 Acquiring finance for commercial ventures traditionally involved asking a handful of benefactors for substantial investment, a practice favouring those with business experience. These days, modern technology allows individuals with lucrative ideas to bypass the antiquated process and pitch their products directly to the public. Crowdfunding is emerging as a viable way for small businesses to raise funds from a large number of people, all typically contributing small amounts online, to take their concepts from the drawing board to reality. This growing trend has created a wave of online platforms which allow entrepreneurs to exchange pledges with rewards or equity in their business. In a process that only requires a few clicks to complete, it’s not hard to see why so many businesses in the early stages of funding are opting for a quicker and more convenient method of obtaining capital. Despite all of its redeeming qualities, crowdfunding still has some understated drawbacks - so is it really worth the hype? Marketing Benefits Emergent technologies have provided marketers with new options on various platforms to produce outcomes that are entirely customer driven. This is probably why crowdfunding as a marketing exercise is becoming increasingly popular amongst multinational conglomerates as well as startups and small businesses. Crowdfunding can extend a business’s visibility past specialist angel investors, to a wider community of influencers and enthusiasts where these funding campaigns can be used as novel marketing tools. These platforms are an ideal way of obtaining market validation and further information about a business’s potential consumers. It has modernised the traditional focus group with real time feedback from a larger and more representative demographic, providing more reliable indications of market activity. Crowdfunding allows customers to become part of the development of a brand, instead of passively consuming an online advertisement. This marketing technology encourages activity and revolves around engagement, which in turn creates stronger bonds between businesses and their donors. Making this process public creates brand advocates who can generate organic discourse and shares on external social media platforms. Accounting Difficulties While a great method of raising necessary funds for business ventures, equity crowdfunding divvies ownership to a multitude of small investors. Depending on the campaign and its donors, a portion of largely inexperienced shareholders are then given authority over decision-making. This means that businesses using this method of financing have several shareholders to consult, satisfy and pay, placing a higher amount of pressure on accountants. Equity crowdfunding has a lot of complex rules and regulations which must be adhered to. Ensuring that your campaign follows the regulator’s guidelines requires further expenditure by the business; companies need expertise from the accountant and more time spent on administrative tasks. The Financial Conduct Authority specifies how the company selling shares will be committed to some level of disclosure, meaning that every shareholder is entitled to the same level of transparency regarding financial documentation. Therefore, successful crowdfunding campaigns could actually create a considerable amount of admin for the beneficiaries and their accountants. Similarly to other sensitive online documents and data, crowdfunding platforms are subject to targeted threats such as hackers and malware used to compromise valuable data which could also lead to potential loss of investments. This vulnerability within online crowdfunding services makes it more difficult for accountants to track cashflow and then consequently harder to budget and forecast. What’s Best for Your Business?
Crowdfunding is still a relatively new platform but success stories have emerged across multiple industries. It can be the most viable source of funding for entrepreneurs and new businesses. However, it’s worth knowing the risks involved if it doesn’t go well. Each company’s campaign is different but a successful crowdfunding campaign requires a comprehensive planning stage where businesses carry out enough preparation. If you need any financial advice for a new business venture then contact experts at Cottons Accountants to make the process safer, simpler and suited to your needs. The advent of digital media has brought challenges and opportunity in equal measure. As we continue to make technological advancements, the way we conduct business must develop accordingly. However, it appears that HM Revenue & Customs have left a lot to be desired when it comes to digital business management with a system of taxation described by many business owners as ‘outdated’. So with the amount of uncollected tax due to taxpayer error, as well as flawed protocol, now in excess of £8bn per year which costs Britain's public and its businesses respectively, it was time to take action. In a bid to make the process of paying taxes more accessible and efficient the Government announced the 'Making Tax Digital’ initiative as part of their 2015 Autumn Statement. The announcement also outlined their plans to ‘transform’ the tax system and scrap tax returns by 2020. Going Digital Although unprecedented in the UK, digital tax systems have been already been effectively implemented in countries such as Australia, Brazil and Estonia. There are plenty of benefits to digital record-keeping, for instance taxpayers using an online tax account are able to get a clearer picture of their tax affairs in real time. Digital tax management also reduces hassle, making it possible for anybody with internet access to remotely monitor their taxes allowing business owners to budget more accurately and save time by placing all of their taxes in one place. Furthermore, as the digital system requires more regular updates, more taxpayers will be able to use the cash basis of accounting meaning that expenses up to the sum of £166,000 will be deductible. In addition, business will be able to use spreadsheets and cloud accounting