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The art of delegation

Tue, 31 Mar 2026 16:36:16 GMT

How often do you get to the end of a working day and wonder where the time went?

Perhaps you never got to item 3 (or even item 1!!) on your to-do list. How can you solve this problem without working longer hours? The answer is very simple, but the art in the solution is where the gold is.

The answer to free up time is to delegate more – either to existing team members, new people you recruit, or externally to outside contractors. However, if delegation were that easy, everyone would be doing it now, right?

So, what is the art of delegation?

We say art, because delegation is not an exact science; different approaches are needed depending on who the ‘delegate’ is. Time and effort are required to effectively pass on tasks to others.

Often, the time the delegator needs to put in initially is greater than if they did the work themselves – that’s why so many people don’t delegate.

The view that ‘it’s quicker for you to do it yourself’ holds you trapped and unable to be more productive and effective yourself. It also stops others from developing better ways to do things than you already know, i.e. if you teach them your way, then they can master that AND add their own value – two minds being better than one.

Here are some essential principles to apply to help you to delegate (as opposed to abdicate!):

Delegation

Assess the task, issue to the right person and support - helps build trust and respect
Be specific and crystal clear for greater communication
Request they repeat back instructions, so you know you were understood, enabling higher productivity
Set a time frame and request clarification that the task has been achieved, ensuring jobs are completed on time and are profitable
Both parties to review - opens the door for future work

Abdication

Issue tasks to anyone and forget about it - shows distrust and a lack of respect
Giving unclear and little information results in poor communication
Don’t ask if you were understood - results in low productivity
Don’t set a time frame – it can mean jobs are delayed and over budget
Different expectations can result in disgruntled clients
No review results in no future work

Delegation is a skill to be learned; applying these principles consistently will ensure long-term success.

“No person will make a great business who wants to do it all himself or get all the credit” – Andrew Carnagie

Action list:

Which tasks am I currently doing that I could delegate to others?
What can I do with the time I free up?
Who are the best people for me to delegate these to? (Make sure they want to do these as part of their career development).
What is the best way to document what is expected and how it should be done?
What support and review process is needed to ensure success?

Automation can ease your business workload

Tue, 31 Mar 2026 16:13:00 GMT

The average business owner needs an additional four hours in their working day to complete their admin, according to research by OnePoll.

If your people are spending 20 hours per week wading through tedious and unproductive admin, that’s bad for the business and for your efficiency. Fortunately, technology and software automation can go a long way towards automating these low-level admin tasks.

Better productivity through automation

Automation is an important way to ease your business workload, with a host of different business apps and cloud solutions offering ways to automate your admin.

With ‘smart business tools’ increasing in number and choice, software is utilising automation algorithms, artificial intelligence (AI), machine learning and cognitive solutions to help remove the mundane admin tasks from your workflows.

Core processes that will benefit from automation include:

Automated bookkeeping – Simply take a photo of your receipts, expenses and invoices and ‘optical character recognition’ (OCR) technology will digitise the output and pull it through to your accounts software. No data entry, no human error and no lost receipts! We can do the rest to ensure your records are accurate.
Automated credit control – chasing up debts and late-paying customers takes time. Automated credit control apps track your debtor numbers and automatically sends out customised chaser emails as soon as an invoice is late. This reduces your credit control time, speeds up cash collection and cuts your aged debtor figure.
Automated payment collection – the easier it is to pay you, the faster your customers will pay. Automated card payments and cloud-based Direct Debit solutions allow you to automatically take payment from a customer as soon as an invoice is due. Some solutions will even automate the invoice matching and bank reconciliation process.
Automated reporting and forecasting – the better your reporting and business intelligence, the easier it is to make informed decisions about your company strategy. Accounting platforms and fintech tools now offer automatic, real-time reporting and forecasting, giving you access to the important numbers and metrics, fast.
Automated digital marketing – digital marketing is key to raising your brand’s profile. Marketing platforms offer important time-saving ways to create, schedule and post social media content, or email automations to send a pre-programmed cadence of emails to specific target audiences within your wider customer base.

Talk to us about embracing the power of automation

If your admin is holding you back, come and talk to us about how automation can pick up some of the heavy lifting as well as giving you the metrics you need for decision making. We can review your business processes and identify the automation opportunities, helping you choose the best apps to drive your business efficiently.

Is your payroll ready for these changes to Statutory Sick Pay?

Tue, 31 Mar 2026 16:07:19 GMT

“Q: I’ve heard there are some upcoming amendments to Statutory Sick Pay. What are the major changes I should be aware of?”

One of several changes introduced by the Employment Rights Act 2025 was an amendment to the way that Statutory Sick Pay will function for UK employers.

“A: In short, SSP will be available for more employees and will also be available from day one of sickness absence.”

Let’s look in more detail at what these changes to Statutory Sick Pay will mean for your SSP procedures and payroll processes:

Removal of the Lower Earnings Limit

All eligible employees will be entitled to SSP regardless of income. SSP will be paid at 80% of normal weekly earnings or the uprated weekly flat rate of £123.25, whichever is lower.

Removal of the Waiting Period

SSP will be paid from the first full day of sickness absence, not from day four.

These changes make SSP more accessible and remove barriers for lower-paid employees, and will apply across the United Kingdom, including Northern Ireland. The relevant legislation will apply as to when the sickness absence took place.

Absences starting before 6 April 2026 will follow the current system to determine eligibility and payment. Absences starting on or after 6 April 2026 will use the new rules, unless otherwise outlined in legislation.

Helping you plan for the changes to SSP

To be ready for these amendments to SSP, you’ll need to update your payroll processes to account for the wider eligibility requirements and the ‘day one’ SSP payments.

Why bookkeeping is essential for your small business

Tue, 31 Mar 2026 15:42:44 GMT

As a small business owner, do you need a bookkeeper, an accountant, or both? Bookkeepers can seem a little mysterious. In fact, they deal with the organisation, the recording and the reporting of financial transactions of a small business. A well-run business is likely to make use of both accountants and bookkeepers.

Simply put, a bookkeeper clears the way for the accountant to work with your business strategically. This means: keeping track of daily transactions, sending and managing invoices, handling the accounts payable ledger, keeping an eye on cash flow, and preparing the books for the accountant.

When you’re hiring, make sure you ask whether a bookkeeper has an area of specialisation. Some bookkeepers may be able to help train staff in using online accounting or POS systems or give you advice on business processes.

Want help setting up bookkeeping for your business? Get in touch for help from us.

Planning for all eventualities: the benefits of scenario planning

Wed, 18 Mar 2026 19:17:35 GMT

In a business environment that's currently highly volatile and changeable, it pays to scenario-plan for all eventualities.

What is scenario planning?

Scenario planning is the process of using your existing business data to project and forecast the future path of your finances, sales and growth as a small business.

By running various scenarios, you get an overview of the potential opportunities, threats and financial pitfalls that lie ahead, giving you time to plan for these eventualities.

Let’s look at three specific scenarios and how they help you drive your success

1. Worst-case scenario

It pays to hope for the best outcome, but also to consider the worst outcome.

Using forecasting and your knowledge of the current market, you can plan the potential worst outcome for the business. If there’s a 20% price hike in your supply chain, what impact would this have on your operational costs, cashflow and profit margins?.

When you know what the big threats might be, you can develop a scenario plan that prioritises immediate cash preservation and spend management, while also minimising debt.

2. Business-as-usual (BAU) scenario

It may be that no significant changes happen in the market. What does this mean for you?

This baseline scenario relies on historical projections of your existing sales, customer retention and growth. Having managed the business through similar markets, you can use your experience to project your costs, spending and budgets forward in time.

This helps you plan for a stable and consistent business journey over the course of the upcoming periods, with detailed numbers to guide your hiring, resourcing, cash management and investment strategy.

3. Best case scenario

As an entrepreneur, you need to think positively and aim for positive outcomes.

Scenario planning helps you understand the impact if everything turns out as planned. By forecasting a surge in market demand or a successful product launch, you can see the outcome and plan your growth strategy and projections accordingly.

This kind of scenario planning focuses on scalability, showing you exactly when to invest in new tech, hire new staff or expand your inventory to maximise the potential profits.

If you want the key insights that scenario planning can deliver, now’s the time to sit down and start planning the most beneficial scenarios for you and the future of your business.

Book some time with our team to kickstart your scenario planning.

The major issue of late payment: how to improve payment times

Wed, 18 Mar 2026 19:15:39 GMT

“Many small businesses are now operating under pressures comparable to those experienced during the Covid pandemic, but this time without an emergency support framework in place.”

“SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system and barriers to growth that are compounding rather than easing.”

Rt Hon Liam Byrne MP, Chair of the Business and Trade Committee.

A recent report from the UK Government’s Business and Trade Committee has found that UK small businesses are facing increasingly hostile trading conditions, in no small part due to the endemic problem of late payment.

The key problem of late payment

With liquid cash in short supply, many customers are delaying payment of supplier invoices until the very last moment. Not only does this have a negative impact on your cashflow position. It also increases your aged debt and puts real pressure on your ability to cover operational costs.

The recent Small Business Strategy report found that:

Evidence from Sage indicates that UK small businesses were owed £112 billion in unpaid invoices by the end of 2024
Nearly half of all invoices are paid late, even with payment terms of 60 to 90 days now routine in sectors such as construction
Around 38 small suppliers are estimated to close each day as a result of late payment practices.

Helping you improve your payment times and cashflow

If you’re worried about slow payments from your customers and the cumulative impact this is having on your cash position, book some time for a chat with our team.

We can review your accounts receivable processes and your aged debt to suggest proactive ways of speeding up those payments, including:

Offering multiple payment methods like credit cards and digital wallets
Sending invoices immediately after delivery of goods or services
Automating your follow-up reminders through your accounts software
Implementing early payment discounts to provide a clear financial incentive
Running credit checks on new clients to identify potential payment risks.

Setting goals for you and your business for the new financial year

Wed, 18 Mar 2026 19:13:55 GMT

The new financial year is a new beginning. As a business owner this a great time for you to reflect on where you are at and think about your business goals for the financial year ahead.

Setting goals is an essential part of personal and professional growth. These could be lofty goals, or even setting out a plan to achieve some more mundane (but equally important) projects. Whether that is getting paid faster, reassessing expenses or bigger things like automation of processes and new markets. You may be looking to expand your business or create more time for yourself.

Having a clear vision and actionable goals can help you achieve your long-term plans. Here are some tips to get you started:

Envision your future: Reflect on what you truly want from your life and how your business can help you achieve those aspirations. Consider where you want your business to be in the next five or ten years. Having a clear endpoint in mind will make it easier to set goals that align with your vision.
Set measurable goals: Vague goals can be challenging to track and evaluate. Instead, focus on setting goals that are measurable. Think about the key metrics you already monitor in your business and how you would like to see them improve. For example, aim for a 3% increase in net profit year-on-year, a 2% reduction in expenses, or acquiring two new customers per month or grow your prospect database by 50%. If you set specific targets, you can easily track your progress and make adjustments as needed.
Develop a plan for each goal: Once you have identified your goals, it's crucial to create a plan of action to achieve them. This can be as simple as jotting down your ideas or engaging in a brainstorming session with your team or advisors. Having a well-defined plan in place will help you stay focused and motivated to follow through.
Monitor your progress regularly: It's essential to regularly check in on your progress towards your goals. Set reminders on your calendar or align your monitoring process with your invoicing cycle. By consistently evaluating your progress, you can identify any areas that need improvement or come up with fresh ideas to help you reach your targets.
Celebrate your achievements: Celebrating milestones along the way is crucial for maintaining motivation and momentum. Plan a reward for yourself when you achieve a significant goal. It could be treating the team to a morning tea, having a day out of the office together or planning an event for the end of the year. Choose something that brings you joy without breaking the bank.

