October 2010 - How to save money on business premises


Business Law Update
October 2010

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Gary CousinsWelcome to the October Cousins Business Law ezine. This month we feature 10 tips for saving money on business premises and a link to a useful article on how to stop procrastinating. There are also our thoughts on the government’s spending review and the likely impact on SMEs.

We hope you will find information relevant to your business in this month’s issue. Email your article suggestions or legal questions to marketing@business-lawfirm.co.uk.  

Gary Cousins
0121 778 3212

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The spending review – is it enough for SMEs? 

It’s been a long 5 months since the drama and political intrigue of the General Election. Most political debate has been about public sector cuts but, until now, no one had really known what they would entail. As far as small and medium businesses are concerned, are we really any the wiser following the Comprehensive Spending Review?

In my view, the three main issues facing SMEs at the moment are the state of the economy as a whole (and in particular demand for our products and services), the availability of finance (particularly bank lending) and the lack of stability in the economy (will it grow or can we expect a long period of little growth or even a double-dip recession?).

The Comprehensive Spending Review said a lot about public sector cuts and reducing the fiscal deficit, but offered very little direct help to SMEs.

According to the Federation of Small Businesses, 75% of small businesses support the cuts as a way to tackle the public sector deficit. Certainly, this should mean that the UK can continue to attract international investment, which in turn will mean that interest rates will remain lower than would otherwise be the case. This can only be of advantage to businesses.

Although the immediate effect of the cuts will be to lower overall demand in the economy, the hope is that, in the longer term, conditions will be much better for economic growth. This is where most political and economic debate is focused: how much will be the depressing effect on the economy, and how much will it improve in the longer term? The simple answer is that no one really knows.

Of course, those SMEs who provided work for the public sector are unhappy. According to a PeoplePerHour.com survey, 60% were pessimistic about picking up public sector contracts, and some 75% were concerned that the bureaucracy of public sector tendering was off-putting.

As far as obtaining finance is concerned, the Government seems unable to get banks to start lending again in a helpful way. It has said though that it will make £150m available to businesses over the next four years to help them access loans and equity investments, mainly through the Enterprise Finance Guarantee. Further money will be made available to “small businesses with growth potential” but there is no clear indication of what this will mean in practice.

It still seems that the Government does not appreciate the importance of SMEs to the economic recovery. Between 2002 and 2007, 80% of jobs in the EU were with the SME sector. It is therefore the SME sector that is best placed to find the new jobs for the 500,000 public sector workers who are predicted to be made redundant. With more direct Government help, this is more likely to occur, which, in turn will increase tax receipts and lower benefit expenditure, as well as help the economy grow faster.

What is needed is more direct help for SMEs both directly and indirectly. Reducing National Insurance contributions for SMEs taking on new employees would help. Cutting VAT to 5% in the construction sector would help this still ailing industry. And most importantly, it’s time for the Government to get serious about making banks do their job of lending again.

Tackling the public sector deficit is clearly essential but not enough on its own to kick start the recovery the SME sector so badly needs. When will the Government start listening?

Have your say: join in the debate on the spending review by commenting on the Cousins Business Law blog.  

Legal Advice

How to save money on business premises

Property costs are a large overhead for most businesses. Our latest Property Blog lists 10 of the best ways to save money both now and when relocating.

1. Time to renew your lease?

If you are coming towards the end of your lease then now would be a very good time to take control of the renewal process. It is likely you will have been locked into a lease for a few years paying rent agreed or reviewed at the height of the market. By getting good advice and following the correct procedures you could secure a big rent reduction.

2. Restructure your lease

Many tenants do not realise that Stamp Duty can be payable when taking on a lease of business premises. The length of the lease term is an important factor in calculating how much tax is due. So rather than have a long lease with the right to end this early, stamp duty can be saved by agreeing with the landlord a shorter lease with an option to renew.

3. Claim capital allowances

Capital Allowances can be used to minimise your tax bill. Expenditure on items of plant and machinery acquired for the purpose of your trade qualify for capital allowances and the list is more extensive than most businesses appreciate. The opportunity may arise whenever capital expenditure is incurred on the purchase, construction or refurbishment of premises. The types of property where this is most effective are healthcare (doctors/dentists), leisure and hospitality (pubs/hotels) and motor dealerships/petrol stations.

Don’t forget Business Renovation Allowance either.

Read the remaining 7 ‘best ways to save on property costs’ on the Cousins Business Law blog.

To implement any of these cost saving measures or for any other property related questions contact Cousins Business Law.

Useful Links

New data code for online businesses
The Information Commissioners Office has published a useful new code of conduct for small businesses that gather and use personal information online as part of their business operation. The list of good practice points promise competitive advantage as it claims customers will trust you if you are known to handle their data carefully and within legal guidelines.
7 ways to stop procrastinating
Procrastination is one of the biggest threats to personal efficiency. In another of it’s useful ‘How to’ guides Real Business has published seven tips on minimising the amount you procrastinate.
Blogs in brief

New licensing conditions in force 

Confusion over new mandatory premises licence conditions 

Blog Watch: How to run a business whilst raising kids

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Cousins Business Law is a member of the Law Society & regulated by the Solicitors Regulation Authority under number 485128. Head Office: Swan House PO Box 11543, Birmingham, B13 0ZL. Tel +44 (0)121 778 3212. Fax: +44(0)121 275 6155