The FreeAgent Blog

When you’re running your own business, sometimes it’s easy to forget that as well as focusing on paying the bills, you should still think about your own job satisfaction. This week, we’re looking at some essential ingredients for satisfaction:

What makes you feel satisfied with your work? Hit us up on twitter or leave a comment and let us know. And have a great weekend!

It's Expenses Month here at FreeAgent so - in addition to our recent blog posts about travel & accommodation and business use of home expenses - we've decided to make life a little easier for anyone who is unsure about what food and drink they can claim when they're working.

Our Chief Accountant Emily has been hard at work and has created this handy infographic for UK limited companies and sole traders, which explains whether or not they can claim for their lunch when they're out on business. Judging by the questions we've received during our recent live expenses Q&A sessions, it's an issue that many people find confusing - so we hope that this guide will provide a little bit of clarity!

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<p> <a href="http://www.freeagent.com/l/food-and-drink-expenses-travel"> <img src="http://freeagent-assets.s3.amazonaws.com/website/images/site-assets/landing/lunch.600.png"> </a> </p> <p style="align: center; font-family: helvetica, arial;" > View the full image at <a href="http://www.freeagent.com/l/food-and-drink-expenses-travel&utm_campaign=expenses&utm_medium=infographic&utm_term=food-and-drink">FreeAgent</a> </p>

Lord Young, enterprise adviser to the government, has recently published the second phase of his report into small business. This time he looks at Growing Your Business.

In summary, he’s recommending increased support to help small businesses grow:

• A “Supporting Small Business Charter” to encourage business schools to target the area of SME growth.
• A £30 million “Growth Vouchers” programme, aimed at helping small and micro businesses to get professional help.
• An increased £30 million funding for the Start-Up Loans scheme, with a recommendation that the current upper age limit of 30 on this scheme be removed.
• More funding for SMEs in their third year looking for money to grow, and an extra £100 million funding to be made available through the Business Finance Partnership, which promotes alternative finance sources such as crowdfunding.

I’d like to pick up on three points in the report.

1. Growth through simplification?

Lord Young points out, “Within the micro business population itself growth has been driven predominantly by businesses without employees.”

Drawing attention to the perceived complexity of the recruitment process - and to the fear many business owners have of recruiting the “wrong” employee, costing them and their business a lot of time and money - he says: “The actual employment process should be simplified. We need to ensure that employers can complete the actions required of them more seamlessly.”

He’s absolutely right. To me, the key to business growth is simplification of the myriad legislative processes involved. Employment, HR, tax, all are hopelessly complicated, and contribute to why many businesses choose to stay small - so making these simpler would be a great boost to the small business sector.

However, I would also hope that these changes are not rushed and that all of the implications are properly considered - to ensure that by simplifying one aspect of running a small business they don’t inadvertently make things more difficult elsewhere!

2. Growth Vouchers: what will the model be?

The report makes a proposal for a £30 million Growth Voucher scheme, but also mentions that the model for this has not been finalised. So it's not yet clear if these vouchers would actually allow small business owners to redeem their value on professional services such as accounting (which is an idea that our good friend Elaine Clark at Cheap Accounting talks about on her blog).

I wholeheartedly agree that small business owners should be encouraged to seek professional help and guidance, given the complexity of the legal framework in which they are operating. A voucher scheme would help with this, however, the quality of the providers would need to be vetted.

I am also concerned that Lord Young wants private firms to set up websites providing “advice and inspiration to help people start and develop their businesses.” My concern here is that this could lead to an enormous and disjointed collection of websites, with business owners confused as to which one to choose. I would have preferred a centrally managed and operated service with funded advice from vetted professionals. 

3. Start-Up Loans: no age limit is positive

I agree with Lord Young’s recommendation that the Start-Up Loans scheme should be open to anyone of any age who wishes to start a business. Many people over the current age limit of 30 have ambitions to start a business but do not have the money to spare. They may have better-paid jobs than their younger counterparts but are also more likely to have mortgages to pay and children to support, so they cannot simply walk away from a well-paid job

Opening the Start-Up Loans initiative to potential business owners of any age would be a very positive move.

From my perspective, Lord Young’s report has a lot to commend it and I hope that the government will heed his recommendations and act upon them.

