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your business suited to e-commerce?
In the right circumstances
e-commerce can have a number of benefits:
Reduced overheads from using virtual space rather than
physical space for display/office purposes
Reduced staff costs from automating the sales process
Reduced
administration costs from providing customer services and
after sales services online
Access to
wider geographical markets
The ability
to trade twenty-four hours a day, seven days a week
Greater
agility to make flexible responses to changing market
conditions
These can sometimes mean
considerable gains on the bottom line - even when offset
against the costs of building and maintaining an effective
commercial Internet presence. But not every business is
suited to e-commerce.
E-commerce works best when
the whole transaction can be completed online - preferably in
one visit to your web site. Thus selling services such as
most financial services, ticket sales, holiday bookings, and
recruitment services is proving to be relatively successful on
the Internet.
When it comes to selling
products online, however, things are not so
straightforward. Goods such as books, CDs, and computer
products sell well online, but where the consumer is likely to
want to inspect or try out a product prior to purchase, or
where home delivery adds substantially to the final selling
price, online sales are proving to take off. But as catalogue
based direct mail stores have shown, with the right Marketing
it is possible to persuade consumers to buy almost anything
remotely.
The advent of interactive TV
and the prospect of totally free Internet access mean
more and more people are likely to be shopping online in the
future. Certainly the large supermarkets, who are
currently investing millions in their online stores, seem to
think so. Maybe it is time for all of us to think about the
feasibility of e-commerce for our business.
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Investing in
a new company?
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| Investing in a
starter company can be exciting and profitable, but
there are numerous tax issues to consider. If
you are planning to invest in a new business, or if
you are setting up your own company from scratch,
there are some steps you can take now which could save
you a considerable amount of money in the long term.
There are several
ways in which you can make an investment. Will
you be subscribing for shares, or making a loan to the
company, or a combination of both?
In some
circumstances it is possible to obtain 20% income tax
relief and up to 40% capital gains tax (CGT) deferral
through subscribing for shares that Investment
Scheme. Holding the shares for five years could
allow you to escape tax on any gain you make.
The rules are complex, and although some investments
might not score for income tax relief, they may still
qualify for CGT deferral. Check with us before
you finalise your plans - valuable tax relief could be
lost if you
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without proper advice.
Even if the
investment will not qualify for immediate tax relief,
there are still a number of options open to you.
Should the company fall, or perform less well than you
had hoped, tax reliefs for losses are available.
These vary according to the form your investment takes
today. The right decision now can be very important
for the future.
On the other hand,
you need to consider ways to shelter from capital
taxes any potential growth in value which could arise
if the company is successful. All to often clients
seek advice on saving CGT or inheritance tax (IHT)
once their company has succeeded and the shares have
become valuable. Acting now when the shares are
really worth no more than their face value can avoid
many problems.
Options include:
Your spouse or partner |
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subscribing for
some of the shares, rather than just
yourself. This will allow you to save
not only NICs through the payment of
dividends, but also income tax if your partner
is paying tax at a lower marginal rate
Subscribing
via a pension plan. Your first contributions could be used to
subscribe for shares in the company - so you obtain 40% tax
relief on the contribution and future growth in value is
protected from CGT
Setting up a
family trust to subscribe for some of the shares. This can
mean lower CGT and IHT bills in the future
There
are many things to consider when you are
investing in a new or growing company, and tax
planning may not seem the most immediate
issue. We hope that we have brought out the
importance of not overlooking the tax
implications and tax planning opportunities of
your investment, and look forward to
discussing your plans with you.
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Developments
on the home front
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| JAMES
ROBINSON runs a small family publishing business with a
turnover of £2.5 million. He has twenty full-time
employees, many of whom have been with him for years.
Imagine his alarm when his chief graphic designer - one
of his most long-standing and trusted employees -
announced that she needed to devote more time caring for
her elderly mother and was considering leaving her
employment.
'Jenny was mission
critical, and it was not the right time to start
thinking about replacing her', says Robinson. 'But if I
was going to keep her on I needed to find a way to let
her work from home.
'At first, the
arrangements were pretty ad hoc - she worked the same
number of hours, but on a more |
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| flexible
basis, and sent her work in by e-mail. She would come in
once a week to meet clients and attend team meetings.
'Of course, we
remained her employers. We needed to provide her with
the necessary equipment, electronic connection to the
office, insurance cover, etc. - and to start with we
monitored her quite closely to see how she coped with
the relative social isolation and absence of traditional
forms of supervision.'
But Robinson's early
concerns were unfounded. His first teleworker proved to
be such a success that he has now extended the practice
to other suitable employees, including one of his
typesetters, his |
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manager, and his sales manager.
'It started me
thinking, not only about the benefits for employees who
need to make adjustments to their life/work balance, but
also about the benefits for employers,' says Robinson.
Besides the obvious
savings on office and other employment overheads,
Robinson has noticed a surprising improvement in
productivity, a drastic reduction in time lost due to
illness, and a virtual elimination of absenteeism among
his home workers.
'It is also
environmentally friendly,' he adds, 'which helps to make
the firm look progressive.' |
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