Choosing the right business entity If yo

Choosing the right business entity

If you’re starting a new business in the UK, one of the most important decisions concerns the form the business will take. There are four common ways of arranging a business, each with its own legal and tax requirements, benefits and complications.

How you decide to set up in business will be influenced by whether you plan to work with others or on your own and how you choose to structure any business relationships.

Sole proprietorship

As the name suggests, a sole proprietor (or trader) owns and runs their own business. There are few rules for the individual to adhere to, as the business is not considered a separate legal entity by law. All assets and debts belong to the proprietor and profits are taxed alongside any other income the individual has.

Limited company

If it’s important to you to keep your business arrangements separate, a limited company may be suitable. Incorporating a business means it has a legal identity of its own and provides some protection to its owners and shareholders, as any debts are ‘owned’ by the company. However, creditors may still require personal guarantees from owners of small businesses. Limited companies must file certain documents laying down the rights of shareholders and owners. Annual tax returns must also be filed.


Two or more partners run the business together, share responsibility for liabilities and ownership of assets. The exact way these are split can be determined by a specific partnership agreement. The partnership is recognised as a legal entity, which means there are a number of responsibilities for the partners to be aware of. For example, the business will need to file a tax return but tax will be paid by the individual partners on their specific incomes. The assets of each partner can be used to pay any creditors and partners may need to guarantee repayment of any borrowed money against their own personal assets. Partners can also sign contracts, although this process can be complicated if all partners need to be available to sign documents.

Limited Liability Partnership

Partners in a LLP are known as members and their names and addresses will need to be registered at Companies House. The main advantage of a LLP is that members will only be held responsible for a certain level of debt if the business encounters problems. The LLP exists as a separate legal entity which can sue or be sued and enter into contracts in its own right. In return, the business must file accounts annually as a public record. Members are usually taxed individually in the same way as partners are, although some members must be treated as employees for tax purposes. Although they have traditionally been used by professional businesses such as solicitors, small businesses may also want to look at this type of entity.

Need some advice?

If you are unsure about how to set up your business venture, we can provide advice and can also assist in forming the company. Please call us on 020 7330 0000.

Digital and IT Support for SME’s Small

Digital and IT Support for SME’s

Small and medium-sized enterprises (SMEs) can apply for IT and digital support worth up to £2,000 through the Government Growth Voucher programme.

The programme is set up to boost SME growth by subsidising the cost of specialist business support. Businesses must be prepared to match the amount of funding awarded through the programme and can then claim 50% cash back using their Growth Vouchers.

Eligible businesses must have:
been trading for at least one year
49 employees or fewer
not sought advice in the last three years.

It is estimated that around 20,000 businesses will be eligible for funding under the scheme, which runs until March 2015.

The support available applies to the following types of IT and digital advice:
improving customer online experience
planning digital projects
automating business activities
selling online
analysing technology usage
online visibility

IHT Planning: use of Trusts Inheritance

IHT Planning: use of Trusts
Inheritance tax (IHT) is a concern for an increasing number of home-owners as house prices continue to rise, with property forming the majority of many people’s assets. IHT is payable when someone dies and leaves an estate worth more than £325,000. It must be paid at 40% on the value of the property over this amount.

This can reduce the amount which can be passed on to family or friends significantly, so managing IHT is a priority for many people.

You can ‘gift’ some of the value of your estate to others in a number of ways. In some of these cases, IHT will not be due:

• If a charitable donation of more than 10 per cent of the estate is made, you will only pay tax at 36% over the threshold amount.

• No IHT will be due if you make a gift to a spouse or civil partner, provided they own a home in the UK.

• You can also give a gift to mark a marriage or civil partnership or to support a relative, a charity, some national institutions and political parties.

• You can gift up £250 to as many recipients as you want, or gift £3,000 to one recipient each year (if you don’t use this allowance it can be carried forward to the following year).

• Gifts can also be made from income as long as making the gift doesn’t affect the donor’s standard of living.

There are other situations where you can make a gift which will remain exempt from IHT if you live for more than 7 years after the gift is made (known as potentially exempt transfers). Property is a good example of this situation but the rules surrounding selling your home and IHT can be complex.