services such as Xero to support their digital reports which is guaranteed to expedite the process of paying tax. Financial Secretary to the Treasury, David Gauke, later highlighted more benefits of a digital switchover, adding that introducing digital record keeping and quarterly updates for businesses will eradicate around 10% of taxpayer error. Making Tax Digital: The Timetable MTD is set to be introduced in phases, giving all business owners and landlords at least two years to make the adjustments required to manage their taxes using the new digital service. The new scheme is due to roll out for Income Tax and Class 4 NI contributions from April 2018. Pensioners and people in full-time employment will be required to use the digital accounts if they earn a secondary income of £10,000 or more from property or self-employment The proposed changes are due to take action for VAT purposes from 2019 onwards. Is it for Everyone? Businesses must make an annual turnover that exceeds the VAT threshold, currently set at £85,000 to qualify for digital VAT record keeping. This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to make the switch to the new digital system. As VAT already requires a quarterly update, this won’t be a major adjustment and taxpayers will not need to report to HMRC more frequently than they already do. 'Smaller' businesses turning over £10,000 or less will be exempt from the change in legislation, but will be allowed to submit reports and quarterly updates on a voluntary basis. Changes to the submission of Corporation Tax obligations will come into effect in April of the following year. Most British businesses will then be required to keep digital records and update HMRC on their income and expenditure every quarter. MTD Assistance
If you need assistance with Making Tax Digital and how to integrate digital systems into your business then talk to an accountant. This article was written by Cottons Chartered Accountants, small business accountants and audit specialists.  Your business is under threat. Around 50% of businesses have been subject to burglary, vandalism or other types of property crime. A place of commerce and money making and full of valuable equipment and goods, it should come as no surprise that a business premises is a prime target for criminals. Small businesses in particular most protect themselves and their assets. But businesses aren't left without options to protect themselves. With attack comes defence. Securing your business against threats requires a few different security elements. You need to make it difficult for criminals, you need to stop them from wanting to target your company in the first place and you need to consider every angle they might use to steal from you or cause you harm. Deter Intruders
Security cameras that are clearly visible and constantly monitoring your business property provide you with one crucial thing: evidence. This dramatically increases the risk factor for an intruder and minimises the chance that they will target your company premises.
Alarms are something most people will anticipate when robbing a business, but perimeter alarms are a new technology burglars are unlikely to be prepared for. Perimeter alarms work through the activation of motion sensors set up around your business premises. If an intruder gains access to somewhere they shouldn’t — even just within the grounds of your business — the alarms will sound. You can couple these sensors with security lights to create an intimidating defence plan. Even criminals who make plans are looking for easy options. Perimeter alarms and lights make the challenge of burglary unappealing, up the chance of getting caught considerably and reduce the chance that you will be a target. Make It Difficult
These are electronic locks. They vary in design — opened by key cards, codes, fingerprints, etc. — but essentially do the same thing: they make it harder for somebody to access your business property. You cannot pick an electric lock, nor can you login and hack software that isn’t online, which means getting through smart locks is very difficult. In many cases, there are only two methods of access:
If you do find an intruder gets past your access control without force, the primary culprit will be somebody with insider information. Narrow down the potential criminals using other security tools, such as CCTV, to create evidence and catch the perpetrator.
Safes are ancient technology. They’ve been in existence for thousands of years in some form, built to protect objects of value, and there is a reason we still use them to this day. It’s because they work. If somebody gets into your building and your most important items are behind the thick steel of a safe, they aren't getting their hands on them. Don’t be fooled by TV shows or crime novels — safes are not as easy to crack as you might think. A secure business safe is near impossible to access unless you know the combination or have the key. Many modern safes also come with multiple security elements to ensure they remain fully secure. So confident are people in safes that you can often reduce your insurance premiums just by owning one. It says a lot about safes as security tools when insurance companies are willing to accept them as a method of reducing fees. Consider All Angles
Last year, businesses lost around £20 billion to data theft. Protection against data theft is critical, especially now that GDPR rules have come into force. Even the smallest of businesses will likely store some kind of data, from simple pieces of client information to whole archives of purchase histories, invoices, personal details and account information. Data encryption is essential for keeping this data secure, not only working as a deterrence, but also making things harder for criminals. This is especially important in the 21st century, where all data tends to be accessible via cloud systems. The use of data encryption software ensures you keep your business secure from all angles. Keep up to date with @SmallBizAdvWeek for more tips and advice |
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