Staying compliant – how to avoid bad business hygiene
To kick things off, when I talk about staying compliant and how to avoid bad business hygiene. Basically, the governing rules for the financial management of all businesses.
This covers areas including your company’s VAT returns, corporation tax, PAYE, a workplace pension and everything to do with filing your accounts at Companies House and HMRC.
If you’re reading this and thinking, “my company accounts are late and in a bit of a mess” don’t worry, you’re not alone. I see bad hygiene in business all the time, and although it is a far from ideal state to be in, it is rectifiable.
The consequences of bad business hygiene
Hygiene may not add any extra value to your business, but it is the vital minimum requirement for all businesses. Late and unfiled returns can lead to a whole host of unwanted consequences, including:
- Fines, penalties and interest
- An investigation from HMRC
- Withdrawal of credit terms by suppliers
- Credit rating reduction
- Loss of trust from customers
- Difficulty obtaining credit (loans, overdrafts, or leases)
It’s all about discipline
The answer to achieving good hygiene is quite simple when we think it through. It’s all about discipline. Discipline is vital across all areas of business, not just our finances. When we conduct ourselves in an orderly manner and run an efficient business, our company will, in turn, attract the attention of great customers.
On the other hand, a poorly disciplined business may lead to the loss of support from both suppliers and customers. When red flags begin to appear in your business, you will also ultimately attract the attention of the wrong people.
What’s needed to achieve good business hygiene
A company that is disciplined displays good business hygiene. This means the following will be filed consistently, on time:
- Company accounts filed to Companies House
- Tax returns filed to HMRC
- Workplace pension contributions filed to the Pensions Regulator
Additional positive outcomes that will result from good business hygiene include:
- A message of trust to suppliers, customers and regulatory bodies
- A boost in confidence for business owners and employees
If you’d like to read some specific examples about staying compliant and how to avoid bad business hygiene, why not download a copy of my book The Keys To The Safe. In it, I discuss the importance of adopting the right business ethos. I also explain how this will lead you to the vital performance information your business needs to succeed.
In my previous blog posts, I have discussed topics including the importance of information. Next time, I plan to finally give you the all-important keys to your safe in terms of what valuable information you actually need.
Antony Holdsworth BSc (Hons) FCMA CGMA