Concerns that small businesses are struggling with the move to auto enrolment has sparked an inquiry into the changes.
Committee member and MP for South Cambridgeshire Heidi Allen recently told Citywire the process was “intimidating” for small business owners as many didn’t have the experience to implement the required processes.
“While I’m very supportive of encouraging people to save for retirement and the concept of auto-enrolment, I am concerned that some small employers may not have the knowledge or resources to implement the policy. It is vital we communicate to and support these smaller employers so they can meet the new requirements,” Allen said.
Accountants are one group which have a significant role to play in getting the UK’s small businesses ready for auto enrolment.
It’s also a massive business opportunity for the UK’s accountants. Over the next two years the bulk of the country’s 5.3 million small businesses will have to contend with their staging date and for many, how to deal with the changes is still a mystery.
However, given the majority of the UK’s small businesses still use simplistic paper based methods or spreadsheets to keep their books, the challenge of having to contend with more complicated payroll requirements will not be trivial.
So with so many small businesses in need of a helping hand from their accountant or advisor, are you ready for the influx?
There are a few elements accountants can firm up to ensure they themselves are not overwhelmed by the many small businesses which will need to implement pension schemes.
Figure out what level of service you want to provide your clients
As an accountant you shouldn’t just be doing your client’s sums, you should also be doing your own. Before you get all tangled up in setting up auto enrolment for your clients, figure out the level of service you’re willing to deliver and what this means for your own business.
However you design your auto enrolment package, there is a lot of work to be done and value to be offered to small businesses so make sure you price accordingly.
Remember software is your friend
To help meet these new requirements, software is being deployed which goes beyond the traditional payroll model to include a broader people and payroll offering.
Small businesses which have been using HMRC’s payroll tool are going to find their admin tasks more difficult.
We’re building assessment, auto enrolment, and workplace pension capabilities in Xero. We’re also providing tools for our accountants and bookkeepers to help with pensions. This way you can always lean on your trusted advisor.
Having an end-to-end payroll software package which handles employee communications and integrates with your AE provider will help streamline the whole process.
Decide on an Auto Enrolment scheme
The first thing to note is that selecting an AE scheme for your clients doesn’t constitute regulated advice.
There are a bunch of auto enrolment pension providers to choose from, including the government’s NEST scheme and several corporate outfits offering various plans.
The best advice seems to be to find one scheme and stick to it.
Nailing your auto enrolment transition service for your client is an important way to show just how valuable your services as an accountant are. It’s also going to come in handy as HMRC forges ahead with its digital strategy over the next four years.
By helping your clients transition to cloud-based accounting and small business software now, you’re going to help them avoid a lot of pain when they’re required to manage their taxes and accounts digitally by April 2018.
Accountants and bookkeepers – want to know what you can do to prepare your clients for auto enrolment? Sign up to attend Xerocon 2016, Xero’s annual conference in London on the 9 -10 February to hear from Charles Counsell, Executive Director for Automatic Enrolment at The Pensions Regulator.