Often a potential donor is concerned that by making a gift while they are still living, they may find they need the money at a later date. One option is to set up a trust, which can include property, land or money. Setting up a trust does not guarantee that no IHT will be due but it can reduce the amount to be paid.

Two possible solutions to this are:
• The Gift and Loan Scheme, which involves setting up a trust with an initial gift of £1, then lending the trust a larger amount, repayable on demand.

• The Discounted Gift Trust, which allows a donor to make an outright gift (usually invested in a bond) but receive an ‘income’ from it, as well as potentially paying lower IHT on the initial gift, depending on the donor’s age and health.

Regardless of how you plan for inheritance, it’s crucial to make a will and review it regularly.
This kind of tax planning is complicated and we would recommend taking advice if you are considering how best to pass on your estate. We can provide detailed expert advice tailored to your situation.

Contact us today
Call us on 020 7330 0000 or email to talk about your estate planning needs.

New personal tax statement for 24mn peop

New personal tax statement for 24mn people

From October 2014, around 24 million people will receive a personal tax statement from HMRC detailing how their taxes were spent, the Chancellor George Osborne has announced.

This is 4 million more people than was originally announced at the Budget 2012.

The additional people are PAYE taxpayers who have had recent contact from HMRC setting out their tax calculation for a previous tax year.

The Government announced at Budget 2012 that 20 million taxpayers would receive a new tax statement from October 2014. It will explain:
• how their 2013/14 income tax and national insurance contributions have been calculated
• their average tax rates
• how their contributions have been spent.

George Osborne hopes that the decision will lead to increased transparency within the tax system:

“These tax statements represent a huge boost for tax transparency, showing people very clearly how much tax they pay and giving them a better understanding of where their money is spent.”

How to start-up in the technology sector

Many of the best-known technology businesses were started by individuals, often working from their own living rooms. If you have an idea you think could meet a need within the IT sector and generate a healthy profit, how do you go about setting up in business?
Write a business plan
Firstly, you need to have a very clear idea about what you are aiming to do. You will almost certainly need funding to develop your idea and the people you approach for money will want to see evidence of viability, including financial forecasts and projections, before investing. Bear in mind that many start-ups fail first time around: although you may have a great idea, putting it into practice will take time, effort and know-how.
Choose the right structure
Next, you may need help with choosing how to structure your company, whether it is as a sole trader or one of the various types of partnership. Forging ahead with your idea will need planning and the paperwork to back it up, however tedious it may seem. You must make sure you have documents to support your type of business and put in place systems for recording tax, income, pay and outgoings.
Protect your ideas
If you have an original idea which you are planning to market, it may be considered intellectual property. There are four main ways of protecting your concept so that it isn’t copied or taken advantage of:
• designs
• trademarks
• copyright
• patents.

If you’re developing technology, a patent could protect it. Or, you could register the design if it is an original one. A trade secret can be useful if the way your technology has been developed makes it difficult to copy.

Talk to an expert
Don’t underestimate the value of talking through your ideas and plans with others who have experience of the type of product or area of the market you are targeting. If you don’t already have contacts that can help, there are plenty of tech networking events taking place around the UK. You could also make use of business incubators (often linked to Universities), which can offer advice, business understanding or office space. Accelerators aim to kick-start business growth by providing hands-on help from experts in your field.

Find the funds to get started
Approaching a bank, venture capital firm or ‘business angel’ will require you to have a very well thought out plan, with clear expectations of business growth backed up by detailed market research. If successful, securing these types of funding may come with the additional benefit of specialist advice or mentoring support.

If you’re forming a technology start-up which aims to have social benefits, it may be worth researching grants, as there may not be an obvious financial return to attract traditional forms of investment. What about crowdfunding? If your business would benefit from a network of supporters to spread the word, this could be a great way of securing finance from a wide range of different sources.

Contact us to discuss your plans
Starting up in business is never easy but if you’re clear about your aim, can convince others of its potential and are open to advice and support from others, your tech start-up will have a better chance of success than most.

At Arram Berlyn Gardner, we can help you to review your business concept and provide you with helpful and constructive feedback to move forward. Contact us to start the conversation.

John Donohoe

Telephone 020 7330 0000


Establishing bonus and commission schemes for sales staff

Sales staff can play a key part in the success of a business. Motivating and retaining the best of them is vital. So what factors do you need to consider when setting up a reward scheme for your sales team?

