Non Executive Directors - What you need to know?

As levels of boardroom regulation have increased, more and more businesses are appointing Non Executive Directors (NEDs) to their boards in order to assist the management team with risk management, compliance and governance.

While executive directors help to run a company’s business, NEDs don’t have daily management responsibilities. As a result, they have the time to contribute to the development of the firm’s strategy, monitor the performance of the management team and ensure that appropriate risk management processes are in place.

Whereas executive directors can be too busy with day to day duties, NEDs are there to point out what the management team doesn’t know. They also help to ensure that a small group of individuals can’t dominate the board’s decision-taking.

So where do you find a NED for your board? NEDs tend to be people with extensive managerial experience in areas such as finance, marketing, sales or legal. Many businesses find their NEDs through word of mouth or business contacts. An alternative is to use an executive recruitment agency.

In order to get the most out of having a NED on your board, you should create a clearly defined job description with a strong letter of appointment, setting out exactly what is expected of them.  NEDs should operate at more of a strategic level, challenging executives and providing the board with an independent perspective. It’s not just the business that needs to be careful, as NEDs face considerable personal risks in terms of personal liabilities if a business were to fail. They are as accountable as other directors to the regulators and shareholders of the business.

NEDs are not necessarily as important to the success of a business as a chief executive or management team but they can provide expertise, guidance and perspective which can help to pave the way to success for the firm.

Attack On Self-Employed In Budget 2017!

In his first Budget on 8th March, the new Chancellor Phillip Hammond announced that he would  level the playing field between employees and the self-employed by increasing Class 4 National Insurance Contributions (NICs) from 9% to 10% from 6 April 2018 and then to 11% from 6 April 2019. His justification is that the self-employed are now entitled to more generous state benefits than in the past and thus NIC rate should be increased towards the 12% Class 1 NIC employee rate.
Note that the flat rate Class 2 NIC contributions, currently £2.80 a week, cease on 5 April 2018.

The chancellor stated that only the self-employed with profits in excess of £16,250 will pay more national insurance.

Tax Free Dividend Allowance To Be Reduced To £2,000

The Chancellor also announced measures to limit the rise in tax-driven incorporation. The £5,000 tax free dividend allowance introduced by George Osborne will be reduced to just £2,000 from 6 April 2018. Mr Hammond claimed that many smaller owner-managed businesses have incorporated as limited companies mainly for tax reasons. Typically the director/shareholders of such businesses have paid themselves in dividends and paid less tax than similar unincorporated businesses.

Currently, once the dividend allowance has been used the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate. There are rumours that these dividend rates may also be increased in future years.

Although the cut in the tax-free dividend allowance is clearly aimed at owner managed companies, it will also impact on those with substantial share portfolios. Mr Hammond reminded us in his speech that the annual ISA investment limit increases to £20,000 from 6 April 2017 and that dividends on shares held within an ISA continue to be tax free.

Start Of Digital Reporting Delayed For Smaller Businesses

The Government is committed to the "Making Tax Digital" (MTD) project which is scheduled to start in April 2018 with the first quarterly updates being submitted by the self-employed and property landlords in July 2018.

Many business owners, professional advisors and the Treasury select committee had

expressed concerns about the timescale for the introduction of MTD. The Chancellor announced that there will be a one year deferral in the start date to 2019 for self-employed businesses and property landlords with gross income below the VAT registration limit.

Contact us if you need more information or business help:
APJ Accountancy | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com

How to Manage Business Mistakes?

No matter what type of business you run, mistakes will happen. All employees make mistakes. However, the key to resolving the situation when things don’t go to plan is to manage your team and the actions they take, effectively.

When things go wrong, stop and analyse the situation. How big is the mistake? Is it one that should not have been made but can be rectified? Or did it cost your company hundreds of thousands of pounds?

If a team member makes a mistake, hopefully they will own up to it. If not, you may have to raise the issue with them. The key at this point is to communicate clearly and in a professional manner. There is no point getting angry and shouting at people. Instead you should outline your expectations.

Discuss the mistake with your team member and ask them what they think they can do to rectify the situation. Outline that the most important thing right now is to come up with an effective remedy rather than pointing out whose fault it was.

If the mistake is a one-off occurrence, you should outline to your team member that the main thing is to learn from the experience in order to avoid it happening again. If the team member in question has made various mistakes in the past and it is becoming a regular issue, then perhaps it is time to consider getting HR involved. Maybe the individual is making regular mistakes because they aren’t properly qualified for their job or perhaps they just aren’t suited to their current role.

As a manager, you should think about what type of leader you are and what you want to accomplish. Do you want your team members to be scared of you or do you want to encourage them and support their actions? As a manager you can’t be their friend but you can be supportive. A supportive manager will use mistakes as a learning opportunity for the team.

If your firm's current culture for handling mistakes is not one that encourages learning or growth, it might be time to update your strategy. The best modern businesses use mistakes as an opportunity to step back, look at a process and find a better way of doing things. This type of approach helps to identify best practice, minimise the chances of similar mistakes happening again and may even create a better, more efficient way of managing parts of the business.