March 3, 2010
Filed under: Business Finance — Alan @ 3:06 am
London’s private business firms, especially the minor ones like small office users, and retailers, are going to suffer a major blow financially. The recent decision of the Treasury to impose high tax rates on the firms is severely ill-judged, and going to cause a lot of hardship.
The renewed tax rates, which are going to be activated from April 2010, are based on the rental rates in the time frame of April 2003 to April 2008.
This time frame chosen for setting up the new rates is prior to the economic downturn, when rental values were at their peak. But there has been a sudden twist in the plot, and a quick turnaround of events, when the recession hit the scene, and rental rates slumped dramatically.
The flawed formula set by the Treasury took no time to create chaos and raise protests, and the Government has responded by offering a relief scheme worth £2 billion for the small office owners and retailers. But the ugly truth remains, that a majority of the companies are still going to suffer a hefty blow.
Demise is looming over many businesses, and strong preventive measures are badly needed to assist many company’s out of their troubles, not burdening them with more expenses.
Some companies will not be able to withstand their office letting or ownership suffering an additional tax hike, which may be the final push over the edge for many office bound, or shop bound, companies.
February 10, 2010
Filed under: Business Finance — admin @ 2:57 pm
Individual Savings Account (ISAs) allows you to shelter your savings or investments from tax, and can take the form of either a Cash ISA or a Stocks and Shares ISA.
Unlike a Stocks and Shares ISA, the value of the capital within a Cash ISA is guaranteed not to fall. This is great for investors who don’t want to place their savings at risk of falling in value. However, over the long-term this type of low-risk, low-return investment needs to be secured at an interest rate which exceeds the rate of inflation for a return to be made; otherwise the saving is making a loss in real terms.
A Stocks and Shares ISA, on the other hand, gives investors the chance for higher potential returns, by allowing investment in different types of financial assets. This greater potential comes at a cost however, as the value of investments in a stocks and shares ISA can fall as well as rise and are not guaranteed.
What are the Main Types of Investment Asset for a Stocks and Shares ISA?
Each type of financial asset has different characteristics in terms of the risk and potential returns involved. Here is an overview of the main types of financial assets often available for investment within a Stocks and Shares ISA.
Gilts and corporate bonds are issued by the government or companies as a means of raising capital. They are fixed interest stocks, which are effectively loans you make in return for interest payments. Both the level of interest and the volatility of the bond price in the market depends on the creditworthiness of the issuer.
Gilts are issued by the British Government, and are lower risk than corporate bonds but they also pay a lower rate of interest to the investor. Corporate bonds, on the other hand, are issued by companies, and therefore have differing levels of risk and potential return depending on the company concerned. The higher quality corporate bonds are known as investment grade bonds, whilst the lesser quality bonds are known as sub investment grade or ‘high yield’ bonds. In both cases, returns in the main are created from interest payments, rather than capital growth.
Corporate bonds are generally perceived to be less volatile than shares. However, given the increase in risk high yield bonds present they often behave more like shares.
A share represents partial ownership in a company for the investor, and therefore the right to share in the profits of the company, often in the form of dividends. Shares, or equities, have the potential to increase significantly in value, however their volatility means this potential return is balanced by greater risk as the value of the share is not guaranteed and will fall in value as well as rise.
What are Funds?
Funds, such as unit trusts and OEICs, allow investors to entrust the choice of underlying investments to a professional fund manager. They pool your money with that of other investors, allowing investors to spread their investments – and their risk – across dozens of different shares, bonds, gilts, or property.
February 3, 2010
Filed under: Business Finance — Alan @ 5:29 am
New research shows that small companies are now using their own resources to fund their organizations since they no longer are able to secure decent credit from banking institutions.
In a survey completed by the Scotland Federation of Small Businesses over a fifth of bosses were forced to turn to their own savings to make it through 2009. Also shown in the survey was the fact that only a third of the SMEs actually used a bank overdraft in order to continue to finance their activities.