Money as a motivator

Money is a key motivator for many employees and, as a result, most reward schemes for sales staff are based around the payment of bonuses or commission on top of basic salary. Tax and NI will be payable on all of these but how they are weighted will depend on the type and size of business.

Paying a smaller salary in lieu of a larger bonus or commission will mean there is a greater focus on achieving targets and will reduce the pressure on salaries. But it’s important that the salesperson does not feel completely demotivated if a sale does not happen. Too much of a reliance on commission or bonus can also result in poorer customer satisfaction, as salespeople go after their reward with less regard for building good relationships with customers.

Bonus or commission?

Let’s look at the difference in how bonuses and commission are structured. A bonus is usually paid when a particular target is achieved. This could be linked to a single objective, or multiple business objectives – around revenue, profits or productivity, for example. In larger organisations, a bonus scheme can relate to local targets and/or be linked to overall company performance. A bonus scheme can also be used for retaining staff – you agree to pay a bonus after a certain period of time if targets are met, for example. 

Commission involves paying a percentage of what the contract won is worth. As a result, there is a clear link between the amount of business the employee brings in and the amount of financial reward. However, if lots of employees are involved in the sales process it may be difficult to correctly allocate the commission. You must be clear about which areas of the business are involved.

Individual or team?

One factor to consider is whether bonuses should be based on individual or team performance. Will everyone get a chance to work towards the target, or will the bonus be awarded to the highest performer? On the face of it, team targets may help to bring staff together in pursuit of a common goal. All employees can potentially benefit from the company’s success, but drawing up a reward scheme which is fair to all can be difficult. If business is lost by a lack of after-sales support, will the salesperson that originally brought in the business be affected? Additionally, high-achieving sales staff may resent ‘carrying’ less successful colleagues if they are bringing in a disproportionate amount of business.

Reviewing progress

You will also need to decide how often progress towards the bonus or commission will be reviewed and how your sales data will be analysed to establish whether they can be awarded. You should review any reward systems you put in place regularly to check they are still having the desired results, both for the employee and the business.

It may also be helpful to look at offering other benefits, as bonuses and commission may not be the best way of motivating all staff. Both bonuses and commission can be affected by external factors such as an economic downturn and, ultimately, any reward scheme you put in place needs to finance itself.

If you are looking to implement this kind of scheme and need advice, Arram Berlyn Gardner can help.  Call us on 020 7330 0000 or email for further information.


Paul Berlyn


Joint accounts less attractive to couple

Joint accounts less attractive to couples!

A third of couples don’t have a joint bank account, according to research by Thinkmoney.

The survey of 2,000 adults found that 31 per cent of respondents in a relationship use their own accounts rather than sharing with their partner.

The research also found that:
64 per cent of couples have individual accounts, even if they share a joint one
33 per cent have a joint account but at least one partner also has their own
25 per cent of couples have a joint account but have also bothkept their own individual accounts
34 per cent share an account with their partner, rather than having individual accounts.

The research revealed that age is a factor for couples deciding whether to open a joint account:
Nearly half of couples over 55 have a joint account rather than individual accounts
At 24 per cent, couples aged between 25 and 34 are least likely to share an account.

Ian Williams from Thinkmoney said:

“Increasingly, choosing to share your life with somebody doesn’t mean that you will share your finances with them too. There’s a lot to be said for maintaining financial independence, but having separate accounts can make budgeting and managing shared expenses such as rent or mortgage, childcare costs and household bills more complex.”

Elsewhere, a study by the National Employment Savings Trust (NEST) showed that UK adults see being ‘good at managing money’ as an essential trait in their partner.

The survey of more than 1,000 adults who were either in a long-term relationship or had recent experience of one revealed that good financial management skills were more desirable than looks or car and home ownership.

The NEST study also revealed:
people who’d recently become single were even more likely to look for someone who manages their finances well
nine out of ten of those surveyed said ‘good financial planning’ is important for happy relationships
the top financial priorities are now saving for a rainy day and pension saving.

Graham Vidler from NEST said: “Financial planning is clearly becoming much more of a priority, which is welcome news. Not only are people prioritising their own finances, but it’s clearly important for other parts of their lives – relationships, potential relationships and plans for their future.”