment laws, registration, insurance, various health, safety and equality duties, payroll and the legalities of sick and maternity pay.

What’s more, outsourcing allows you to adopt a more flexible approach, as when you start working with an agency, you have the benefit of being able to increase or decrease the number of services you require as and when you need to.

And the cons?

First and foremost, it may be hard to find an agency that understands the unique needs of your business. You want an agency with different perspectives, but, at the same time, these could actually cause them to try and take your marketing in a direction you’re not entirely comfortable with (or ready for).

Learning to trust their direction could take time – time that you may not have if you’re hoping to grow your business quickly.

You may also notice a lack of loyalty and/or commitment when working with freelancers or other companies, and this is because they (understandably) don’t feel the same level of investment as a permanent employee would.

If you’re hiring a freelancer, one other thing to watch out for is that they don’t fall under IR35. This is when someone is working for a client (you) on a supposedly self-employed basis, but the relationship is actually more like they are an employee, or an employee-in-disguise.

Failing to comply with IR35 rules can result in financial penalties.

What to look for in a marketing agency

Broadly speaking, you want to look for one which offers a diverse range of services, from digital and social media marketing to web design and copywriting.

Whether you have an immediate need for all of these right now or not, it’s still good to have the option – just in case.

A proven track record (and the accompanying experience) is also a crucial factor, as you’re effectively placing your trust in someone you don’t know, and so you need to see evidence they’re capable of getting the job done.

Otherwise, it’s a complete shot in the dark.

Good communication is also important, so that you’re kept in the loop and can track the progress you’re making (via things like monthly reports or meetings).

And, again, you ideally want someone who just “gets” your business, as this will make the whole process much smoother, allowing you to scale at a faster rate.

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Should My Small Business Outsource Marketing? appeared first on The Cheap Accountants.

If you use a car for your business

Car insurance is a legal requirement for every driver, but did you know there are special considerations if you drive for business as well as leisure or commuting?

Using your own car for business purposes

Car insurance is issued based on what you use the vehicle for, so if you don’t already have business use on your policy, make sure you either upgrade your personal car insurance to cover business purposes too, or get business car insurance.

If you have an accident without it, you might not have cover – and that can be both very expensive and a legal issue.

It’s also worth checking the car’s contents are adequately covered, too. If not, you could lose a fortune in stock or equipment should anything happen.

Company vehicles

Vehicles used solely for your business, be they cars or vans, will need commercial car insurance. It’s not the same as business car insurance!

If you run your business from home

Running your business from home can be a great way to save costs – and you’ll be able to claim the portion of household bills which relate to your business as an allowable expense! In some cases it might be a matter or practicality anyway – such as an Airbnb host who lives ‘above the shop’ as it were. Just make sure you have the correct insurance in place to cover any activities taking place there.

Buildings and contents insurance that covers business use

You need to make sure your buildings and contents insurance is adequate. When getting a quote for buildings and contents, you’ll be asked to if your building is only used for domestic purposes.

Don’t be tempted to say no if that’s not true, particularly if you have expensive equipment or stock in your home. Answer yes if you:

• Have any regular business-related visitors to the property (more than once a month, advises GoCompare)
• If you or anyone else run a business from the property
• If you have paying guests staying there

Many standard policies will cover limited business use with little or no extra fees, but check what protection you’re getting and consider business insurance if you’re not getting adequate cover through a standard policy.

Protecting your business against claims

There are different types of insurance available which can help your business if anyone needs to claim against it. This type of policy can sometimes become mandatory depending on what sort of business you run.

Public liability insurance

Public liability Insurance protects you against compensation claims and the legal fees involved in defending against them. These claims could be from customers, clients, or anyone else who feels your business has been responsible for injury or damage.

Examples might be a customer who trips on an uneven step and breaks their ankle, or damage that occurs to someone else’s property while you’re having work done or moving bulky stock.

It should also cover the actions of yourself and any employees when you’re on someone else’s premises, but always check exactly what’s covered.

Professional indemnity insurance

This is sometimes confused with public liability insurance – not helped by the fact that some companies offer a joint policy!

Professional indemnity insurance covers you against claims from customers or clients who have been adversely affected or financially disadvantaged by taking your advice or using your services.

This could be anything from the fire or flood resulting from electrical or plumbing work you’ve undertaken, to losing money because a service you supplied was delayed or inadequate.

Lawyers, accountants, and financial advisors must have this type of insurance by law.

Product liability insurance

This may sometimes be covered by your public liability or professional indemnity insurance. If it’s not, and your business sells products, ensure you take out product liability insurance.

This covers you against claims arising from injury to members of the public or damage to their property caused by products you make or supply. An example might be a small child choking on part of a toy that’s come loose.

If you have employees

Employers must have adequate insurance – it’s a legal requirement.

Employers’ liability insurance

The minute you employ someone, even on the most temporary or casual basis, you must have employers’ liability insurance in place.

This insurance will cover your business for claims and legal fees if an employee seeks compensation after being injured or taken ill because of their work.

The Health and Safety Executive (HSE) is responsible for enforcing this law and if you don’t have cover in place, they can fine your business up to £2,500 per day that you don’t have insurance in place (and even close you down).

You should display your employers’ liability insurance certificate in a prominent position and you’re legally required to keep a copy of it for a minimum period of forty years. You’re also obliged to show it to the HSE if requested. Failure to comply with either of these conditions above can result in a fine of up to £1,000.

Protecting your business premises

You might need insurance for your premises and contents, even if you’re a tenant rather than the owner.

Business building and contents insurance

This is necessary to cover your business against damage to premises or the loss of tools, materials, stock, packaging, furniture, appliances and IT equipment. Make sure you take the time to realistically value everything you would have to replace, not just the obvious bulk or high value items.

Desks, the fridge, the stationery cupboard; everything would have to be replaced if a fire occurred at your property, so make sure that if the worst happens, there will be enough money to start again.

Business interruption insurance

If you can’t work because vital equipment has been destroyed or stolen, or because your premises have been damaged, then you’re going to lose money. Business interruption insurance will help you recoup that lost income.

 
Insurance can be costly and with so many other costs to consider, it can be easy to put off getting the cover you need. But bear in mind you’re taking a huge risk—and that just one compensation claim or burglary at your premises could be enough to bring your business to its knees. Don’t take the chance! Get the cover you need now.

The post Insurance Policies your Small Business Needs appeared first on The Cheap Accountants.