The FBS concluded from their study that Scottish firms needed better access to flexible and affordable bank credit.
Out of the 1,200 firms that were surveyed between the months of last September and October, about ten percent said they used personal credit, including credit cards, company credit, or a bank loan but over half of them did actually use these lines of credit during the month of October, which is when the base rate of the Bank of England fell to its lowest point ever.
About 33% reported that bank facilities had changed their interest rates with only about one out of six actually lowering their interest.
Out of the firms included in the FBS survey, only 30% saw an increase in their profits while 47% reported they saw their overall profits plummet.
In terms of expansion, 47% also reported that they planned to keep their business its current size until the recession passed with 32% stating that they planned on about a fifth of future expansion.
January 25, 2010
Filed under: Business Finance — Alan @ 7:16 am
Within the next three years over 35 countries will start to follow the same international accounting rules for SMEs, which will increase pressure on developed nations to implement the new set of standards.
Many of the counties that have pledged to utilize the standards are either emerging or developing economies and have noted that they would like to use the new financial standards for SMEs fully by the year 2013.
Director of standards for SMEs for the International Accounting Standards Board, Paul Pacter, conducted the poll during a meeting in 2009 after the new rules were in force for two months.
The project, which is based on a seven year timeline, is aimed at producing a consistent set of rules for use by SMES that were published in July of 2009 in a 230 page booklet. The booklet was met with approval from the World Bank and many other international organizations as a positive way for emerging economies to increase the capital within their counties.
The goal of standardization of accounting is that investors will better understand how much a company is valued at, regardless of where it operates, which may prompt them to invest in a company they otherwise would overlook.
Some of the most eager countries to start using the new standards were Brazil, Swaziland, and El Salvador, which all are considered to be emerging nations.
Pacter said this is due to the fact that the smaller counties want to have better access to potential capital which the consistency will allow them. He now feels that the time is right for the EU to take a positive lead in implementing the same rules within the Union
January 11, 2010
Filed under: Business Finance, Business Tools — admin @ 1:25 pm
Chipsworld Ltd had to enter into a company voluntary arrangement or CVA because of its debts with HMRC. However, there are no signs of panic as the company’s 18 franchised outlets as well as its website remains safe. Chips’ joint MD Don McCabe said, “We were hoping to avoid the CVA, but we had to go into it in the end. It means we are having to prepare ourselves and trim a few things down”.
CVA is one of the most important business tools that companies can use in UK. Many companies in UK are not aware of this arrangement. The fact is whenever we are talking about debt; we get a picture of measures that can help only individuals. Just as an IVA is essential for a debtor, a CVA is also equally important for a company that is stuck in debts.
A CVA is like a debt management plan for companies in UK to deal with debts. The company in debt reaches a formal binding agreement with its creditors for paying them back over a certain period of time. A CVA is a formal route out of debts for businesses in UK. For this an application has to be made to the court for a moratorium period which means that the creditors would not take any more action against the company concerned. This time period is for 28 days. After this, a meeting of creditors and shareholders is arranged for the approval of CVA. If 75% of the creditors agree to this, the CVA becomes binding on the creditors. A CVA is safe because it is more of a private affair and does not involve any kind of public flash of the company’s state.
Similarly Chipsworld Ltd also has resorted to a CVA to protect its customers, suppliers, employers as well as itself. It has thrown a positive light on the company and serves as a protective shield thus giving it time to recover from this financial crunch. The good factor is that this CVA has not affected the internal or external customer base. It is good to see that Don McCabe and Nik Agar still continue with their business administration and take all the necessary commercial decisions within the CVA framework.
Stores which NOT linked to this in anyway are: CHIPS Stockton, Stafford, Skipton, Hartlepool, Arnold, Lytham St Anne’s, Yeovil, Consett, Chester-Le-Street, Guisborough, Chorlton, Newcastle-Under-Lyme, Woodley, Ashford, Ormskirk, Dudley, Longton & Market Harborough.
For tips and advice on other simple debt solutions, visit www.yesdebtfree.co.uk.