Not sure how to get started?

We can help you with the strategy and identifying the information you’ll need to track, so you can monitor your progress.

Setting goals is just the first step. By implementing these tips and staying committed to your vision, you can turn your long-term plans into reality.

How to maximise your tax position

Wed, 18 Mar 2026 19:12:17 GMT

The 2025/26 income tax year began on 6 April 2025 and will end on 5 April 2026.With only a couple of weeks left, make sure that you’ve taken steps to improve your tax position, and prepare for key tax changes coming in 2026/27.

Beat the dividend rate rise. If you run a company and are planning on paying yourself a dividend, consider doing so before the tax year end. In 2025/26, dividends are taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for those that pay the additional rate. However, from 6 April 2026, the basic and higher dividend rates will increase by two percentage points, to 10.75% and 35.75% respectively. Don’t forget the £500 dividend allowance either, which resets every tax year and offers further tax savings.

Consider capital disposals . The annual exempt amount for individuals is £3,000 in 2025/26, with most gains above this amount taxed at either 18% or 24% depending on whether you’re a basic or higher/additional rate taxpayer. While these rates and allowances will remain the same in 2026/27, the rates of business asset disposal relief and investors’ relief will increase from 14% to 18% from 6 April 2026. Time is short, but if you are considering selling a business, or qualifying assets or shares, reviewing the timing of your sale could result in tax savings.

Be proactive with IHT planning . From 6 April 2026, a new £2.5 million allowance will apply to the combined value of property eligible for 100% agricultural relief and 100% business relief, with a 50% rate of relief applicable to any qualifying relievable property over £2.5 million. If you have significant agricultural or business assets, estate planning will be critical to plan for these changes, including whether any action need be taken before 6 April 2026.

Finalise end of year housekeeping. The end of the tax year is a great time to make sure that all possible allowances and deductions have been claimed. This means maximising pension contributions, ISA investment limits, and making use of the personal allowance and personal savings allowance, if you haven’t done so already.

Get Ready for Making Tax Digital for Income Tax

From 6 April 2026, Making Tax Digital (MTD) for Income Tax will be mandatory for self-employed individuals and landlords with qualifying income over £50,000. Those in the regime will need to keep digital records and send quarterly updates to HMRC using compatible software, with a tax return still required by 31 January following the end of the tax year.

Need support with your tax affairs?

For bespoke tax planning advice, book some time with our team. Our expert advisers can help, and work with you to prepare for a tax-effective 2026/27.

5 things your balance sheet can tell you about your finances

Wed, 25 Feb 2026 12:32:10 GMT

Chances are you’ve heard of the accounting term ‘balance sheet’. But what is a balance sheet? And what does it tell you about your finances?

Your balance sheet is a financial statement that provides a snapshot of your company’s financial position at a specific point in time. It’s an overview of your finances that details three key elements of your accounting.

The formula for the balance sheet is Assets = Liabilities + Equity:

Assets: These are resources your business owns – things like cash, inventory or equipment – that provide future economic value and help generate your revenue.

Liabilities: These represent the company’s financial obligations or debts owed to outside parties – think bank loans, taxes or unpaid invoices.

Equity: This is the remaining interest in the assets after deducting liabilities. Equity represents the net worth of the business or, as the owner, your residual interest in assets after deducting all liabilities.

Ways the balance sheet informs your view of your finances

Liquidity and short-term solvency

By comparing your current assets to your current liabilities, you can use the balance sheet to reveal if the business can meet its immediate obligations. This is vital for ensuring you have enough cash or liquid assets to remain operational and trading.

Capital structure and leverage

The ratio of total debt to shareholders' equity illustrates how your company finances its growth. Are you relying too heavily on borrowed money? Or are you maintaining a sustainable level of debt that helps you fund the next stages in your growth?

Efficiency of your asset management

By reviewing your total assets against revenue trends, you can find out how effectively the company is utilising its resources – things like inventory and equipment – to support your business operations and generate long-term value for your stakeholders.

Working capital position

Calculating the difference between your current assets and liabilities helps you spot the operational capital buffer that’s available. This indicates whether the business can comfortably fund its day-to-day activities or if it faces a looming cash deficit.

Net worth and book value

The equity section of the balance sheet reflects the total value remaining for you, as the owner, after all debts are paid. This gives you a clear idea of the company’s intrinsic value and the overall cumulative financial success of the business.

Want to dig deeper in your balance sheet and financials?

If you’d like to understand more about your balance sheet and accounts, book some time with our team. We’ll be happy to explain more about your financial health as a business

The importance of regular bank reconciliations

Wed, 25 Feb 2026 11:40:39 GMT

A Bank reconciliation involves a comparison of your sales and expense records against the record your bank has. It is a critical financial process to identify and rectify any discrepancies or errors between your internal financial records with the transactions recorded in your bank statement.

Bank reconciliations keep your bookkeeping accurate and can help lower your tax, alert you to fraud, and allow you to track costs. They are essential for several reasons:

Firstly, they help detect and prevent fraudulent activities or errors, such as unauthorized transactions or bank fees.
Secondly, they provide a clear picture of your actual cash position, allowing for better cash flow management and informed financial decision-making.
Thirdly, by reconciling regularly, you can also identify any outstanding checks or deposits that haven't cleared, ensuring that you have an up-to-date understanding of your financial health.

It can take a lot of time to do it manually, but there is plenty of software to make the process easier. It's important to do it regularly so you recall the correct details.

To learn more about how to perform a bank reconciliation and its importance, you can read this guide from Xero.

If you need further assistance please talk to us, we can help.

How to improve UK business confidence

Wed, 25 Feb 2026 11:37:50 GMT

“Our data shows more clouds have gathered over business confidence, and the outlook for SMEs in 2026 is unsettled.” “Firms tell us they are worried about tax, struggling to invest and fear they’ll have to put their prices up in the months ahead.”

David Bharier, Head of Research at the British Chambers of Commerce

The latest Quarterly Economic Survey from the British Chambers of Commerce has some sobering outputs for UK business owners. Business confidence is low, with many companies worried about tax, costs, pricing and the future outlook for 2026.

Here are just three of the key takeaways from the survey:

Less than half of responding firms (46%) are expecting increased turnover over the next 12 months (compared with 48% in Q3)
Nearly a quarter (24%) expect a decrease in their turnover (21% in Q3).
Only 19% have increased investment and 27% have scaled back their plans.

It’s time to review your strategy and financial plans

With trading already challenging, it’s easy to see UK small businesses struggling to invest and feeling forced to raise prices as we start a new year.

But you don’t have to be part of that statistic. With the right strategic outlook and financial planning, you can see the foundations for a more affluent 2026 – a year where we hope we’ll see the clouds of uncertainty disperse and stronger business confidence returning.

Working with you to build your business confidence

Contact us for a strategic and financial review. We’ll be happy to review your current strategy and suggest ways to build and nurture steady growth.

Start Up Loan Scheme: getting your business off the ground

Thu, 29 Jan 2026 18:00:31 GMT

Having adequate access to adequate funding is fundamental for any startup.

In the early stages of getting your enterprise off the ground, you need working capital to reach the all-important minimum viable product (MVP) stage, rent premises and hire staff. But where does this initial funding come from?

Let’s look at the UK Government's Start Up Loan scheme and the funding options it offers.

What is the Start Up Loan scheme?

Start Up Loans are government-backed loans aimed at UK entrepreneurs who’ve been unable to secure funding through traditional lending channels, such as the Big Four banks.

These loans are different to some kinds of business finance in that they are personal loans offered to individual directors, not to the company itself.

How much can you borrow?

As an individual director, you can borrow from £500 up to an upper limit of £25,000. The loan must be repaid over one to five years, at a fixed interest rate of 6% per annum.

Because these are personal loans, rather than company loans, each of your directors can apply for funds of up to £25,000 each, up to a maximum limit of £100,000 for the company.

What are the key benefits of a Start Up Loan?

Having enough capital to get the business off the ground is a vital step in your startup journey. Being well capitalised gives you the funds to start operating, finding customers and making the revenues needed to sustain your business idea.

Here are some key benefits of applying for a Start Up Loan:

The loan is unsecured :Because this is an unsecured loan, you won’t have to use your personal assets – like your home or car – as collateral to secure the funding.

Fixed interest rate of 6% per annum :The rate is locked in for the entire loan term, meaning any future increases in the Bank of England's base rate won’t lead to an increase in your repayments.

Flexible repayment terms :Repayment periods can be tailored from one to five years, allowing you to manage your cashflow effectively by choosing a schedule that aligns with your forecasted revenue.

Support during the application process : You can get assistance with creating a business plan and completing cashflow forecasts, which improves your chances of the loan application being approved.

Free one-to-one mentoring for 12 months : Being connected with an experienced adviser gives you valuable guidance on strategy, operations and scaling, dramatically improving your chances of long-term success.

Cost-saving measures and how they drive profits

Thu, 29 Jan 2026 17:57:44 GMT

Question: “Can cost-saving measures in the business truly be a key driver of profits?”

Running a profitable business is one of your key goals as an owner. Without profits, there’s no capital to reinvest in the business, no funds to grow the company and no money for your own dividend payment at the end of the financial year.

So, is cost-saving the answer in these challenging economic times?

Answer: “Careful management of costs is a fundamental way to improve your profit margins and profitability as an enterprise”

Cost-saving measures will have a direct and measurable impact on your profits. This is usually achieved via two main mechanisms.

Firstly, reducing your variable costs (like raw materials or direct labour) increases your gross profit margin. This retains more revenue from each sale you make as a business.

Secondly, lowering fixed overheads (such as rent or software licenses) directly reduces the total expenses on your profit and loss statement, leading to a higher net profit. This immediate bottom-line improvement makes you a more financially healthy prospect to investors and lenders – which, in turn, can often make it easier to access funding and grow the business.

Want to know more about cost-saving measures?

Talk to the team about your profit goals and we’ll advise you on the key ways you can reduce your overheads and expenses to drive improved profits.

Protecting you and your business: taking out insurance

Thu, 29 Jan 2026 17:55:28 GMT

We all hope that our pathway along the business journey will be smooth and uncomplicated.

But the reality is that accidents can happen, along with unplanned injuries, damaging weather events and legal suits from disgruntled clients.

So, what can you do to protect your business from these potential negative consequences? The answer is to take out the relevant business insurance for your company.

Five common kinds of business insurance policies and how they protect you

1. Public liability insurance

Public liability insurance covers your legal costs and compensation claims if a third party – such as a customer or passer-by – suffers an injury or property damage because of your business activities. It’s an essential policy to take out if you interact with customers in a physical space.

2. Product liability insurance

If a product you design, manufacture or supply causes injury or damage to a consumer, product liability insurance protects you. It handles legal defense fees and settlement costs and is a vital policy for all retailers, wholesalers and manufacturers that produce or sell physical products.

