Facebook to Pay More Tax in the UK

Facebook-LogoFacebook is to see its UK tax bill increase by millions of pounds following a huge reform of its tax practices. The social networking giant implemented the reforms following heavy criticism of the practices it uses to minimise the amount of tax it pays on its UK advertising revenue.

Previously Facebook, like a number of other major companies, used complex business structures to divert its UK profits through overseas offices. As such, though the profits were generated in the UK, they were largely recorded as taking place overseas. Effective rates of tax paid to the UK government by multinational companies using these tactics can be extremely small, with tax on UK profits instead being paid in other jurisdictions that offer lower rates of corporation tax.

The announcement that Facebook will be paying more UK tax follows not long after another company that has used similar tactics, Google, attracted fresh controversy. The search specialist reached a deal with the UK government which saw it continue to pay very low effective rates of corporation tax, leading some to accuse the government of offering “mates’ rates.”

Facebook was diverting profits for advertising revenue generated from sales to many of its biggest advertisers through Ireland, a jurisdiction also favoured by many companies using similar tactics such as Google. This included revenue generated through advertising for large-scale businesses such as Sainsbury’s, Tesco, WPP – a major advertising specialist – and Unilever.

Advertising sales from smaller businesses will still be routed through the company’s international headquarters in Ireland when advertising is booked online without significant involvement from Facebook staff. However, the decision to cease this practice with regard to the bigger advertisers will see the full rate of UK corporation tax paid on the majority of the company’s UK profits. The resultant increase in the company’s tax bill for its UK operations is expected to reach into the millions.

Facebook is one of a number of multinational companies to attract criticism for avoiding UK tax on its earnings. Facebook is a multi-billion pound company, usually taking only around three months to generate in excess of £1 billion in profit. While it is not known exactly how much of this comes from UK revenue, it is known that the UK is one of the company’s biggest markets. In spite of this, it was revealed late last year that Facebook’s total corporation tax bill for 2014 came to just £4,327.

The changes to Facebook’s tax structure will take effect in April as the new tax year begins. As a result, the company’s first tax bill under the new arrangement will be payable next year.

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How To Keep Your New Business Afloat

After all the hard work that goes into setting up a small business, including establishing contacts with customers and achieving the first sales, it is unfortunate that many start-up businesses find the going to be too tough and have to cease operations before reaching their second anniversary.  It is difficult to run a small business and the prevailing financial climate can make it very tough indeed; however, there are some tactics that can help to keep a business afloat even in such stormy financial weather.

Difficulties of the current climate

The national and international economy at present appears to be stacked up against the interests of small businesses. It can seem that corporations and large companies have distinct advantages in terms of taxation legislation. For example, it has been reported in sources such as Recruiter news online that falling foul of the distinction between contractor employment and self-employment can have tough financial consequences based on calculators under recently amended laws which you can discover when you file your income taxes this year.  Moreover, small businesses are finding it very difficult to receive financial backing from banks and other lending institutions, which are generally in a phase of being very conservative about small business loans.  All of this is against a backdrop of low demand and variable consumer confidence.

 

Tips for the entrepreneur

Entrepreneurs can mitigate the risks inherent in the current climate, however, by taking some steps to consolidate their business position. Some small businesses call upon the services of an umbrella company to assist with several of the financial and taxation aspects of running a firm and ensure good support for entrepreneurship. On a day-to-day basis, businesses need good levels of sales, and this often means prioritising good customer relations so that the flow of sales continues and hopefully grows. In turn, this requires effective and well-targeted advertising.

Practically, these elements can be achieved with some simple actions. Holding face-to-face meetings with individual customers, to gather feedback and explore possible expansions in their needs, is one of the most obvious methods available. For many businesses, an increased focus on the online side of the business and a reduction in costly physical premises is another way to balance the books between income and expenditure. Furthermore, it is necessary to maintain vigilance to spot ways to improve business efficiency and to find possible new business outlets and revenue streams. Many companies have survived over the years by shifting their strategic position rather than remaining locked into a single market area.

 

The need for efficiency

Maintaining and improving business efficiency is, indeed, one of the key issues in running a successful business. There is little point in spending time, and paying for it, if somebody else has already covered the task in question. When a small business involves several people or employees, the tasks and roles need to be clearly defined and co-ordinated, to avoid unnecessary overlap and to ensure that each person can focus on the things that they do best.  Focus, organisation, and efficiency may sound a little like business buzzwords, but they can be the key to small business survival.

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Working as a Freelance Writer? How Much Should You Really Be Charging?

Many freelancers begin without fully understanding how to determine their charges. Some charge so little that there is no feasible way to earn what they need.

