When it comes to business, everything boils down to knowing your numbers. As an entrepreneur or the owner of an SME, one of the most important sets of numbers you could ever look at tells you all about your cash flow. Cash flow is food, water and air to business. It’s what comes in, what goes out, what happened in the past, what might happen in the future, how loyal your customers are and how much your business is worth.
But there’s a lot more than knowing which directions your cash is flowing in; as of April 6th 2013, another factor reared its head; one that could threaten to throw even the most efficient business off track.
April 6th 2013
April 6th saw HMRC introduce RTI PAYE. Although there was some trumpeting done on the run-up to this event, by the time it came along, the Institute for Business reckoned that around 35% to 40% of small businesses didn’t have a clue what was going on – and many of those businesses will still be trying to sweep up the mess. If you want to keep your business on track, you need to understand the numbers and an important part of those numbers is RTI PAYE.
RTI stands for Real Time Information and RTI PAYE is the process through which data is sent to HMRC every time an employer makes a payment to an employee. Every time you put your hand in your pocket, the Tax Office wants to know about it. This is a huge diversion from the once-a-year tax returns that businesses had to previously submit. HMRC says that it’ll make it easier for them to calculate who owes what or whether rebates are due – but there is a hidden problem.
The Hidden Problem
One of the lesser-known things about RTI PAYE is that HMRC will know from the data you send to them each time you make a payment how much you them in terms of tax liabilities and NI contributions. So far, so good. But the ace up their sleeve is that you are obliged to make those payments by the 19th of each month – so you can’t afford to take your eyes of the ball or you’ll be liable for a fine. However, there is a solution to all this.
QuickBooks is an accounting software package that also deals in RTI PAYE. In fact, it’s one of the few systems that’s approved by HMRC. You can use QuickBooks to both send the data about what you’ve paid your employees, but also program it to respond to the HMRC’s calculations and get those payments in on time. Once the payments are in, there’s nothing to worry about. And, if you’re worried about all the time this is going to take, don’t be. Once you’ve punched in the initial figures, QuickBooks will take care of the rest, turning that time-consuming task into an automated process.
Changes of any sort need a period of adjustment. However, if you use the right tools you can get the job done before there’s any mention of fines, liabilities or investigations.