3. Business contents insurance and tools insurance

Business contents insurance covers the cost of replacing or repairing your internal assets – items like computers, furniture and stock – if they’re damaged or stolen from your premises.

Tools insurance covers the cost of repairing or replacing your vital portable gear – things like your laptop, specialist machinery or hand tools – if they’re stolen, lost or damaged.

Having contents and tools insurance in place to cover the expense of repairs or buying new equipment means you can get back up and running without major out-of-pocket costs.

4. Employers’ liability insurance

Employers’ liability insurance covers your compensation costs if an employee falls ill or is injured while working for your business. The specific legal requirements vary from country to country, but it’s often mandatory for employers to take out protection against workplace-related health and safety claims.

5. Professional indemnity insurance

Professional indemnity insurance protects you against legal costs and damages if a client suffers a financial loss because of your professional advice or services. It’s a crucial policy for consultants and experts, shielding your business from client claims of negligence, errors or omissions in your work.

Working with you to understand your insurance needs

Whatever stage you’re at in the business journey, it’s important to think about the insurance needs of your business and the specific areas where you may need protection.

We’re not insurance experts, but we can work with you to define the basic policies you’ll need. We can also connect you with the best insurance brokers and agents for your business type, industry or niche sector – so you get tailored advice on your insurance requirements.

5 impacts of the rise in the National Living Wage

Thu, 29 Jan 2026 17:53:21 GMT

Budget 2025 announced a forthcoming rise to both the National Living Wage and the National Minimum Wage, with the aim of keeping wages in line with inflation.

But what does a rise in wage rates mean for employers like you?

1. Higher wages for those on the National Living Wage

The National Living Wage (NLW) will rise from 1 April 2026 by 4.1% to £12.71 per hour for eligible workers aged 21 and over. This will increase the gross annual earnings of a full-time worker on the NLW by £900, benefiting around 2.4m low-paid workers.

2. Increased pay for those on the National Minimum Wage

The National Minimum Wage rate for 18–20-year-olds will also increase by 8.5% to £10.85 per hour from 1 April 2026. This will mean an earnings increase of £1,500 p/a for a full-time worker. The NMW for 16–17-year-olds/apprentices will increase by 6% to £8 per hour.

3. Higher labour and operating costs for your business

Where you have workers on the NLW and NMW, this means your payroll costs are going to increase from April 2026. The wage rises will increase your gross payroll, automatically raising Employer National Insurance and workplace pension contributions. This has the potential to put additional pressure on your margins, cash position and net profit as a business.

4. Pressure to boost prices or drop staffing levels

The question is how you react to this increased pressure on your payroll costs. You could offset the higher costs by raising prices, but this risks alienating your existing customers. Or you could cut staff hours and reduce hiring to bring down the overall labour costs you’re incurring.

5. A need to invest in more labour-saving technology

The reality is that human labour costs money. By investing in artificial intelligence (AI), robotic process automation and smart production techniques, some of your basic tasks could be automated. This removes some of your dependency on expensive human labour, but you’ll need to balance the need for human skills and talent against the benefits of automation.

If you’re concerned about the impact of the increase in the NLW and NMW, do come and talk to our team. We can review your staffing, labour costs and profit margins to find a workable strategy for keeping your payroll and hiring costs under control.

Why flexible working is the new normal

Thu, 08 Jan 2026 04:07:22 GMT

"Gone are the days when flexible work was a perk. Whether it’s hybrid roles, remote options, or custom hours, flexibility has become a baseline expectation." - Recruitment Trends for SMEs by Onside.

The pandemic may have introduced us to the idea of working from home, but the ability to flex where we work from is now a core expectation for many employees.

Why should your business embrace flexible working?

According to a recent survey by Robert Walters, 54% of employees prefer a combination of in-office and remote work.

We’ve learned about the efficiency benefits of working from home, making the most of the reduced travel time and the ability to work non-conventional office hours to get the job done.

But we’ve also come to realise the advantages of spending time with our team in the office, and how this can build team spirit, aid collaboration and get us working as a unit again.

The ideal scenario is hybrid working, where time is split between mandated office days and the flexibility to work from home when that makes employees’ lives easier.

How to embrace flexible, hybrid working

Flexible working will be different from company to company and sector to sector. But there are some key ways you can embrace hybrid working in your business:

Have a clear hybrid policy: Define which roles are eligible for hybrid work and set core collaboration days so you can work on team connections at the office.
Invest in cloud tech and online ways of working: Make sure your remote employees have the necessary tools and technology to work from home.
Put your focus on output, not presence: Employee performance should be based on what each employee delivers and achieves, rather than hours spent in the office.

Do customers still want good, old-fashioned customer service?

Thu, 08 Jan 2026 04:01:32 GMT

“Q: Do customers still want good, old-fashioned customer service?”

Customer service has changed. We now have multiple options for automating our customer interactions or offering self-service options to our customer base. Customers can talk directly to AI agents or sort out a query with an automated chatbot. It’s fast, efficient and (from your viewpoint as an employer) highly cost-effective.

But is automated customer service always the best option? In an environment where your customers are surrounded by digital interactions, wouldn’t it be nice to offer a more human and personalised level of customer service? And does that mean hiring more staff?

“A: There’s still great value in personalised customer service.”

Fundamentally, customers are still seeking out the human element of customer service, amongst the sea of digital and online noise that we’re now surrounded by daily.

There are three core reasons why customers crave this more personal touch:

Trust and empathy : When dealing with complex or emotionally charged issues (like financial errors or faulty products), customers want to talk to a human agent who can demonstrate empathy and take ownership of the problem. Chatbots may be efficient, but they don’t deliver when it comes to customer empathy.

Context and recognition : Old-fashioned service means being recognised and having your history remembered. Customers expect the business to know their needs, history and preferences without forcing them to repeat this information. A human agent with access to a CRM system can deliver this recognition in a personalised and tailored way.

A need for exceptional service : A recent Australian survey found that 88% of consumers expressed satisfaction with customer service interactions that were managed mostly or fully by human agents. When customers have a good experience with a human agent, this increases their brand advocacy and can also generate positive word-of-mouth referrals (one of the best ways to attract new customers).

The impact of human-led customer service can be immense. AI agents and software automation can boost your overall efficiency for many simple tasks and customer interactions. But having the human touch drives customer loyalty, retention and your competitive advantage.

Hiring more customer service staff (and investing in their training) could be a way to find your own competitive advantage as a business.

5 tips for controlling your cashflow

Thu, 08 Jan 2026 03:58:10 GMT

Is your cashflow position keeping you awake at night? Don’t worry, we have five simple tips to improve your cashflow management and achieve a positive cash position.

1. Give your accounts receivable a boost

Invoice your client as soon as the job is completed, or consider invoicing in instalments once key milestones are reached. Also, make sure you have strict payment terms in place.

2. Negotiate longer payment terms

Talk to your suppliers to negotiate 30 or 60-day payment terms. This delays payment for your most common overheads, helping you spread the cost over a longer period.

3. Always have a cash reserve in place

Putting surplus profits into a cash reserve gives you a buffer to draw on when cashflow is challenging. This can be a great way to get through quiet periods or cover unexpected costs.

4. Make the most of your cashflow forecasting tools

Use the cashflow tools in your accounting software or forecasting app to create a rolling cashflow forecast. This helps you spot the potential cash shortfalls and budget accordingly.

5. Keep a close eye on inventory levels

Review your inventory levels and warehouse stock to make sure capital is not tied up in slow-moving stock. Think about a leaner approach that reduces your costs.

More helpful advice on managing your cashflow

If your current cashflow position is worrying you, come and talk to our team. We’ll give you tailored advice on how to boost your cash inflows and reduce your cash outflows.

Key numbers to focus on in your business now

Thu, 08 Jan 2026 03:54:56 GMT

As a business owner, it’s never been more important to have a good grasp on your finances.

For many businesses, priorities have changed, customer behaviours have mutated and revenue streams have had to evolve and pivot in order to maintain a profitable business model.

To track, monitor and drive your financial performance in this updated business environment, it’s increasingly important to have a handle on your key financial reports and metrics.

Getting to grips with your financial reports

Whereas in the past, extra cash in the business may have been seen as a surplus that needed to be spent on something, recent years have shown us that having reserves is vitally important for the survival and long-term health of your business.

To truly be in control of this cash, it’s vital that you can dip into your accounts, financial reports and dashboards and ‘see the genuine story’ behind your financial position.

Here are the key reports to focus on:

Budget – your budget is the financial plan that's tied to your strategic plan. In essence, the budget is your approximation of the money it will take to attain your key strategic goals, and the revenue (income) and profits you hope to make during this period. It’s a benchmark you can use to measure your actuals (historic numbers) against, allowing you to see the variances, gaps and missed targets over a given period.
Cashflow Statement – a cashflow statement shows the flow of money into and out of your business. Understanding these cash inflows and outflows in detail allows you to manage this ongoing process, allowing you to aim for a ‘positive cashflow position’ – where inflows outweigh outflows. In this ideal positive scenario, you have enough liquid cash in the business to cover your costs, fund your operations and generate a profit.
Cashflow Forecast – forecasting allows you to take your historic cash numbers and project them forward in time. As such, you can see where the cashflow holes may appear weeks, or even months, in advance – and that gives you time to take action, whether it’s increasing your income stream, reducing your underlying costs, chasing up unpaid invoices (aged debt) or going to lenders for additional funding.
Balance Sheet – the balance sheet shows you the company’s assets, liabilities and equity at a given point in time. In a nutshell, it’s a snapshot of what the business owns (your assets), what you owe to other people (your liabilities) and what money and profits you currently have invested in the company (your equity). The balance sheet is useful for seeing what stock and equipment the business owns, how much debt (liabilities) you’ve worked up and what the company is actually worth – all incredibly useful information to have at your fingertips when making big business decisions.
Profit & Loss – your profit and loss report (P&L) gives you an overview of the company’s revenues, costs and expenses over a given historic period of time. While the balance sheet is a snapshot, your P&L is more like a moving video. It shows you how your finances are progressing by demonstrating how revenue is coming in and costs/expenses are going out (rather than cash coming in and going out, as you see in your cashflow statement and cashflow forecasts).

Talk to us about accounting and financial reporting for your business

We’ll run you through the key reports in your accounting software, and can help you track performance, take action and position your company for growth.

Should your strategy be defensive or growth-focused?

Wed, 03 Dec 2025 08:23:31 GMT

The latest edition of the Federation of Small Businesses’ (FSB) Small Business Index had some unexpected results when it comes to growth expectations of UK small businesses.

27% of businesses said they expected their business to shrink, close or sell up over the next year. This outweighed the 25% who predicted their business would expand over the same period. It’s the first time in the history of the SBI that expectations of contraction have outnumbered those of growth. And it underlines a growing trend.

Should you forget about growth and make your strategy more defensive?

Here are three key actions you can take to create a more defensive business strategy.

Improve your cashflow resilience

Focus on prompt payment by agreeing shorter payment terms with your customers and making sure you have credit control procedures in place to chase up any aged debt. This keeps cash inflows coming into the business, making it easier to meet rising costs.

Audit and optimise your entire cost base

Carry out a ‘line-by-line review’ of your business costs to identify and eliminate any non-essential spending across the company. Look for overheads that can be reduced and prioritise investments only in areas that can deliver immediate, measurable cost efficiencies.

