The FreeAgent Blog
Posted on 16 April 2015 by FreeAgent Guest Blog – 0 Comments
If you run your business as a sole trader, you might assume that business insurance is something you don’t need to worry about. But there are several policies that could help you keep your business running if something goes wrong. Here, Jade Wimbledon from online business insurance provider Simply Business explains the key types of cover and the factors to consider when insuring your business.
Types of insurance cover for sole traders
Professional indemnity cover is likely to be one of your main insurance considerations as a sole trader. It covers you if your client seeks compensation because they think you’ve made a mistake in your work. This might include mishandling data, giving faulty advice or violating intellectual property rights.
Professional indemnity cover is particularly important if you offer professional advice, so if you work in a field like accountancy, design or IT consultancy you should give it some serious thought. Clients may want to check your level of professional indemnity cover before they begin working with you. It’s good practice to find out whether they require you to have a minimum cover level before you start working with them.
Public liability cover protects you against compensation claims made for damage or injury to a customer or member of the public. It’s not just for big businesses or those that do dangerous work; if you interact with the public in any way as part of your work, then this cover could be crucial. If you run a home hairdressing business and burn a customer’s scalp during the dyeing process, for example, or if you run a small photography studio and a client trips over a trailing wire, your public liability insurance could cover any compensation claims.
Loss of revenue
Loss of revenue or business interruption insurance protects your income if your business is out of action for a period of time as a result of a disaster covered by your policy. This might include damage from a fire or flooding. Usually for up to 12 months after the disaster, the insurance provider will pay your lost income and any additional costs required to keep your business running.
If your insurance covers your business equipment then you can receive money to replace it if it gets damaged, lost or stolen. This type of insurance doesn’t just cover specialist equipment; it can also cover items such as mobile phones and laptops. Business equipment insurance can come in really handy if you need to replace your business tools and technology quickly and with minimal disruption to your business.
If you’re an employer, it’s likely that you’re legally obliged to have an employers’ liability policy for at least £5 million. This insurance covers you if an employee makes a compensation claim for injury or illness that they blame on their work. If you’re legally obliged to have an employer’s liability policy, you can be fined up to £2,500 for each day that you don’t have one in place.
There are certain circumstances in which an employer might not be legally obliged to have an employer’s liability policy in place (e.g. when employing family members). To find out more, check out the advice on gov.uk.
Top tips for buying insurance
Now you know what some of the options are, here are some factors to consider when it comes to insuring your business:
- Consider the events that could seriously impact your business and estimate the costs that you could incur if the worst happened.
- Check your client contracts and see whether they insist on particular cover and whether they specify a cover limit.
- Think about combining several types of cover to create a single business insurance policy.
- Aim to get a well-tailored policy so that you’re not paying over the odds for insurance that’s better suited to big businesses.
- Always read your policy documents carefully so that you understand what’s covered and what isn’t and how to make a claim.
- When you apply for insurance, be honest and accurate with your details and keep your insurer up to date if anything changes. If you don’t, you may not be fully covered when you come to make a claim.
Posted on 15 April 2015 by FreeAgent Guest Blog – 0 Comments
Mathew Aitken is Head of Content at MadeSimple, who offer business products and services to start-up companies and small businesses.
Since MadeSimple began in 2002, one of our services - Company Formation MadeSimple - has helped form over 400,000 start-up business in the UK. This has given us a fascinating insight into some of the entrepreneurs who have driven the UK’s recent start-up boom.
Here are some of the facts and figures we found when we looked at 240,000 limited company directors who started new businesses in 2012 -2014.
Say hello to the Smiths!
It will probably come as no surprise that the most popular surname among both the male and female directors of the UK start-up businesses in our group is Smith. Other popular surnames for both male and female directors include Singh, Williams and Taylor.
The names in our list are popular across the entire UK; check out this interactive map from The Guardian, which breaks down the most popular surnames by region, to find out more.
The gender gap persists
When we looked at our group of UK start-up directors, we found that in 2014 the ratio of male to female directors was 73% to 27%. This is very similar to the ratio we found in both 2013 and 2012.
Most of the directors started businesses in their 30s
The age range of the directors we looked at suggests that the entrepreneurial spark has no real age limit. Our youngest director was just 16 (the minimum legal age for a UK limited company director), while the oldest was an extremely impressive 113! The majority of our directors, however, were aged between 31 and 40.
It’s not all about London!
As you might have guessed, the majority of the company directors in our research were located in and around London. However, our research also found that a high proportion of directors live in Scotland, Birmingham, Manchester and Wales.
So there you have it: just some of the insights we gained into the entrepreneurs who started new UK companies between 2012 and 2014. To learn more about our findings, take a look at our full report.
For this first release we’ve kept things simple, focusing on tasks you want to do when you’re on the move. We’ll be releasing more features over the coming months, but for now it allows you to:
- create and send invoices
- record out-of-pocket expenses and capture photos of receipts
- view and add to your list of contacts
So, just the basics for now, but more is coming soon. And of course this is available free to all customers.
What about Android?
