Tips For Small Business Owners

For many sole traders or small businesses it can be difficult to find the time to maintain all paperwork on a regular basis, meaning a large amount of admin is left until it is absolutely necessary to sort out.

If this sounds like you, then you will need to make some changes to the way you work because the Inland Revenue  is set to investigate two million small businesses – slapping many with big fines if records have not been kept in order. Here are 5 tips to help your business in 2012…

Receipt
Receipt (Photo credit: BreakfastPirate)

1) Get organised, get in a routine and get sorted

Under the HM Revenue and Customs initiative ‘Business Records Checks’, small businesses and sole traders will be subject to inspection to ensure all paperwork and bookkeeping is up-to-date and correct. If they find that your business isn’t hitting their standards, you’ll be fined £3,000. And as the HMRC have been given a target of £600 million to hit over the next four years, you can be sure they won’t be taking a lenient approach when it comes to handing out fines.

Getting organised seems like an obvious first step, but if you’ve set your admin duties to one side for quite some time, you’ll have your work cut out! Admin is part of your business, so set some time aside either at the start or end of the week (or whenever your quiet period is) and focus on your paperwork and bookkeeping.

Consistency and routine are key to ensuring you stay on top of this task.

2) Keep all receipts

It is essential you keep all receipts so that you can back up business expenses. You could get 12 envelopes and write the name of each month on them and store your receipts according to when you purchased goods / paid bills. Alternatively, you could separate receipts according to source, for example ‘rent’, ‘tools and supplies’ ‘stationery’ ‘miscellaneous’.

This also applies to documentation for purchases you want to claim the VAT back on.

3) Bank and building society documentation

It’s easy to see a letter or statement from a bank or building society and think ‘I know what that is, I’ll open it later’ and before you know it, you have a stack of unopened letters to sort through. This is a habit you need to break – open the letter, check payment transactions are correct and file it away. It only takes a few minutes at the most and means you’ll save yourself a great deal of time and effort later on.

4) File your tax return on time

If you’ve kept paperwork up-to-date as outlined in the points above, you’ll find that filing your tax return will be much more straightforward to complete on time – helping you to avoid fines for being late.

5) Don’t throw anything away!

We’re not suggesting that you become a compulsive hoarder and never throw anything away; we simply mean that at the end of every tax year, you box away important financial documents like receipts, invoices and bank statements, and keep them safe in case you need them in the future. You should keep documentation of this sort for at least six years.

How Inflation has Bolstered Commodity Prices

Perhaps the simplest of all financial misunderstandings is the idea that inflation is a “static” concept that exists in the same way for all markets and regions. This isn’t true. For example, just because a national inflation rate is reported at, say, 5%, doesn’t mean that every market and every region of the nation is experiencing 5% inflation.

Part of the nation could be experiencing 10% inflation, while other regions could be experiencing just 3%. Some markets could be seeing prices go down (like the real estate market) while other markets could be experiencing extreme inflation, like the silver and gold markets are currently.

In this article, we’ll be analyzing specifically different commodity markets to see how they’re fairing during our current inflationary and deflationary cycle.

  • Gold Prices. The price of gold has skyrocketed in the last few years, more out of fear from inflation than the actual inflation itself. Precious metals — including silver as discussed below — are almost always used by investors to hedge against future inflation and out of the fear of the  economic unknown.
  • Silver Prices. Silver has gone up in the last years to the extent that it’s absolutely unsustainable short of hyperinflation. For several years, silver prices have kept increasing. If you own silver, be on the lookout for major corrections or bear markets in the future — it wouldn’t be wrong to keep your eyes on live silver prices just to stay on the safe side.
  • Oil Prices. Crude oil prices have also gone up in the last few months due to inflation, even though a lot of the price jumps have been caused by political turmoil and fears of some OPEC countries shutting off oil exports.
  • Copper Prices. The price of copper is important for economic development and recovery because copper is found in just about all major appliances and electrical equipment. Copper prices probably won’t be dropping anytime soon, considering Chinese growth — inflated, of course — is still rushing forward.

Whenever an asset class is benefiting from inflation, you can almost always be sure it’s a bubble — and bubbles pop. Stock bubbles, real estate bubbles, and commodity bubbles have always popped in the past, and anyone who claims “this time it’s different” is probably wrong.