It’s Expenses Month here at FreeAgent, and we’ll be posting lots of useful information about managing and claiming your expenses throughout the rest of May. In the second article of her expenses series, our Chief Accountant Emily talks you through claiming the costs of travel and accommodation for your business. 

Are you self-employed and have to regularly travel for your business? And does this travelling ever involve an overnight stay away from your home?

If the answer is yes, then there's good news - you may be able to claim some of these costs back. Here's a few tips for working out which travel and accommodation costs you can include in your business’s accounts. 

1. Reason for the journey

Before you can claim for travel or accommodation, you need to consider why you made the journey in the first place. Was it just for business, such as to visit a client, or to pick up your new business cards?

Or was there a private element to your travel? For example, did you stop on your way home from a client meeting to do your weekly shop or another non-work-related chore?

Before you can work out if you can claim for your travel, you need to establish what the primary purpose of the journey was. If it was mixed (i.e. for both business and private), then you need to look at whether you can split the business element from the private part of the journey.

Let’s look at some examples.

Business journey: incidental private use

If your journey was primarily for business, and any private use of the journey was incidental, you can put the full cost of this travel into your business accounts.

Simon is a web designer. He travels by train from his home in Birmingham to visit a client in Brighton. While he is there, he has a walk by the sea.

The purpose of Simon’s journey to Brighton was for business. The private element, his walk by the sea, was purely incidental. Simon therefore claims the full cost of his train ticket in his accounts.

Mixed journey: different uses separable

If your journey included both business and private elements, but you can split out the private element, then you would include only the business cost in your accounts.

Jessica is a business consultant. She lives in Glasgow but has several clients who are based in Manchester. She travels to Manchester and stays there for two nights in order to attend meetings with her clients. She then decides to extend her stay to three nights so that she can attend a Premiership football match. Doing this costs her one night’s extra hotel bill and £50 in fees to change her train ticket.

The purpose of Jessica’s journey was to visit clients. She can claim the full cost of her train ticket but she cannot claim the £50 in fees to change the ticket, because she only had to do that in order to see the show, which is not a business expense.

She can also only claim two nights’ worth of hotel accommodation, not three, because the third night’s stay was for a personal purpose.

Mixed journey: no separation possible

If your journey is for mixed purposes, and you can’t split out the business and personal elements, then you can’t claim any of the cost of that journey.

Tom runs a microbrewery. He travels to his local town to bank his business takings and to do the weekly supermarket shop for his family. Because that journey was for mixed purposes, and because he can’t split the cost into business and private, Tom must not include any costs for this journey in her business’s accounts.

2. Use of your own car

When you’re self-employed you will often travel in your own car on business.

The simpler way to do this is to include your business mileage in your accounts, at HM Revenue’s approved rates. If you’ve already been doing this for some years, you must continue to use this method until you change your car. If your business is new, then as from 6th April 2013 you can use this method if your annual sales are under the current VAT limit, which is £79,000 at the moment.

Otherwise you’ll need to work out your car running costs and claim a percentage of them in your accounts, based on how much you used your car for business and how much was private. This means you have to track the mileage you travelled for all your journeys, so that you can work out the business use percentage of your car.

This second method will take longer but may save you tax if you have a car that’s comparatively expensive to run.

3. Method of transport

HM Revenue don’t require you to use the cheapest available method of transport – or even to claim only the amount that the cheapest method would have cost you. You can claim the full amount you spent on the journey.

Let’s take an example.

Elizabeth is a self-employed PR consultant working in London. She travels to Edinburgh to visit a client.

To make this journey by overnight coach would cost her £35, to go by train would be £90 standard class or £160 first class, and to fly would cost her £80.

Elizabeth decides to save time and fly.

She can claim the full £80. She’s not restricted to claiming only £35 because there would have been a cheaper way she could have reached Edinburgh.

The main issue with travel and accommodation is to make sure you’re certain that the only costs you’re including in your accounts are for business travel.  And remember - if you are in any doubt about what you can and can’t claim, you should seek professional advice from an accountant who will be able to advise you.

Expenses month series:

• Working from home expenses
• Travel and accommodation expenses