Adventures in Micro-Business: Am I too old for the bank to finance my business?

Professor Russell Smith answers your queries
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The Independent Online

Q At 59, am I too old for the banks to consider lending money to my new business venture?

A Not at all. A recent Business Link survey showed that new businesses, run by people over 55, are 50 per cent more likely to have business plans together with sales and marketing forecasts compared to businesses that have been established for 10 years or more. This is important since these planning tools are pre-requisites for debt finance from banks. In addition, a mature person may have equity in a house that could be used to secure a business loan. HRH The Prince of Wales founded Prime (the Prince's Initiative for Mature Enterprise) to support older entrepreneurs; its Prime Business Club website ( www.primebusinessclub.co.uk) has a very helpful section on start-up loans.



Q What is Professional Indemnity insurance and do I need it?

A If you offer expert advice as part of your service to clients then, not surprisingly, your client may wish to seek financial compensation from your business if that advice turns out to be poor or inaccurate. Professional Indemnity insurance (often called "PI") can provide cover in such situations. You should talk to an independent financial adviser (IFA) about the right kind of PI for your business and the level of cover that would be appropriate. If you don't already have an IFA then you can find one via the IFA search website ( www.searchifa.co.uk).

Q Do I have to trade under my company's name?

A No – you can have a trading name which is different from your company's name. However, you are required to display the name of your company outside all places of business from which you will operate and on all business letters, notices, cheques, purchase orders and invoices. Documents must also state the company number and the location of your registered office. Also don't forget that, if registered, you should quote your VAT number on documentation.

Q Is it true that new rules have been introduced regarding health and safety at work this year?

A While the maximum fines for breaching health and safety regulations and the range of offences for which an individual can be imprisoned have been increased from January of this year, these tougher penalties apply to existing rules. All business owners are therefore being made more accountable and should review their health and safety policies to ensure compliance. The Health and Safety Executive website ( www.hse.gov.uk) is one of the Government's best, and is full of helpful and pragmatic advice.

Q I've noticed that customers are paying invoices later and later in recent months. What should I do if I am unable to make my PAYE payments on time?

A Firstly, move to online banking since HMRC gives you until the 19th of the following month to make PAYE payments by electronic transfer. But don't forget that payments may take three days to clear although most banks offer a "same day transfer" service for a fee of around £15. If your customers do not pay within this time then you must call your local tax office to explain the situation and to state when you expect payment to be made. If you are new to business, you may find it helpful to seek additional advice from HMRC via their Newly Self-Employed Helpline on 0845 915 4515.

Send your questions to Russell Smith at independent@businessboffins.com. Selected questions will be answered each month. Answers are for the general guidance of owner-managers only; always seek professional advice. Professor Smith is the founder of Oxford-based Business Boffins Ltd which, in collaboration with Oxford Brookes University Business School, delivers support programmes to small businesses nationwide. Independent and Independent on Sunday readers can enrol on the university-accredited programme at a discounted rate; see www.businessboffins.com/independent.

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