Never fear, we haven’t forgotten about you Android users. We’re going to build out a few more features on the iOS version but we’ll be shipping an Android version later this year. Stay tuned for more details on this.
Catch you out there,
Roan and the team at FreeAgent
Every April, the government tends to roll out new taxation changes and this year is no exception. So what changes will take effect in April 2015? Our Chief Accountant, Emily Coltman FCA, highlights five key things to keep in mind.
VAT thresholds increased
|1st April 2014 - 31st March 2015||From 1st April 2015|
|VAT registration threshold||£81,000||£82,000|
|VAT deregistration threshold||£79,000||£80,000|
Starting from 1st April 2015, the VAT registration threshold increased to £82,000 a year. That means that you must register your business for VAT if its VATable sales are more than £82,000 a year.
The VAT deregistration threshold also increased by £1,000, so that means that you can deregister a VAT-registered business if its VATable sales fall below £80,000 a year.
Personal allowance increased
|6th April 2014 - 5th April 2015||From 6th April 2015|
The personal allowance is the amount of income that any individual with earnings below £100,000 a year can earn free of tax. Starting 6th April 2015, this allowance goes up from £10,000 to £10,600.
For individuals who earn over £100,000, the personal allowance also goes up to £10,600. However, this is then reduced according to how much money they earn – specifically, the personal allowance reduces by £1 for every £2 that individuals earn over £100,000. That means that if someone earns £121,200 or over in 2015/16, their personal allowance would reduce to zero (this assumes that they were born after 5th April 1948 – see below).
HMRC has also introduced a change to personal allowance rates for older individuals. Previously, the personal allowance for individuals born between 6th April 1938 and 5th April 1948 was higher than for individuals born after 5th April 1948. From 6th April 2015 the personal allowance for both these age groups will be the same. There is still an extra allowance of £60, however, for anyone born before 6th April 1938 – so their personal allowance would increase to £10,660.
National Insurance thresholds increased
|6th April 2014 - 5th April 2015||from 6th April 2015|
|Employee’s National Insurance threshold||£153 a week||£155 a week|
|Employer’s National Insurance threshold (employee over 21)||£153 a week||£156 a week|
|Employer’s National Insurance threshold (employee under 21)||£153 a week||£815 a week|
The Employee’s National Insurance threshold has increased to £155 a week, meaning that employees will start having National Insurance deducted from their wages from 6th April 2015 once they earn £155 or more a week. This means that even if you earn less than the personal allowance, you may still have to pay National Insurance; anyone with a salary between £8,060 and £10,600 will need to pay National Insurance at 12% for anything earned above the £8,060 level.
The Employer’s National Insurance threshold has also increased. If your business employs staff, you’ll start paying employer’s National Insurance on their wages above £156 per week, or £8,112 per year, up from £153 a week. This is unless the employee is under 21 years of age, in which case you won’t start paying employer’s National Insurance until they earn over £815 per week or £42,380 per year. The threshold for people under 21 is new for this tax year.
Don’t forget that the £2,000 Employment Allowance is available again for employers for the 2015/16 tax year. Using this allowance, you can set £2,000 against your overall Employer’s National Insurance bill. Check out this article for more details about the Employment Allowance.
Class 2 National Insurance increased
|6th April 2014 - 5th April 2015||From 6th April 2015|
|Class 2 National Insurance||£2.75 per week||£2.80 per week|
If you’re a sole trader or a partner in a partnership, your Class 2 National Insurance bill will go up from £2.75 per week to £2.80 per week.
The Budget of March 2015 promised abolition of Class 2 National Insurance, but a date for this has not yet been set, so you’ll need to continue paying Class 2 National Insurance as before.
If your profits are under the Small Profits Threshold, which is £5,965 a year from 6th April 2015, you won't have to pay Class 2 National Insurance, but be aware that this exemption might affect your entitlement to State Pension and other state benefits – it’s worth talking this through with your accountant.
Reduced tax on savings income
|6th April 2014 - 5th April 2015||from 6th April 2015|
|Starting rate band for savings tax||savings up to £2,880||savings up to £5,000|
|Rate of tax for savings on starting rate band||10%||0%|
Up to 5th April 2015, any savings income (i.e. interest that banks pay out), up to £2,880 a year was taxed at 10%. From 6th April 2015 the level of this “starting rate band” will go up from £2,880 to £5,000, and the rate of tax on this income will fall to 0%.
What this means in practice is that if your taxable income for 2015/16 is under £15,600 (the Personal Allowance plus the starting rate band), and part of that is savings income, you’ll be able to make a claim to either have your bank pay you interest tax-free, or for a refund of any tax the bank has already deducted..
If you want to find out more about how any of these rates may affect you and your business, it’s worth speaking to your accountant.
This blog post was first published on 3 April 2015 and was last updated on 24 April 2015.
Showing 1 - 4 of 571 Articles · Page 1 of 143
- A guide to business insurance for sole traders from Simply Business
- Who’s behind the UK’s start-up boom? MadeSimple looks at the numbers.
- FreeAgent Mobile for iOS is here!
- April 2015 tax changes – five things you need to know
- Introducing the Payroll Dashboard
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