It is important that you know what rates are appropriate for the services that you provide. Understand that what you can feasibly charge will depend highly on your level of expertise. Those with more experience and more expertise in a specific subject matter will be better able to command a higher price.

That being said, there is a way that you can determine how much you need to charge, in order to earn the income that you require.

 

  • How Much You Need

Before you can determine how much to charge per hour, project or even per word, you will first need to determine how much you need to earn to live comfortably. It is essential that you set your own rates as opposed to allowing your clients to pay you what they want. Some clients would take advantage of your insecurity and practically pay nothing for your hard work.

Spend some time calculating your yearly budget and ensure that you are including everything that you pay out each year. This calculation should include things like rent, utilities, and food, etc.

According to the latest figures by the Office for National Statistics (ONS), the average earning of a full-time worker in the UK is £26,500. The study found that since April 2000, average annual pay for those in full-time work has risen by 40% from £18,848.

 

  • Divide Your Calculation

Once you know how much you spend yearly, divide that number by 12. For instance, if you spend £24,000 each year on living needs then you will divide that number by 12 which will give you an income need of £2,000 per month. This is the amount of money that you need to clear every month after taxes, and other expenses have been paid.

This should give you a goal of the amount of work you need to win. If you need help working out your actual take home pay after pension contributions etc., try using a take home pay calculator.

 

  • Hourly Rate Calculation

Now that you know how much you need to make monthly, you can determine how this calculates hourly. Keep in mind that most freelance writers do not work a typical 40 hours each week, so dividing by that figure is not going to help.

You have to allow time for interviews, research and networking as well as proofreading, editing and other tasks. You are not going to be spending 40 hours every week simply writing. There are other tasks that also have to be considered.

If you are like most writers, you will spend around 20 hours each week actually writing. If you need to make £500 per week to meet the £2,000 per month income requirement, you would divide that income by the 20 hours that you will be working each week which gives you £25 and this is what you need to be charging per hour.

How many articles can you write in one hour? Obviously this will vary depending on research and word count. What kind of content is it- a landing page, a link building article or a press release? Landing page content tends to charge more.

If you choose to charge on a per word basis, we recommend £2 per 100 words. This equates to around $2-$5 per 100 words but please note, if you are going to charge $5 per 100 words, the article needs to be well-researched, error free, and include at least one picture that has a Creative Commons license.

Once you have determined what you need to make in a year, you can better determine what you need to be charging clients for your time. The calculations above are simply examples and you should change the numbers as needed, to meet your specific income requirements.

Ask yourself, if you are just starting out, can you really charge top rate fees for your lack of experience?

 

This article was provided by Nixon Williams, the UK’s leading contractor accountants serving freelance contractors, interim managers and consultants. Visit them at www.nixonwilliams.com/to find out which business structure is right for you.

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The Key to a Successful Business!

Post- Christmas can be a tricky time in the workplace; you still have the miserable weather but without all the fun and festivity. That’s why it’s important for employers to try and boost morale, and prove to those who work there that this year is going to be the best year yet; not only for the business, but for them as individual. But how, and what can guarantee that the company is going to succeed? Well, one essential element which we believe you MUST make a priority is to be sure that all your staff are happy in their job. But how? Well, it’s not an easy task but we have some top tips to getting your business on the right track for the New Year.

Team building

An important aspect to address is that you have a positive and friendly atmosphere in the workplace. If your staff are miserable and dread coming in every morning, then this can make an impact on other areas of the business and consequently be counterproductive. That’s why it’s fundamental to regularly hold team building activities to maintain enthusiasm. One option is to have out of office events. Why not go paintballing or treat staff to a night out? Or if you’re feeling particularly generous, then corporate entertainment packages are a fantastic means of keeping employees happy.

Reward good work

One way to ensure that workers are enjoying their job is to reward staff success. Acknowledging achievement lets employees know that their efforts are appreciated, and this in turn will give them the confidence to continue to strive for the best. But in what ways can you reward good work? Bonuses and prizes for those who go the extra mile are great incentives, but making the rest of the staff aware of individual accomplishments is also another way for employees to feel valued. Whatever you decide, ensuring no success is ignored is key to making your business prosper.

Training

As well as offering rewards and incentives, providing a high quality training scheme is also a means of making staff feel that their job is worthwhile. Asking employees to set personal goals and then assisting them to achieve them is a good way to, not only establish a better relationship with staff, but it also gives workers the chance to see how much they’re progressing. Guaranteeing excellent training allows employees to reach their potential, therefore encouraging them to be happier at work; something which will certainly make your business come out on top.

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