Focus on core customer retention and value

Put your effort and resources into strengthening relationships with your most loyal and profitable customers. Reduce your dependence on high-cost, new-customer acquisition and look at nurturing your existing customer base. You should also review your pricing to make sure you’re offering value, but still creating healthy margins that will drive profits.

We can help you rework your strategy to reflect the challenging market

Talk to our team and we’ll work with you to review and update your strategy in a way that defends the long-term outlook of the business.

Why it's smart to accept payments online

Wed, 03 Dec 2025 08:21:19 GMT

One of the best things about online shopping is instant, hassle-free payment. Enter your details, click, and you’re done. If your customers can make an instant online payment, they’re likely to pay you more quickly – and they’ll appreciate the simplicity too.

The details

Online payment methods include credit and debit cards, ACH (Automated Clearing House) services like Paypal, and repeat payments through direct debit. Payments are managed by merchant service providers – specialist companies that process transactions on your behalf. Some focus on credit and debit cards, while others stick to ACH or direct debit.

Choose a provider that can integrate with your accounting software, and you can add a super-simple payment button to future invoices.

The costs

While your merchant service provider shouldn’t charge any set-up fees, they will charge transaction fees. These range from 2-4% of the invoice for debit or credit cards, and under $2 a transaction for direct debit.

These fees are an added expense, so they need to be included in your profit calculation – smart accounting software will do this automatically.

Because credit and debit fees can add up, many businesses don’t offer online payment for invoices over a certain amount.

The benefits

Businesses using online payments get paid faster. Of course, not every client will pay instantly just because they have the option, but it should speed up your average payment time.

A bonus benefit? Customers appreciate the ability to pay online, so offering it as an option can be a big point in your favour.

Ready to reap the benefits of online payments? Get expert advice and set-up support from our accounting team.

5 challenges for small business - and how to beat them!

Wed, 03 Dec 2025 08:19:53 GMT

Starting, building and growing your own small business is a hugely rewarding experience for many entrepreneurs. But the road ahead isn't always smooth.

There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.

So, what can you do to beat these challenges and make the journey as frictionless as possible?

5 proactive ways to overcome your business challenges

We’d all love to know what lies around the corner when it comes to the future path of your business. The truth is that every business journey is unique. But there are common challenges that every owner-manager or CEO will be faced with – and being prepared for these hurdles is the best way to leap over them and take each challenge in your stride.

We’ve highlighted five common challenges and the simple ways to overcome them:

Uncertainty : No-one has a crystal ball to know exactly what's coming around the corner. But there are ways to be prepared for some unknown circumstances. You can't fully predict the main external threats like government policy, economic conditions or freak weather conditions. But you CAN use forecasting and scenario-planning tools to build up contingency plans so you have a Plan A, Plan B and even a Plan C. With forecasts of your business data, finances and industry trends, you can be ready to react, pivot and take positive action.
Competition : Small businesses often face stiff competition from larger, more established companies. To stay ahead of the curve, it's important to be nimble and agile. It's also vital to find your niche and to know precisely why your customers value your offering. By ploughing a unique furrow and keeping your customers happy, you can give yourself an edge over larger, slower-moving corporate-size competitors.
Access to capital : It can be a struggle to secure funding as a startup, particularly if you have limited financial resources or a poor credit history. Having a detailed funding strategy is a crucial way to overcome this problem. Keep your finances in order and make sure you have in-depth financial reports to show banks, lenders and investors. It's also helpful to focus on paying suppliers on time, keeping debt levels under control and ensuring your cashflow is in a positive position. These are all excellent ways to improve your business credit rating and show you're a stable, risk-free prospect for lenders.
Hiring and retaining employees : Attracting and retaining talented employees is difficult, especially during the ongoing talent shortage. Offering competitive salaries or benefits packages can be one way to attract people. But it's also important to think about your brand reputation, your sustainability credentials and your CSR policy – all things that Millenial and Gen Z workers value alongside decent pay and benefits packages. Employees want to be proud of where they work, so make your company a progressive, satisfying and rewarding place to work.
Keeping up with technology : Business technology is evolving at a rapid pace. It can be daunting keeping up with all the available apps, tools and software solutions that are aimed at your business. The trick is to be informed but selective about the apps you use. Start with the operational and financial needs of the business and look for apps that can automate, improve efficiency or provide improved data and management information. Talk to other business owners and your professional network to find out what the essential apps are in your industry. And do your research and homework before you choose any software solution to add to your app stack.

Talk to us about being an agile small business

Looking to the horizon for the upcoming pitfalls is essential as an ambitious and informed business owner. As your adviser, we can help you generate the most informative management information, to keep you agile and ready for what lies around the corner.

We’re also on hand to discuss your ongoing strategy, how to react to upcoming risks and the best ways to access capital and manage your company’s finances.

Arrange a meeting and let’s see what the future may bring for your business.

The Budget: key points for small business owners

Wed, 03 Dec 2025 08:17:37 GMT

The Chancellor of the Exchequer, Rachel Reeves, delivered the Labour government’s Budget on 26 November 2025, with the key aim of bringing the UK economy back under control.

Let’s take a look at the main points from the Budget announcements and how they may affect your small business in the coming months and years.

Budget 2025: the important takeaways for small businesses

The Chancellor presented Budget 2025 as a plan to restore stability and fund public services without raising the main rates of income tax, National Insurance (NI) or VAT. In practice, the OBR estimates that the package will raise about £26 billion a year in extra tax by 2029–30, taking the overall tax burden to a new post-war high.

The economic backdrop is mixed. The OBR now expects the economy to grow by around 1.5% in 2025, slightly faster than it had forecast in March, but with weaker growth further out. Inflation is expected to average about 3.5% in 2025 and 2.5% in 2026 before returning to the 2% target in 2027.

Borrowing is forecast to fall each year over the next Parliament, although public debt as a share of GDP remains close to its recent highs.

Have taxes gone up, as predicted?

For individuals and owner-managed businesses, the key point is that there are no headline increases in the main income tax or corporation tax rates.

Instead, most of the extra revenue comes from freezing thresholds, increasing rates on investment and rental income, and new or extended charges on wealth and assets.

Labour has stuck to its manifesto promise of not raising income tax, NI or VAT. But there are some tax rises and changes to consider.

Frozen income tax thresholds extended to 2031

The existing freeze in the personal allowance and higher rate threshold is being extended by a further three years beyond 2028, so the main income tax thresholds will now remain fixed until April 2031.

The OBR estimates that this ‘fiscal drag’ will bring hundreds of thousands more people into basic, higher and additional rate tax bands over the forecast period, and is one of the single largest revenue raisers in the Budget.

In practical terms, if salaries continue to rise with inflation, more of each pay rise will be taxed, and more people will move into higher rate bands – even if their real standard of living does not improve. For company directors who pay themselves through a mix of salary and dividends, this makes it even more important to review remuneration structures on a regular basis.

Higher tax on dividends, savings and rental income

Income tax rates on dividends, savings income and property income are generally being increased by 2 percentage points. For dividends, the basic and higher rates will rise to 10.75% and 35.75% from April 2026, with the additional rate being unchanged at 39.35%.

For property and savings income, the basic, higher and additional rates will also rise by 2 points from April 2027, taking the rates on both property and savings income to 22%, 42% and 47%.

For many small company owners who extract profits mainly as dividends, and for landlords with personally-held property, this is a significant ongoing cost. It will be important to revisit profit extraction strategies, use of ISAs and pensions, and the split of income between spouses where that’s relevant.

National Insurance on salary-sacrificed pension contributions

From April 2029, salary-sacrificed pension contributions above an annual threshold of £2,000 will no longer be exempt from National Insurance. Contributions above this level will be subject to both employer and employee NIC, at 15% and 8% respectively on earnings within the main band, with the higher 2% employee rate applying above the higher rate threshold.

This change is aimed primarily at higher earners and larger employers that have used salary sacrifice to save NICs on substantial pension contributions. It will reduce the attractiveness of salary sacrifice for directors who currently route large pension payments this way, and may tilt the balance back towards more conventional dividend and bonus planning in some cases.

High-value council tax surcharge (aka the ‘mansion tax’)

From April 2028, owners of residential properties in England worth more than £2 million will pay a new ‘high value council tax surcharge’. The surcharge will be banded, starting at £2,500 a year for properties valued between £2 million and £2.5 million, rising to £7,500 for properties over £5 million, payable in addition to normal council tax.

The Government expects this to affect fewer than 1% of properties. A scheme will be developed to allow payment to be deferred until the property is sold or the owner dies.

Electric and plug-in vehicle mileage tax

From 2028/29, a new mileage-based charge will apply to battery electric and plug-in hybrid cars. The initial rates will be 3p per mile for fully electric vehicles and 1.5p per mile for plug-in hybrids, with rates increasing with inflation each year.

This is expected to raise around £1.4 billion once fully implemented.

The detail of how this will interact with existing rules for business mileage claims and advisory rates is not yet clear. For now, the message is that the tax advantage of running an electric vehicle is being reduced over time, even though company car benefit charges remain significantly lower than for conventional cars.

Corporation tax relief on capital investment

The main writing-down allowance rate for plant and machinery that’s not covered by full expensing or the Annual Investment Allowance (AIA) will be cut from 18% to 14% from April 2026. This slows the rate at which companies can obtain tax relief on qualifying expenditure that sits in the main pool.

For many small companies that keep capital spend within the £1 million AIA limit, this change will have limited impact. It will, however, matter for larger investments that fall outside the AIA or full expensing rules, and for unincorporated businesses where similar rates may apply for income tax purposes. The overall direction of travel is still towards more generous up-front relief but less generous ongoing relief.

Employee ownership trusts

Capital gains tax relief on disposals of businesses to employee ownership trusts (EOTs) will be reduced from 100% to 50%. This means that half of the qualifying gain will become subject to CGT at the appropriate rate, with detailed rules still to be confirmed.

EOTs will remain an attractive route in some situations, particularly where succession and employee engagement are priorities, but the tax advantage is now less generous. Anyone contemplating an EOT sale will need careful modelling of after-tax proceeds compared with a conventional share sale.

Business rates and sector-specific measures

Business rates will be reduced for around 750,000 retail, hospitality and leisure properties, funded by higher rates on larger premises and warehouses such as those used by online retailers.

There are also targeted measures such as a new tax on ride-hailing journeys (for example Uber and Bolt) and an extension of the soft drinks levy to a wider range of high-sugar drinks. For many bricks-and-mortar businesses this should provide some modest relief on property costs, although it will take time for the detail to filter through to actual bills.

Homeworking expenses relief withdrawn

From 6 April 2026, employees will no longer be able to claim income tax relief for additional household costs when they’re required to work from home and their employer does not reimburse those costs.

This removes both the flat £6 per week homeworking easement and claims based on actual extra costs. Employers will still be able to reimburse eligible homeworking expenses without deducting tax or National Insurance.

