Accounting Advice

Struggling businesses turn to their accountants

28 Apr 2015

70% of 500 businesses with 1-57 employees say they ‘don’t know who to turn to’ for support with auto-enrolment’, and, according to AccountingWeb, ‘A vast number of those are expecting their accountant or payroll bureau to come to the rescue’.

Workplace pensions are becoming mandatory and confusion over legislation, an overwhelming administrative burden, and the daunting cost to business has left employers panic-stricken.
  

What’s the problem? 

By summer 2017 all employers must automatically enrol their employees for workplace pensions. The process began in 2012 with big businesses, and over the next two years it will finally reach the smallest of employers.

Companies have individual ‘staging dates’ (when pension payments kick in) depending on their PAYE references. All employees paid by PAYE must be assessed for enrolment.

If you have an existing pension scheme, you must check whether it meets the Pension Regulator’s standards.
  

Administrative burden 

The Pension Regulator’s auto-enrolment guide initially makes the process seem unintimidating. But after clicking a few links to expand on certain points, employers soon find themselves in a tangle, with endless tabs and no clear picture.

For small companies with a few regular staff paid by PAYE, things shouldn’t be too difficult, but every employee must be assessed individually by a range of criteria. High staff turnover, internationally mobile workers, fluctuating pay, zero hours contracts, bonus schemes, and commission, all serve to complicate matters.
  

Cost to business 

Minimum employer contributions may seem low, starting at 1% and rising to 3% in 2018, but for SMEs operating at low margins, and start-ups still making a loss, every penny counts. The Pensions Regulator recommends businesses give themselves a year before their staging date to prepare, because not only can it be a complex and long-winded process, but businesses need to plan ahead with these costs in mind. Cash flow, internal budgets, pricing; suddenly everything must be re-examined.
  

Wanted: crystal ball 

Will low-margin, employee-intensive companies have to lay-off staff? How many companies will pass this cost onto the consumer? How many onto their employees? Certainly, the UK suffers from a vast savings gap, and workers should be encouraged to take their retirement plans seriously, but in the short term, what will be the day-to-day impact on small businesses and the wider impact on the economy?
  

Don’t panic! 

Accountants hope the costs are low enough, and rise gradually enough, for the vast majority of businesses to adjust without catastrophe. They are getting to grips with the new legislation and the enrolment system so they can provide confused employers with comprehensive support. A good small business accountant will be able to look at the impact of new costs, and help with financial forecasting, working with you to develop a strategic plan to protect your business and keep it growing.

If you’re struggling to get to grips with your auto-enrolment obligations, we’re here to help. We take pride in providing in-depth analysis and business insight, can help you understand the implications for your business and make a new business plans.

We are London accountants offering a full range of online tax and accounting services. From payroll to corporation tax, and bookkeepers to financial reports and forecasting, we provide everything you need to help you grow, and we tailor our prices to your business.

Contact us today or get an instant quote for our services. 
  

  

Chris Conway

photo

Managing Director, Accountant & Corporate Finance Specialist

0207 043 4000

About the author

Chris joined Accounts and Legal as Managing Director in November 2015. Chris’s primary role is ensuring the firm runs smoothly on a daily basis, supporting the growth of its entrepreneurial clients and delivering the firm’s own ambitious growth objectives. 

Having qualified as a Chartered Accountant (ICAEW) in general practice with a Top 20 firm in 2010, Chris quickly chose to specialise in corporate finance. During his 5 years Chris worked on over 70 transactions involving SME’s, from company valuations and restructures to substantial equity and debt fundraisings. He also advised on the sale and purchases of businesses, both to trade buyers and financial investors, providing advisory and due diligence services.

  

We can help you grasp opportunities

 

If you’re setting up or running a business, we are full-service accountants offering tax and accounting support from bookkeeping to business plans, payroll to business strategy, growth, exit planning and general business advice.

 

Call our London or Brighton office today or get an instant quote for our services!

 

Instante-Quote-Accounting