Micro Multinationals: A guide to international finance for small businesses
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About this ebook
The world is shrinking. If your business has a website, or if you're using Twitter or are on LinkedIn, then you and your business can be seen by people right across the world, and lots of them might be your potential customers.
There are lots of exciting opportunities out there. But there is always a catch. Keeping on the right side of the taxman can be time-consuming enough if you run a small business and don't sell or buy anything outside the UK. When you look outside our borders, there are even more tax traps waiting for the unwary small business owner.
What should you do to make sure you don't fall foul of not only HM Revenue and Customs, but also the tax authorities in the countries where you're buying and selling your wares?
What would it mean for tax if you're travelling overseas yourself to carry out a project for a customer, or if you want to be based in the UK and sell goods or services to customers abroad, or if you want to set up a satellite business outside the UK? How should you deal with selling to customers, and buying from suppliers, in foreign currencies?
You may well want to keep your business small, but what if you want to have a local staff member or agent abroad? What are the pitfalls? And are there any grants or help available for small businesses who want to look beyond the UK's shores for customers?
Emily Coltman answers all these questions and more in this brand new book.
Packed with useful guidance and case studies from UK small business owners who have either spent time working abroad or who are based in the UK but still trade with the world, this book is a must-read for any small business owner who would like to take their business global but is worried about what this would mean for tax.
Emily Coltman
Emily Coltman, Chief Accountant to FreeAgent, is a very unusual Chartered Accountant - she communicates in plain English as well as accounting-speak! After graduating from the University of Cambridge, she trained and qualified with growing accountancy practice Cannon Moorcroft, where she looked after accounts and tax for a portfolio of micro-business clients. This gave her a keen interest in accounting software and training, which led to starting up her own business making screen-capture tutorial videos, and later to joining FreeAgent, where she works with worldwide small businesses to help them use this simple online accounting system to keep their books in real time. Emily is passionate about helping the owners of small and growing businesses to escape their fear of 'the numbers', and believes that, with the right tools and guidance - some of which she aims to provide in this book, absolutely anyone, even if they were hopeless at maths at school - can learn to look after the finances of a small business.
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Book preview
Micro Multinationals - Emily Coltman
Micro Multinationals
A guide to international tax and finance regulations for small businesses
Emily Coltman FCA
An Enterprise Nation book
www.enterprisenation.com
HARRIMAN HOUSE LTD
18 College Street
Petersfield
Hampshire
GU31 4AD
GREAT BRITAIN
Tel: +44 (0)1730 233870
Email: enquiries@harriman-house.com
Website: www.harriman-house.com
First published in Great Britain in 2012, updated 2015
Copyright © Harriman House Ltd
The right of Emily Coltman to be identified as the Author has been asserted in accordance with the Copyright, Design and Patents Act 1988.
ISBN: 978-1-90800-328-7
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior written consent of the Publisher.
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher or by the Author or by the employer(s) of the Author.
This book is for Michael Green, great friend and colleague, who not only first opened my eyes to how tremendously exciting global business is, but provided fantastic support, contacts and research suggestions for this book.
You are a wizard, Michael – thank you so much!
Contents
Contents
About the Author
Introduction
Chapter 1 – The Practicalities
Chapter 2 – Foreign Currency
Chapter 3 – VAT
Chapter 4 – What If You Leave The UK Altogether?
Chapter 5 – Record Keeping
Conclusion
Case Studies
Bibliography
About the Author
Emily Coltman FCA, Chief Accountant to FreeAgent, is a very unusual chartered accountant – she speaks plain English as well as accounting-speak!
After graduating from the University of Cambridge, she trained and qualified with growing accountancy practice Cannon Moorcroft, where she looked after accounts and tax for a portfolio of micro-business clients.
This gave her a keen interest in accounting software and training, which led to starting up her own business making screen-capture tutorial videos, and later to joining FreeAgent, where she works with small businesses worldwide.
Emily is passionate about helping the owners of small and growing businesses to escape their fear of ‘the numbers’, and believes that, with the right tools and guidance, anyone can learn to look after the finances of a small business.
She is the author of Refreshingly Simple Finance for Small Business (Brightword Publishing, 2011) and Very Awkward Tax (Brightword Publishing, 2013).
Acknowledgements
Thank you to all who provided case studies for this book and helped me with my research:
Carolyn Whitwell of Bishopston Trading Ltd.
Colin Shelbourn, cartoonist extraordinaire.
Robert Killington, friendly VAT expert.
Bill Rhodes and all at TMF VAT.
Luke Brynley-Jones of Our Social Times.
Lisa O’Brien and Judy Mansfield at First Rate FX.
Michael Wood, Alexis Prenn and Sophie Hossack at ReceiptBank.
Tola Popoola of Chocolatatoi.
Shaun McGuinness of Tax-Sorted.
Rich Brady of Denbigh Army Surplus.
Michael Barber of Neuxpower.
Linda Kozlowski and Molly Morgan of Alibaba.com.
Matthew Bartlett and Rebecca Sweeney of UKTI.
Dennis Howlett at AccMan Pro.
Thank you to Emma Jones from Enterprise Nation, who is so passionate about UK small businesses and encouraging them to trade globally, and who gave me the chance to write this book.
And finally, thanks to David Mapletoft, my first ever employer back in the days before university – ‘The Boss’ at the Louth branch of Barclays Bank – who started me on the road that led eventually to being an accountant. I say in all seriousness, thank you, David – the one thing I haven’t been is bored!
Introduction
Have you ever wished you could sell to overseas customers, but been scared that you might fall foul of not only the UK’s tax regulations but also those of other countries?
I’ve got news for you.
Lots of small businesses just like yours trade internationally every day. That might involve buying goods or services in from overseas, either over the internet or offline. Increasingly, it also involves selling goods or services outside the UK.
In this book I aim to give you a guided tour of the UK’s tax regulations that affect small businesses with customers outside the UK.¹ This includes UK-based freelancers who travel outside the UK for project work, small businesses who sell goods and services over the internet, and business owners who want to establish a base overseas. I’ll also highlight what the local tax regulations might be.
But we’ll begin by looking at some of the practical financial aspects of trading outside the UK.
We’ll look at how you might do this, which will often be via the web, and how you should record costs such as website and currency fees in your books.
And we’ll also look at what happens if you work with foreign currencies. This could mean you sell to customers and price your goods or services in their currency, rather than your own. Or it could mean that you’re a freelancer travelling overseas to work on a project and wondering how you should record expenses you incurred in a foreign currency.
We’ll finish up with a series of case studies that cover a range of the financial issues highlighted in this book.
Let’s get started by looking at the different ways you might trade overseas, and what this will mean for your finances and tax.
1 I have assumed that readers of this book have a basic knowledge of UK tax and finance, including VAT. If you feel unsure