Other points to note

Among the many Budget announcements there were several other changes that it’s important to have on your radar as a small business owner.

a) ISA savings: From April 2027, the overall £20,000 ISA limit stays the same, but new cash ISA subscriptions will be limited to £12,000 a year (£20,000 still allowed for those aged 65+). The rest of the allowance can be used for any other type of ISA.

b) Fuel duty: Fuel duty is frozen until September 2026, with the temporary 5p cut also extended to that date. Staged increases are planned thereafter.

c) Welfare changes: The two-child benefit cap will be removed from April 2026 and working-age benefits will be uprated in line with inflation.

d) National Living Wage: The National Living Wage will increase again from April 2026, adding to wage costs in labour-intensive sectors:

e) Gambling, tourist and other specific taxes: There are increases to the taxation of remote gambling, a new tourist tax on overnight stays, and various other targeted measures that may affect particular clients such as hoteliers or leisure businesses.

Overview

Overall, the Budget continues the pattern of raising revenue by tightening the tax treatment of wealth, investment and property, while relying on frozen thresholds to increase the effective tax take on earned income over time.

For many small business owners the headline tax rates may look unchanged, but the cumulative effect of these measures over the rest of the Parliament will be significant.

If you’re concerned about any of the announcements made in Budget 2025, come and talk to our team. We’ll be happy to run through the shorter and longer-term implications of these changes and what they will mean for your business in 2026 and beyond.

The basics of business finance: income and expenditure

Sat, 15 Nov 2025 04:37:52 GMT

Understanding the financial management of your small business is a vital skill as a business owner. And it starts with an awareness of two fundamental concepts: income and expenditure.

Grasping the difference between what comes in, and what goes out, is crucial for your financial health, making informed business decisions and the overall survival of the company.

Let's break down the basics.

1. What is income (revenue) and how do you generate it?

Income, often called revenue, is the money your business earns from its core operations, before any costs are deducted.

This income comes primarily from selling your goods or services to customers. Whether you're selling handmade crafts, offering consulting services or running a local café, every sale contributes to your income. You may have secondary sources of income as well, such as rental income from property, or interest you’ve earned on your business savings.

The goal is to maximise your income streams through effective sales, marketing and excellent customer service. This ensures you have a steady flow of cash coming into the business.

2. What is expenditure (costs) and how do you manage these costs?

Expenditure, or costs, refers to the money you spend in order to operate, trade and generate your income as a business.

This expenditure can be direct costs, like the raw materials for a product, or indirect overheads, such as rent, utilities, salaries, marketing, and office supplies.

Effectively managing these expenses is vital for your cashflow and profitability. Keeping your spending under control means reviewing your outgoings, negotiating prices with your suppliers and distinguishing between essential spending and discretionary expenses.

Careful cost control ensures that your hard-earned income isn't eaten up by unnecessary outgoings, helping you take care of the financial health of the business.

3. What is a profit and loss report and why is it important?

Your profit and loss (P&L) report, sometimes known as an ‘income statement’, is a crucial financial document that summarises your business's income and expenditure over a specific period (e.g. a month, quarter, or year).

Your P&L report directly accounts for income by listing all revenue generated at the top. Below this, it details all the associated expenditures, categorised for clarity (for example, cost of goods sold, operating expenses, administrative costs etc.).

By subtracting total expenditures from total income, the P&L report ultimately reveals your business's net profit or loss for that period. This gives you a clear overview of your financial performance during a specific period.

If you’re new to financial management, getting your head around the ins and outs of accounting can be a complex task. But it doesn’t have to be rocket science.

Come and talk to our team. We’ll be happy to explain the importance of income and expenditure and how these metrics are represented in your P&L report.

Don't end up paying tax on uncollected debtors!

Sat, 15 Nov 2025 04:32:34 GMT

Did you know you still have to pay tax on uncollected debtors? This is because you pay tax on your sales figures irrespective of whether you have collected the cash.

To avoid paying tax on uncollected debt, here are some quick and easy-to-implement debt collection strategies to ensure your hard-earned money is sitting in your bank account (and not in theirs):

Agree on your payment terms at the time of sale
Get the Terms of Trade signed off in writing before you start the job
Include a guarantee in the payment terms
Ask for a deposit
Invoice as quickly as you can
Change your payment terms to 7 days or ‘on delivery’
Send statements with only two columns – current and OVERDUE
Schedule overdue reminders and follow up the day after the due date
Put someone other than the business owner in charge of collection – owners are usually too soft!
Document what your customers have promised in terms of payment and hold them to it
Use a debt collector sooner rather than later – the longer you leave it, the harder the debt will be to collect
Stop credit for customers who are late on payment

Take action! Reflect on how many of these ideas you've integrated into your business, and check how many you're actively applying. Don’t let procrastination hold you back — address your debtors today!

“It’s the squeaky wheel that gets the oil” – Anon

Understanding if your business is profitable

Sat, 15 Nov 2025 04:30:28 GMT

Did your business run at a profit last month? Knowing if you’re currently profitable is a vital part of your financial management – but not everyone knows how to check this metric.

A recent Xero survey from October 2025 revealed that nearly two in five small business owners (38%) are unaware whether their business was profitable last month. That’s a startling (and unnecessary) failing when today’s cloud accounting makes it so easy to judge your profitability.

Let’s look at what we mean by ‘profitable’ and how to track and measure your profitability.

1. What is gross profit?

Gross profit is the money left over once you’ve deducted the direct costs associated with making or delivering your product or service.

Think of profit as your revenue (income) minus your 'cost of goods sold' (COGS). COGS includes things like raw materials, direct labour and packaging. It's a vital number to measure, as it tells you how efficiently you’re producing and delivering your core offering. A strong gross product indicates you’ve got effective pricing and production controls in place.

2. What is net profit?

Net profit is often referred to as the 'bottom line' or true profit. It’s your business's ultimate take-home earnings, once all other costs and tax is deducted.

You calculate net profit by taking your gross profit figure and subtracting all remaining operational and administrative expenses. These overheads include indirect costs like office rent, administrative salaries, utilities, marketing, taxes and depreciation. Net profit shows the overall financial success of your entire business model after every single cost, operational or non-operational, has been accounted for. This is the acid test of whether you’re turning a profit as a business.

3. How the P&L report measures your profitability

The profit and loss (P&L) report, also known as the income statement, is your financial report card for a specific time period (e.g. a month, quarter or year).

Your P&L report acts as a chronological ledger, starting with total revenue, deducting COGS to show gross profit, and then subtracting all other expenses to give you your net profit figure.

With cloud accounting platforms, like Xero, Quickbooks and Sage, it’s incredibly easy to run regular P&L reports and even to add profit metrics to your everyday dashboard.

By reviewing your P&L regularly, you can:

Track financial trends in your accounting
Identify where costs are running too high
Strategically measure your business performance

Keeping your business profitable is an ongoing process. It means reviewing your pricing, checking on your spending and making sure your margins are delivering sufficient profit.

Our team can help you set up the most meaningful profit metrics and key performance indicators (KPIs), so you can see at a glance if you’re profitable this month.

Restructuring or selling your business? We can help

Sat, 15 Nov 2025 04:27:48 GMT

In a challenging business landscape, if you are considering a major change, your head is no doubt filled with questions.

I’ve decided to restructure. What’s the best way to do this?

Restructuring is never easy but if it’s necessary to keep your business afloat, there’s a process you can follow to keep stress to a minimum.

Write a proposal outlining why roles need to change for the business to succeed.
Email employees to let them know you’re proposing a restructure and invite them to a meeting (at least 2-3 days later) to learn more.
At the meeting talk through your proposal on how the restructure should be implemented. It’s really important for staff to feel part of the process, so invite them to give feedback via email or book to see you after the meeting. Particularly if redundancies are a possibility, it is vital that you show an open mind as to what should be done to promote your business’s objectives.
Proposed changes to an employee’s terms and conditions must be committed to writing and provided to the employee with notification that they are entitled to seek independent advice. They must be given a reasonable opportunity to seek that advice.

I want to sell my business. How do I get it ready for sale?

Selling your business involves a lot of homework. You need to get it looking as “shiny” as possible before getting it valued by an accountant.

Here’s how:

Sell assets you’re not using, stop investing in long-term projects and put together a realistic financial forecast.
Prepare a business plan that includes how well the business is running and your plans for growth.
Sort out any legal issues or staffing problems.
Bring health and safety, cloud solutions, and bookkeeping software up to date.
How are your website and social media looking? Could a buyer hit the ground running with them?
Talk to us about ways to boost your sales revenue and pre-sale profit margin. Remember it’s the last two or three years’ profit, and future maintainable profit, that determine the value.

The Man on the Moon Principle

Wed, 22 Oct 2025 07:17:47 GMT

In 1961, President John F Kennedy famously announced his goal of landing a man on the moon and returning him safely to Earth before the decade was out. As we know, in July 1969, Neil Armstrong and Buzz Aldrin became the first people to walk on the moon, and were brought back to Earth safely, achieving JFK’s goal.

At a time when most people hadn’t even been on an aeroplane, landing on the moon would’ve felt unachievable and overwhelming. However, such a massive goal united people with a purpose; the story goes that even a cleaner mopping the floor at the space station said his job was to help put a man on the moon.

So, how did they make the goal achievable? They broke it down into milestones, with each one taking them closer and closer to achieving their ultimate goal.

The first milestone was to achieve lift off. So, they set about resolving this challenge. The next milestone was to reach orbit, so they had a team working on this milestone.

Then, they had to reach the moon’s atmosphere, land safely on the moon, take off from the moon, enter Earth’s atmosphere and land safely back down to Earth.

You can see how breaking the goal down into milestones gave everyone a more achievable objective to focus on which was less overwhelming. Those milestones were then broken down into the actions which needed to be completed. Each action was essentially a small step towards reaching the ultimate goal.

We can use this principle in our planning.

Start with a 12-month goal, then break this into milestones on your way to achieving the goal. What milestones will you reach in the next 90 days? What actions do you need to complete each week to reach them?

You might have a longer-term goal you’d like to achieve within 5-10 years. Follow the same process of identifying the milestones and the actions you need to get there.

What’s an important goal that will unite your team in a common purpose? When you’ve identified your goal, break it down into milestones and actions. Don’t forget to celebrate when each milestone has been reached.

If you need help making a plan for your business or breaking your goals down into milestones, get in touch.

“The journey of a thousand miles begins with one step.” - Lao Tzu

5 signs you’re undercharging

Wed, 22 Oct 2025 07:15:25 GMT

Are you undercharging for your services? It can be hard to tell, particularly if you’re in a niche industry or you’re a contractor. Costs have been rising, so it may be time to rethink your own pricing.

Here are five signs that you might be undercharging:

Nobody ever questions your quotes - Do all your new clients accept your quotes or charges without asking any questions, requesting a breakdown or wanting a discount? It’s possible they’re delighted to be getting such a great deal.
You run off your feet but you can’t afford to get help - When you’re working yourself to the bone, but there’s not enough money left over to employ someone to help you, your prices are too low – or something else needs to change.
Your prices have been the same for two years or more - In most industries, prices increase just slightly each year. Leave your prices flat for too long and you’re not keeping up with the market; make sure you review your fees annually.
You’re overbooked - When business is booming and there’s no room for new clients, it’s time to raise your prices.
Clients don’t treat you as well as they should - When clients think they’re paying peanuts, they’ll often take you for granted. They don’t see your time as valuable, so they feel free to mess you around.

What should you be charging?

Finding your pricing sweet spot could take a little time. You’ll need to do some research, maybe ask around a little, and find out where your competitors are pitching their rates.

