HMRC have increased the number of winding up petitions it has filed by a staggering 13% compared from this time last year, research by accountants North Wales working alongside Northwales.com has shown.
This news, unfortunately, is only part of a general decline, part of an increasingly steeper slope of misery which appears to be the trend within businesses recently. In the face of it becoming more and more complicated for small business owners to adequately make ends meet, it’s quite safe to say that circumstances as of late simply haven’t been easy.
“Winding up”, of course, is the term given to selling all assets of a business, paying off creditors, distributing any remaining assets to the partners or shareholders, and finally dissolving said business. Also known as liquidation, it is essentially the end of days for a business – with forced closure coming after all assets are sold.
The proceeds from the sold assets, of course, go to HMRC so that they can attempt to cover unpaid tax bills and other fees owed to the Government, should they be applicable.
Despite the fact that 2008’s recession has played a large part in more and more small businesses starting up, owning a business isn’t easy.
A staggering 80% of small businesses close within three years of being started, and it’s safe to say that operating them is hard. This jarring figure is indicative of the difficulties all business owners face, and the fact that it is particularly hard on small-medium businesses which can have very volatile cash flows compared to larger, more established companies.
In a nutshell: Small to medium businesses can really struggle when it comes down to managing cash flow to pay their key tax bills such as partnership tax, VAT and corporation tax. HMRC have shown that things are indeed getting harder, by releasing figures which have shown that 18% more businesses are closing while in arrears compared to last year.
But what, exactly, is causing this?
A number of accountants in North Wales and beyond have indicated that the issues are widespread and myriad, but with VAT in particular comes more problems, due to the fact that that more recently, VAT is billed upon invoiced amounts.
Hypothetically, a small business can find themselves troubled with key invoices not being paid on time and a tax bill is due- even if they are not technically in arrears.
Larger corporations, strictly speaking, have much larger cash pools than smaller outfits, plus what some like to call “rainy day funds” dedicated to just that.
Essentially, it’s truly difficult to keep your head afloat when you, compared to a larger business, don’t have a lifeboat to speak of.
But, there are help and advisory services around such as the Government’s website.
For those that prefer a more comprehensive, hands on and decidedly less lonely experience, the services of a good chartered accountant in North Wales might just be what you need, as their business is directly funded through the success of your business – they’re well aware of the difficulties smaller business owners face, and they actively tailor their services to provide solutions for smaller outfits.
A good accountant will walk you through everything as they work, and some accountants even offer client training so you can be trained on how to use the tools available that make taxation matters not all that terrifying.
While it seems that HMRC are certainly having to close down quite a few more businesses year after year, it is truly sad.
However, your business doesn’t have to become one of them. Take advantage of the services of a good tax advisor or chartered accountant today, and see how you can protect everything you’ve worked for from the taxman should things go wrong.