Un-packaging government jargon for new entrepreneurs
As the owner of a young, exciting company it can be frustrating when getting support and advice involves working your way through a plethora of difficult and unfamiliar terms and tick boxes.
Below is a guide to all the terminology youll need to get to grips with in the first few months of turning a great idea into business reality.
A programme which entrepreneurs and small teams can apply to be part of if they have an early-stage business idea which they believe could grow very quickly, often if given a financial boost. Most involve the accelerator company taking a small stake in the business in return for providing funding, training and access to experienced mentors.
An auditor checks a company’s financial records to make sure they are accurate. While large companies are legally obliged to pay an external auditor, small ones are not required to do this, but can be audited by HMRC if the tax authority believes an owner has misreported tax liabilities.
These are taxes payable on a property which is used by a business. The amount you have to pay depends on the value of the property, and goes straight to the local authority in which the business is based. Business rates are one of the most hotly-debated topics in recent years, with many believing that they penalise small businesses and George Osborne recently shook things up by promising local authorities more control over them.
Cash basis accounting
A simple method of accounting which sole traders and the owners of small firms with turnovers of less than 82, 000 or less a year are allowed to use to calculate tax liabilities. It means you only have to include money that you have actually received throughout the year in your annual tax return, and do not need to include money owed for which you have not yet been paid.
Community Development Finance Institution (CDFI)
These are small, independent funding organisations that lend to individuals and small companies unable to borrow from mainstream financial institutions like banks especially those based in deprived communities.
The minimum proportion of an employee’s salary which you must pay into the pension that you have an obligation to automatically enroll them in.
This is the tax due on any profit your company makes over the course of your accounting year, which begins in the month you register your business. It is currently set at 20 per cent of profits. You must keep records of sales and purchases in order to work out how much is payable, and pay any tax owed within nine months of the end of your business year.
Enterprise Finance Guarantee (EFG)
A scheme which offers businesses the opportunity to apply for bank financing of which 75 per cent is guaranteed by the government. Entrepreneurs seeking to benefit from this type of loan apply directly to the lender, and it is offered by well-known banks including Barclays, HSBC and Metro Bank.
A capital gains tax reduction for business owners who sell all or part of their company. It isnt likely to affect you until a few years down the line, but means that when the time comes you will only pay ten per cent of any profits you make from selling.
An agreement between a public sector buyer and one or more suppliers about the type of goods that the latter could be asked to provide over a number of years. They make it easier for micro companies to provide goods to government organisations because they can consist of many different small firms, so no one company is expected to provide a large quantity.
A business which uses an existing brand to sell products or services while remaining a separate company. Franchisees pay a fee to a franchisor in order to use the brand’s trademark, and in return are provided with a working business model, training and marketing.
Global Entrepreneur Programme (GEP)
A range of free support services to helps overseas entrepreneurs want to relocate their burgeoning business to the UK.
Office for National Statistics
The UK’s largest independent producer of data, and the go-to place for statistics on employment, prices, and the size and health of particular industries or regions. If you’re looking for evidence to inform your business plan or help you decide where to base your new business, this should be your first port of call.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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