We can help too – if we have clients in similar industries we might be able to give you some indication of typical fees, so give us a call or drop us a note. We’d love to hear from you.

Understanding your revenue drivers

Wed, 22 Oct 2025 07:13:16 GMT

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, changed consumer buying and higher inflation, all this impacts trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Important areas to consider will include:

Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.
Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches .
Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

Accessing funding for your female-led businesses

Wed, 22 Oct 2025 07:10:14 GMT

Female-led businesses have much poorer access to business funding than their male counterparts. In fact, in 2024, only 2% of global venture capital funding went to female-only founding teams, according to research by the Founders Forum Group.

The World Economic Forum estimates that, globally, the finance gap for women entrepreneurs is $1.7 trillion, with male-led start-ups and businesses receiving the majority of funding.

But why does this gender disparity exist? And what are the available routes to funding that your female-led business could consider when looking for additional finance?

What causes the gender disparity in access to funding?

The differences in access to funding between female founders and male founders are a problem. This disparity holds back female entrepreneurs, reduces their ability to grow their business ideas and perpetuates the dominance of male-led businesses in specific sectors.

What actually causes this gender disparity in funding?

Investor bias: A lack of diversity in the investment world leads to unconscious bias, with investors more likely to favour male-led teams over female-led teams.
Networking disparity: Female founders can lack access to the male-dominated professional networks where the majority of funding deals originate, making it harder to find investors.
Perception of industry and scale: Investors tend to fund high-growth, male-dominated tech sectors, while female founders are more likely to start businesses in sectors that are perceived as less scalable or less attractive to venture capitalists.

Historically, it may be more difficult to find the funding you need as a female-led business. But perceptions of female entrepreneurialism are changing, and many institutions are doing their best to address the gender disparity – making it easier to find the funding you need.

Five different routes to funding and how they differ:

1. Flexible loans from specialist lenders

There’s a large choice of specialist business lenders that can offer fast and straightforward access to small business loans.

Applying for a loan with these non-bank lenders is generally faster than applying to the big banks and has less emphasis on traditional business credit checks. Non-banks tend to assess your creditworthiness based on your current and future business performance and ability to repay the loan.

2. Government, local and charitable grants

Unlike a business loan, money you receive from a business grant does not have to be repaid. Grants are usually used to incentivise enterprise within specific areas or industries.

Grants for female-led businesses are offered through a variety of sources, so it’s a good idea to check government and regional websites to check what grants are available. You’ll need to meet the grant’s eligibility requirements to access the funding.

3. Private investors and venture capitalists

Private investors can be a fundamental source of funding when you’re starting your business, or looking to scale up the company.

Angel investors are private individuals who invest their own money into your business, in exchange for equity (usually shares) in the business. Venture capital companies and private equity companies invest in similar ways, but on a larger scale. Any kind of equity investment will mean giving up some ownership of the business (reducing your overall control of the company).

4. Crowdfunding

Crowdfunding platforms, like Kickstarter, give you a way to raise funds through contributions from a large group of interested investors or customers.

You can secure small contributions from multiple individual investors or donors to fund a project, campaign or new business venture. With some platforms, you can also sell your product directly to ‘early bird’ investors, allowing you to raise capital early and boost cashflow.

5. Tax breaks and incentives

Tax incentives are a way for you to lower the overall tax liability of your business, usually through tax credits, deductions or specific industry incentives.

By lowering your tax liability, you’ll end up paying less tax at year-end. This helps you keep more of your profits, giving you more capital to invest back into the business.

Working with you to create a funding strategy

Perceptions of female entrepreneurs are changing for the better. But it’s still vital to have a clear, detailed funding strategy to drive investment in your female-led business.

If you’re ready to kickstart your business, come and talk to our team. We’ll work with you to define your business plan, funding strategy and financial management.

The importance of having a business coach

Mon, 06 Oct 2025 09:32:54 GMT

It can be lonely at the top when you're running your own business. As the owner manager, the buck stops with you and that can result in all the pressures of financial management, people management, strategy and business performance ending on your shoulders.

To ease this pressure, it's helpful to have a business coach. A coach can look at your business objectively as an outsider, will act as a professional shoulder to lean on, and can help you to focus on and enhance your business ideas, strategy and longer-term tactics as an owner.

What a business coach can bring to the table

If you want to get the best from your business, you need to get the best from yourself, as the owner. A business coach helps you to work on your own progression, but by doing so also partners with you to improve the future path of your business ventures.

For example, having a good adviser and coach:

Allows you to get an independent viewpoint – when you’ve been running a business for several years, it can be hard to see the company in an objective light. A business adviser comes to your business model afresh, and helps you to step outside the day-to-day operations and see the company from the outside in. This is incredibly helpful when looking for improvement areas or new opportunities.
Helps you to spot the key issues in your business – with the help of an independent adviser, you’re far more likely to spot the flaws in your business model, and the areas where you – the owner – need to work on your own management skills. By highlighting the problems, you can start the process of overcoming these issues and moving forward.
Provides business planning and strategy – a key reason for working with a business coach is to improve and polish your planning and strategic skills. Drawing on your coach’s experience, you will learn the benefits of proper business planning and how to utilise these skills to draw up a more robust plan for the future of the company.
Assists with goal-setting and targets – you can’t draw up a workable business plan if you haven’t outlined the key goals of your business. Working with an adviser helps you to narrow down your goals, set proper targets and create more momentum and drive in the company. With a clear set of targets for you and your team to get behind, it’s easier to understand your business purpose and measure your performance against these goals and targets.
Provides you with a mentor – working on your business is important, but working on your own skills and wellbeing is equally as important. A coach can act as both a mentor, sounding board and confidant, something that’s incredibly valuable when you're alone at the top. Being able to share your worries and ambitions with a coach helps you to take care of your own mental health and wellbeing – all of which is good for both you and the business as a whole. When you’re less stressed, you’re a better leader, decision-maker and boss, so there’s an undeniable benefit to working closely with your trusted coach.

Talk to us about business coaching

If you want to reach your true potential as an entrepreneur and business owner, we’d strongly advise working with a trusted business coach.

Business coaching helps you review, analyse and enhance your business strategy, while mentoring programme you as a business entrepreneur.

Do you need to improve the cash flow position for your business?

Mon, 06 Oct 2025 09:30:58 GMT

Keeping on top of the financial management of your business can be hard work. It's possible to have a profitable business that is struggling to find the cash flow to pay expenses and fund growth. Likewise, you could have positive cash flow but are not turning a profit, particularly if you are scaling.

Turning a profit is at the heart of running any successful company

But without an even and predictable flow of cash into the company, you can't cover your overheads, you can't pay your employees and you can't run your day-to-day operations – let alone think about expanding and growing the business.

In the end, you need both. But if you’re going to be in control of your financial destiny, it’s important to get your head around the important process of cash flow management.

Let’s look at some of the key things to understand about your finances:

Profit is a by-product of a successful business – as the owner, you want to make profits, but profitability isn’t the only goal. A business can easily be profitable, but also be highly unstable in the longer term. What you want is stability and consistent revenues.
Cashflow keeps your business alive – good revenues (income) serve to bring cash into the business. Without cash to cover your operating expenses, you have no means to keep the lights on in the business. So cash really is king!
Know your cost base and overheads – the flipside of your cash flow position is your costs. In an ideal world, you want more cash inflows than cash outflows, so it’s important to know your expenses and costs and to manage them carefully.
Be proactive about spend management and easing expenditure – if you can take action that reduces your spending, that is hugely positive for your cash flow position. Choose cheaper suppliers, negotiate better deals and bring that cost base down.
Drive more revenue, through increased sales and marketing activity – if you can increase your revenues, you also boost your cash flow. So it’s important to be proactive about running targeted sales and marketing campaigns to increase your sales.
Keep the cash flowing and the profits take care of themselves – if you achieve the ideal cash flow position, the company sits on solid financial foundations, the cash is there for investment and the business can grow. It’s that simple.

Talk to us about improving your cashflow management

Whether you’re new to running a business, or a seasoned owner who needs some financial support, we can give you the cash flow advice you need.

We’ll review your finances, delve down into your cash flow, and will come up with key ways for you to increase your cash income and reduce your cash expenses. It only takes a few small changes to achieve a far better cash flow position for your business – helping you maintain positive cash flow AND generate profits.

Can you build a viable one-person business?

Mon, 06 Oct 2025 09:28:54 GMT

A solopreneur running a complete and viable one-person business is no longer a pipedream.

Sam Altman, the co-founder of Open AI, was recently quoted as saying that a one-person, billion-dollar business could be possible by 2026-2028, using tools like GPT-5 and the other generative AI tools that allow individuals to create and manage AI agents.

The idea that one person, a solo CEO and entrepreneur, could generate that kind of capital on their own, would have seemed crazy less than a decade ago. But with the power of AI and the accessibility of flexible coding tools and AI agents, it’s actually a real possibility.

Let’s look at how a one-person business could work, and how the basic business model differs from the traditional tech start-up model that we’ve known for so many decades.

How the old startup business model worked

Technology and software-based business models have been with us since the 1970s. Software has brought us into the digital age and given us a host of new tools to play with. And delivering a software-based business model has had a fairly standardised model.

Generally speaking, you will:

Have your initial idea for a software product
Write a business plan
Look for funding (whether private or public)
Hire a small team and start the business
Develop and launch the product
Find and convert your customer audience
Refine the product and scale the business
Generate revenues and make a profit (if you’re lucky!)

This is the old model. It works, but it’s slow to scale, needs multiple people and requires significant funding to make it work.

How a one-person business model works

There are multiple differences between the old start-up model and a one-person, solopreneur business model. The one-person model is predicated on the foundations of artificial intelligence (AI) and its ability to remove the staffing needs and automate your processes.

Typically, with a one-person model you would:

Start with finding an audience – likely using a social platform to connect with potential customers
Discover the needs of this audience and develop your business idea
Create a basic coded version of your product/service idea using AI (vibe coding)
Launch the product and refine it based on audience feedback
Build a tangible community around your product
Build AI agents that can be tasked with automating every aspect of service delivery
Scale the business quickly and increase your audience exponentially
Generate fast-growing revenues and hit your aspirational profit targets

The new model is less reliant on people and faster to grow. It can be controlled, in theory, by one solopreneur with the skills to utilise AI, create basic coding and find the right business idea.

What’s the true opportunity of the one-person business?

The true opportunity of the one-person business is to be able to found, operate and scale your business idea without any of the traditional foundations of a tech start-up.

You don’t need a huge team – in fact you might be able to run the entire enterprise yourself
Your delivery is entirely digital – so there’s no need for physical production processes
Your overheads are negligible, increasing your profit margins and revenues
AI agents can scale easily as the customer demand grows
Automation and AI removes the need for you to work ‘in the business’
As the solopreneur, you guarantee yourself an income and lifestyle.

What are the potential downsides of the one-person business?

The idea of being able to generate thousands, millions or even billions of dollars from a business where you’re the only human employee might seem like utopia to some.

But as with any utopian dream, there are potential issues and downsides to the solopreneur dream of creating a one-person, billion-dollar business.

Here are some possible outcomes to consider:

You could over-automate and lose connection with your customers
Your tech may break, failing to operate and scale as intended
Your AI agents may produce garbage outcomes and ‘AI slop’
You may feel the pressure of running the business solo, with no other founders
You may miss the social aspect of being part of a human team

Sam Altman’s dream of a one-person, billion-dollar business may become a reality over the coming years. With the speed of AI development, it’s more than possible.

