A few weeks ago I had quite a heated debate with Richard Murphy on the issue of cash accounting for small businesses. As he opposed that idea, I - and others - asked him to put forward an alternative solution, as the one point we all agreed upon was that the tax regime for small businesses is in dire need of simplification.

Further to a posting by Mike Truman on the Taxation website

Richard has responded and his article can be found here

In summary, Mike and Richard suggest that micro businesses (with a turnover under the VAT registration limit and not registered for VAT) could have the option to work out their taxable profit by:

1) Adding up the sales for the year, figure x

2) Taking a fixed percentage of sales according to what trade sector the business operates in, figure y

3) x - y = taxable profit.

This to me has advantages over cash accounting. It is less open to manipulation and teeming and lading, would be simpler for HMRC to work with since they would set the trade sector percentages, and would be very easy to work out, with far fewer ifs and buts. Also there would be no transitional arrangements since a business could easily use the simple method one year, and switch to preparing full accounts for the next - similar to when a business has to stop using the VAT flat rate scheme.

This simple method wouldn't suit all micro businesses, but for those which don't want to grow and expand but just want to tick along quietly and earn enough to run the home, and/or one man bands selling their services (interior designer, party organiser, web site designer, plumber, taxi driver, etc), I can see serious advantages.

I would though, recommend a safeguard be put in place to ensure that businesses still keep records of sales invoices, purchase invoices, cash received and spent (as in the Winweb cashbook), so that they keep track of potentially late- or non-paying customers, and make sure they have enough cash to pay bills.

Views please?

M

Tags: Accountants/CPAs, Accounting, Business Infrastructure

On my flight to Hong Kong I was watching the Quantas Business Channel (I know that is sad!), the topic was Coolhunting for marketing to teenagers.

Reading Phil Wainewright the other day about what next for Web 2.0, I am wondering if the SaaS industry is also cool-hunting? Are our software clients looking to be cool, or do they just want to get things done.

In the end-user arena I think it is important to be cool, like YouTube, MySpace, Google and others. But in my business sector the small (1-5 people businesses) that approach would be foolish, I think!? We need to concentrate on delivering simple, self-explanatory IT solutions in connection with Live! services that small businesses need.

Cool-hunting would suggest that there is some sort of choice in what is needed ( cool ) and what is not needed ( out ). That would certainly not apply to small business needs. It is important that small businesses survive, that is cool. But you do not survive in business because you use cool business tools.

Having worked in the IT industry for 30 years, I can’t help but wonder if it is not time to concentrate on our customers needs, rather then telling our customers what they need.

Just a thought!

Tags: Accountants, Business Development, Business Infrastructure, Business Mentoring, Business Start Up, Business Tool, Google, Home Business, Homesourcing, IT, Micro Business, On-demand, OnlineOffice, Open Source Software, Outsourcing, SaaS, SBI, Selfemployed, Small Business, Small Business Infrastructure, smb, sme, Software as a Service, SOHO, Teleworking, Very Small Business, VSB, Web Technology, WebOffice, Wiki, WinWeb, WinWeb AccountsOffice , WinWeb CashBook, WinWeb OnlineOffice

Online sales is a fast-growing area for businesses of all types, yet so many small businesses are missing the boat, why?

Well those helpful people over at bytestart have done it again for the start up and small business, they have arranged a live Webchat with the head of merchant services at PayPal, Carl Olav. Go and join in and get some answers to those questions that have stopped you making the internet your shop front for the world.

The live Webchat takes place on Wednesday 15 November at 1pm, don’t forget, put it in your diary.

Tags: Shop, Retail, Consumer spending, Christmas shopping, Small Business, Self Employed, PayPal, Internet Shopping, Entrepreneur, SME, OMB