The value of cashflow forecasting for your business

Mon, 06 Oct 2025 09:26:13 GMT

Projecting your cashflow pipeline forwards is vital.

To be able to navigate the future path of your cashflow, you need to start forecasting – so you can map out your financial position over the coming months and can take the appropriate action to safeguard your cash position.

Plus, when you have access to detailed forecasts you can scenario-plan, search for cost-savings and look for strategies that will preserve your cashflow position.

Forecasting your future cash pipeline

Remaining in control of the cash coming into (and going out of) the business is the real focus, so you can accurately predict your financial position and can resolve any issues.

Key ways to get more from your forecasting

Run regular forecasts – The financial landscape is changing on a daily basis at present. A cashflow forecast is not a document that remains static. Variables and external drivers are literally changing each day, so it’s vital that you run frequent forecasts and react swiftly to any projected cash issues as they become apparent.
Use the latest cashflow forecasting apps – cashflow forecasting apps, like Fluidly, Float, Futrli Predict or Fathom integrate with your accounting software. They give a drilled-down view of how your cash inflows and outflows will pan out over the coming months – information that will inform and justify the decisions you make during these extremely challenging times.
Explore the right revenue streams – most sectors will have seen their sales change over the last 18 months. To overcome this, there’s a real imperative to explore revenue streams and new opportunities for income. This could be offering a new product or service, or working with a new partner. The idea is to find ways to increase the money that’s coming in the door and balance out your unavoidable expenses.
Get proactive with cost-cutting – if you can reduce cash outflows to a minimum, that will have a real impact on the health of your future cashflow. Pare back your operations and aim to reduce things like unnecessary software subscriptions, or over-ordering of basic supplies. Negotiating cheaper rates with suppliers, if possible, will also help.
Review your staffing needs – it's never great to make anyone redundant, but you can also look at ways to reduce the costs of staffing and resourcing without getting rid of staff completely. Reducing working hours or redeploying staff in different roles are all options that reduce payroll costs, while also looking after your staff.
Run a variety of scenarios – changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan once conditions improve. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.
Look at various ways to access funding – if forecasts show a giant cashflow hole coming up, you’re going to need additional funding to get through this crisis. We can assist your business to investigate funding opportunities from grants, banks, loan providers, alternative lenders and crowd-sourcing funders.

Talk to us about setting up cashflow forecasting

Forecasting is an important step to give you the business intelligence to support your decision making.

Get in touch to improve your control over cashflow.

How poor cybersecurity can endanger your small business

Tue, 09 Sep 2025 13:54:03 GMT

Digital systems and cloud technology have revolutionised the running of the average small business. But with software systems comes the ever present issue of cybersecurity.

And it’s not just the big league, like Boots and Marks & Spencers, that have to worry about getting hacked.

A recent BBC News article highlighted how one cracked password is all it took for a ransomware gang to destroy a 158-year-old transport company – putting 700 people out of work.

So, what can you do to increase your cybersecurity and keep your business, customer and finance information safe from hackers and malicious software?

Here are five ways to help protect your business

1. Use strong passwords and multi-factor authentication (MFA):

Make it mandatory for your team to use complex, unique passwords for all business accounts and devices. And make sure to enable multi-factor authentication (MFA) (sometimes called two-step authentication) so all software and system log-ins require a second form of verification, This makes it far more difficult for hackers to gain access to your systems.

2. Keep software and security patches updated:

Regularly update all your operating systems, software, apps and security patches, so you’re always using the most up-to-date versions. Cybercriminals will exploit any known vulnerabilities in out-of-date software, so patching these gaps is a critical step in preventing attacks.

3. Train your staff to recognise phishing and poor security:

Your employees are often the first line of defence. Provide regular training on how to spot suspicious emails, texts or calls. And make sure your team-members knows to avoid clicking on malicious links or downloading unverified attachments for example.

4. Secure and Regularly Back Up Your Data:

Make sure to back up your critical business data to a secure, separate location, like an encrypted cloud service or an external drive. With back-ups in place, you can be up and running quickly in the event of a ransomware attack or data breach.

5. Adopt the Cyber Essentials Scheme:

The Cyber Essentials initiative is a government-backed certification scheme that explains five ways to protect your business against the most common online threats. By completing the Cyber Essentials scheme, you demonstrate your commitment to cybersecurity and give the business increased protection against potentially harmful attacks.

Helping you keep on top of cybersecurity

Keeping your business and your data safe and secure is a core responsibility for every small business owner. And there’s plenty of advice available to boost your cybersecurity.

The National Cyber Security Centre has a mix of advice, schemes and training available for small and medium-sized UK businesses. And if you need 1-2-1 advice, our team will be happy to offer support and connect you with local cybersecurity experts.

Changes to Companies House filings: say goodbye to abridged accounts!

Tue, 09 Sep 2025 13:51:17 GMT

The Economic Crime and Corporate Transparency Act became law in 2023. But as the goals of the Act progress, it’s bringing about a number of different changes to accounts filing.

The aim of the Act was to strengthen the role of Companies House and the UK business environment, support national security and disrupt economic crime. At the same time, the Act helps to deliver a more reliable companies register to underpin UK business activity.

These are all excellent aims. But one outcome of these changes to Companies House procedure is a major change to the way small and micro businesses file their accounts.

Let’s look in more detail at what this could mean for your accounts.

Filing of abridged accounts to be phased out

From 1 April 2027, Companies House will change the way that small and micro-entity companies file their accounts.

Currently, small, micro and dormant companies can file what are known as ‘abridged accounts’ with Companies House. These abridged accounts contain a simplified balance sheet and any notes needed to give context to the figures in the balance sheet.

From 2027, these abridged accounts will be replaced with more detailed accounts:

Micro-entities will be required to file a copy of their balance sheet and profit and loss account.
Small companies will be required to file a copy of the balance sheet, directors’ report, auditor’s report (unless exempt) and profit and loss account.

Companies will no longer be able to prepare and file ‘abridged’ accounts.

This means your micro, small or dormant company will need to prepare far more detailed accounts, including the inclusion of a profit and loss (P&L) report for the first time.

All filing of accounts to be made with commercial software

Another measure brought about by the Economic Crime and Corporate Transparency Act is the desire to modernise and digitise the UK’s filing routes.

From 1 April 2027, all accounts must be filed directly with Companies House using commercial software. All web and paper routes will be closed for accounts filings – but will remain open for other statutory filings.

Get ready for detailed accounts and commercial software filing

If you’re using cloud accounting software like Xero, QuickBooks or Sage, this change isn’t a significant hurdle. But if your company has been relying on Excel spreadsheets or paper ledgers, there’s now a real imperative to move to commercial accounting software.

Talk to our team about the changes to Companies House filing and the steps you’ll need to take to produce the required accounts – and file them with commercially available software.

Should you buy or lease your business assets?

Tue, 09 Sep 2025 13:46:48 GMT

There are certain items of equipment, machinery and hardware that are essential to the operation of your business – whether it’s the delivery van you use to run your home-delivery food service, or the high-end digital printer to run your print business.

But when a critical business asset is required, should you buy this item outright, or should you lease the item and pay for it in handy monthly instalments?

To buy or to lease? That is the question

Buying new pieces of business equipment, plant, machinery or vehicles can be an expensive investment. So, depending on your financial situation, it’s important to weigh up the pros and cons of buying, or opting for a leasing option.

First of all, let’s look at why you might decide to buy the item…

Buying: the pros and cons:

Pro : It’s a tangible asset – when you buy an item, you own the item outright and it will appear on your balance sheet as one your business assets. As such, by owning these assets outright you increase the perceived capital and value of your business. You can also claim the cost of the asset against your capital allowance for tax purposes.
Pro : It’s yours for the life of the asset – once you own the item, you have full use of the equipment for the duration of the life of the asset. Your use of the asset isn’t reliant on you being able to keep up regular lease payments, and if your financial circumstances change then you can sell the asset to free up the capital.
Con : It’s an expensive outlay – paying for the item up-front is a large outlay for the business and will require you having the cash to cover this cost. Spending a large lump sum in this way may take cash away from other areas of the business, so you need to be 100% sure that this purchase is the right decision and a sound investment.
Con : You may require extra funding – if you don’t have the liquid cash available to buy the item outright, you may need to take out a loan. Asset finance is available from funding providers, but does tie you into a loan agreement that will add to your liabilities as a business – reducing your worth on the balance sheet.

Leasing: the pros and cons:

Pro : Leasing has a cheaper entry point – if the item you need to purchase has a large price tag, leasing allows you to make use of the asset without the cost of buying it in full. For start-ups and smaller businesses with minimal capital behind them, this can make leasing a very attractive option. You may not own the asset, but you can make use of it – and this may be the difference between the success or failure of your business.
Pro : You can spread the cost – there is still an associated cost of leasing, but you can spread the cost over a longer period, making it easier to find the necessary liquid cash to meet your lease payments. With this money saved, you can then invest in other areas of the business, helping you to expand, grow and bring in more customers and revenue.
Con : You don’t own the asset – there are different types of leasing agreement. Under a capital lease, you do own the asset (once you’ve paid if off). But if you opt for an operating lease, this is a more short-term lease and you won’t own the asset at the end of the contract. Ownership does have its advantages (including being able to sell off the asset if required) so it’s important to consider what kind of leasing agreement you’re entering into and what the advantages/disadvantages may be.
Con : You may pay more in the long run – most leasing agreements will attract additional costs and interest on your agreement, so you may well end up paying more than the market price for your asset in the long term. If you can cope with the higher cost, this is fine, but bear in mind that buying outright may have offered greater value.
Con : You may lose the use of the asset – if you can’t keep up your lease payments (due to poor cashflow for example) then the owner of the lease agreement may recall the asset. If this item is crucial to your business model, losing this key asset can have a profound impact on your ability to operate. In this respect, leasing is a more risky prospect, but also an easier option for businesses with less cash to splash.

Talk to us about whether buying or leasing is the best way forward

Whether you opt to buy or lease your equipment isn’t always a straightforward decision to make – so it’s a good idea to consult with your accountant early on in the decision-making process.

We’ll help you review your current financial position, assess your available cashflow and look at your regular cost base to decide whether buying or leasing is the right thing for your business.

Could taxes go up in the Autumn Budget?: How to be ready

Tue, 09 Sep 2025 13:42:01 GMT

At the last general election, the Labour party pledged to not raise taxes for ‘working people’,with assurances that there will be no changes to income tax, national insurance (NI) and VAT.

While this pledge may appeal to UK workers, it does limit what the Chancellor, Rachel Reeves, can do when it comes to raising taxes and reducing the UK’s current economic deficit.

With individual taxes protected, some commentators have argued that it’s UK businesses that will bear the brunt of any hikes in taxation.

But what tax changes are most likely? And could any changes impact you and your business?

Possible changes that could be announced in the Autumn Budget 

Let’s take a look at some of the potential changes we could see being announced by Rachel Reeves on the 26th November.

Remember, these are speculative outcomes from the Budget and nothing has yet been confirmed by the Chancellor or the Labour party.

Here are the areas most likely to see amendments;

Personal taxes

Capital Gains Tax:

Capital gains tax (CGT) is widely tipped for changes. The government may raise the rates of CGT or reduce the annual tax-free allowance, which has already been significantly cut in recent years. There’s also speculation about extending CGT to high-value homes as an easy way to raise more tax revenue when property owners sell more expensive properties.

Inheritance Tax (IHT):

Reforms to IHT are being considered. This could include lowering the current tax-free threshold of £325,000, which has been frozen since 2009, or tightening rules around gifting to prevent large estates from avoiding tax.

Income Tax Thresholds:

While the government has pledged not to raise the rate of income tax, a common ‘stealth tax’ is to freeze tax thresholds. It’s possible the current freeze on income tax thresholds could be extended. This would pull more people into higher tax brackets as wages rise, generating more tax revenue for HMRC.

Pensions:

Changes to pensions are possible, with a focus on areas like the tax-free lump sum that can be taken from a pension, or restricting the tax efficiency of salary sacrifice schemes.

Business taxes

VAT changes:

It’s possible that widening the scope of VAT could raise significant tax revenue. There’s also speculation that the Chancellor may reduce the VAT registration threshold, currently set at £90,000 p.a. This would require many more businesses to register for VAT and charge the tax on goods and services.

Business rates:

Although not part of the Autumn Budget, changes to business rates could have a major impact for some businesses. Businesses are already facing new business rate burdens, but some commentators are warning of an ‘unavoidable double hit’ that could push UK business rates bills up by £2.5bn.

Business Asset Disposal Relief (BADR):

For business owners who plan to sell their company, changes to CGT on these sales have already been announced. The rate for BADR rose from 10% to 14% in April 2025, and there’s a further increase to 18% planned for April 2026. Changes to the rate, or the period of availability of BADR are additional possibilities.

We’ll be summarising the key points of the Autumn Budget once the Chancellor delivers her speech.

To stay in the loop, sign up for our regular updates where we’ll let you know all the most salient points from the Budget – and how they will affect your small business.

Business credit: using loans to grow your business

Thu, 21 Aug 2025 18:50:10 GMT

Whatever stage you’re at in the business journey, having an injection of additional working capital is always welcome. Being able to borrow money and take on managed debt in the business is what allows you to fund the next stage in your growth.

But how does your credit profile affect your ability to borrow as a business? And what types of debt financing will help you expand, grow and scale up the company?

Let’s explore the impact of your risk rating and the types of finance that may be available

Your credit profile: and how it impacts your ability to borrow

Your credit profile is a measurement of your risk as a borrower. It’s how banks and specialist business lenders assess whether you’re a good business to lend to.

Lenders want to know you have the revenue and cashflow needed to repay a loan. This will generally be assessed based on your business credit score and your overall financial health and forecasted business performance.

With a good business credit score, your application for a loan is more likely to be accepted. With a poor credit profile, those doors to potential lending are more likely to be closed.

What is debt financing and how does it help you borrow money?

Debt financing is the process of borrowing money from a lender and paying it back over a pre-agreed timeline through regular repayments.

This is how it will typically work:

You apply for a loan, with supporting documents showing your financial health
The lender analyses your risk profile
If you’re successful, the lender lends you the money
You take on this debt in the business
You use the capital to invest in growth
You gradually reduce the debt by repaying the loan

Are there risks associated with taking on debt?

There are obviously risks associated with taking on any kind of business loan.

Too much debt can be a financial burden. But well-managed debt can be the key to financing the expansion of the business, whether it's hiring more staff, or investing in new equipment. What types of loans and financing are available?

There are a multitude of different loans, financing options, lines of credit and government grants available to you. Knowing what’s right for your business, and specific funding needs, is down to understanding how each type of financing works

Here’s a breakdown of the common ways of borrowing:

Unsecured loans:

Unsecured loans allow you to borrow funds without offering any collateral – collateral being assets you offer to guarantee the loan. Because there’s no collateral guarantee, unsecured loans will generally be for smaller amounts, with higher interest rates.

Unsecured loans are typically used for flexible purposes like working capital or marketing campaigns, leveraging the business's creditworthiness and cashflow for growth.

Secured loans:

Secured loans require collateral, like business assets or property, as a guarantee. Due to the lower risk for the lender, you’ll generally be able to access larger sums of money and lower interest rates with a secured loan.

Secured finance is usually used to fund significant investments, such as buying expensive machinery or expanding your operations by creating new branches.

Asset finance:

Asset finance helps you acquire specific high-value assets, like vehicles, machinery, or technology, without a large upfront payment.
There are various different types, including:
Hire purchase, where you have use of the asset and gradually repay the cost to the lender over an agreed amount of time, with an option to own the asset at the end of the term.
Finance lease, where the lender buys the asset and leases it to you for a fixed term. You’re responsible for maintenance and insurance, but you can buy the asset at the end of the term.
Operating lease, where you rent the asset from the lender, but without the intention of owning it. The lender retains all the risks and rewards of ownership, including the residual value.

Using asset finance helps to preserve your cash flow while giving you the essential tools that you need to grow and expand the business.

Commercial property loans and bridging loans:

Commercial property loans are long-term mortgages that you can use to buy commercial premises. Bridging loans are short-term loans that are usually used to ‘bridge’ the gap when waiting for other finance to be secured.

Both types of loan are secured by property, allowing you to finance your expansion, purchase new land or manage cashflow between property transactions.

Lines of credit:

Lines of credit provide a flexible revolving fund up to a set limit, often used for daily cashflow needs. Credit will usually need to be repaid monthly, depending on the terms of the agreement.

Types of business credit include trade credit, where your suppliers extend an agreed amount of credit, and business credit cards, which are ideal for managing working capital and extending cashflow during the expansion of the business.

Government grants and tax incentives :

Not all means of financing involve debt financing. In some situations, there are government grants and tax incentives that can be used to fund your company’s growth.

Government grants allow you to make use of money from the government, without having to pay back the funds. Tax incentives are usually used for specific purposes like research and development (R&D), creating jobs or entering new markets. They’re a great way to cut your corporation bill and fund new growth without incurring debt.

5 ways to get in control of your business finances

Thu, 21 Aug 2025 18:46:36 GMT

Having proper control of your business finances is a big advantage. It helps you make well-informed business decisions and keeps your organisation profitable.

With so many digital tools for managing your bookkeeping, accounting and management reporting, it's never been easier to manage, track and forecast your financial position.

But what are the main tools you need? And how do you set up your financial systems, apps, processes and reporting to put yourself back in the finance driving seat?

1. Bring your bookkeeping into the digital age

Digital bookkeeping apps are a great way to digitise your receipts, records and source documents. This not only saves a lot of time at year-end, it also makes it much easier for you to keep track of your company’s finances and accounting. Keeping your receipts in a box to manually enter at period-end is no longer enough. Take the next step and digitise your receipts at source, so you have up-to-date digital records and copies of source documents.

Optical character recognition (OCR) software, like Dext Prepare or Auto Entry, scans the receipt, converts it into a digital format and stores it in the cloud.

2. Do your accounting in the cloud

Cloud accounting is a software-as-a-service (SaaS) solution that helps you carry out all your main accounting and financial management online, without having to install any software.

Cloud accounting providers, like Xero, QuickBooks, MYOB or Sage, design their accounting platforms to take the pain and hassle of business accounting. You get all the tools and features you need to work on your accounting tasks. And your platform provider will also take care of all the data storage, backups and security of your data.

A good cloud accounting platform does more than just save your hard drive space. It also provides you with tools and dashboards that improve your access to management information, financial reporting, forecasting and projections, performance tracking and more.

3. Use the latest in expense management tools

Expense management can be a time-consuming and tedious job. But it’s also a vital task that helps you ensure you’re spending company money wisely and not overspending. If employees start going over their budget limits, this can be a costly mistake for the company and your cashflow.

Expense management tools, such as Soldo, Weel or Pleo, help you manage staff spending by giving employees virtual cards that are linked to a specific budget, account and code. This helps you track their expenses easily and make sure they’re staying within their budgeted limits. These platforms also give you detailed reporting and analytics, so you can see where money is being spent, and where savings can be made.

4. Make it easy to accept digital payments

The problem of slow payment is one of the most frustrating things for small businesses. If your customers don’t pay on time, this can result in a loss of revenue, poor cashflow and an inability to cover your basic costs and overheads. To resolve this issue, many companies have begun to switch to digital payment platforms that make it simpler, faster and easier to collect payment.

Payment platforms, like PayPal, Square or Stripe offer faster payment times and more control over the customer experience. Some platforms even integrate with your cloud accounting, so you get automatic bank reconciliations.

5. Embrace the latest in digital reporting and forecasting

With digital accounting changing so rapidly in recent years, there's never been a better time to embrace the benefits of the latest in digital reporting and forecasting.

Economic conditions are hard to predict. So it's crucial to be able to quickly analyse data, check your performance and make predictions about how your company will fare in the coming months. When you use cloud solutions for financial reporting and key metrics, you'll be able to monitor trends in real-time while having access to the data anytime, anywhere.

Having this information at your fingertips helps you make informed decisions faster than ever before – and that translates that into more sales, increased business growth and bigger profits.

Talk to us about updating your financial systems

If you’re looking to give your finances a touch of digital magic, please do come and talk to us.

We can walk you through the best cloud platforms, fintech apps and business tools to add to your app stack – so you’re ready to make the most of a digital approach to your finances

Get in touch to supercharge your finances.

Protecting you and your business: using trusts

Thu, 21 Aug 2025 18:44:40 GMT

Have you ever wondered about the best ways to protect you and your business?

In this series, we’ll look at the key ways to use trusts, insurance and risk-management techniques to protect both your personal assets and the future of the company.

In this article, we’ll look at how you can use a trust to shelter your assets.

What is a trust?

Before we go any further, let’s explain exactly what a trust is and how they can be used.

A trust is a legal arrangement where a person (the settlor) transfers ownership of certain assets to another person or entity (the trustee) to hold for the benefit of one or more third parties (the beneficiaries). These assets could be money, property or shares etc.

It's essentially a separation of legal ownership from beneficial ownership.

These are the three main parties involved in a trust

Settlor : The person who creates the trust and contributes the assets. In this instance, the settlor is likely to be you, the small business owner.

Trustee : The person or entity (this could be an individual or a company) who holds legal title to the assets and manages them according to the trust deed. They have a fiduciary duty to act in the best interests of the beneficiaries. Trustees are likely to be you and your family members, or anyone in the business who you decide to make a trustee.

Beneficiaries : The individuals or entities who are entitled to benefit from the assets held in the trust. This will usually be the family members or other interested parties that you wish to be beneficiaries of the assets held in the trust.

What’s a trust deed?

The rules for how the trust operates are set out in a legal document called a ‘trust deed’.

The trust deed is a legal document that formally establishes a trust. It outlines the trust's rules, names the settlor, trustees, and beneficiaries and defines the trustees’ powers and duties.

The deed also dictates how assets within the trust are to be managed and distributed to protect personal assets from business liabilities.

How can you use a trust to protect your personal assets?

Running a business comes with a certain amount of inherent risk. There’s potential for the business to go bust, for creditors to come after your assets, or for individuals and organisations to make legal claims against you and the business.

Setting up a family trust to shelter your personal assets allows you to separate your personal financial security from these inherent risks of running a business.

The trust creates a legal barrier between your individual wealth and any financial liabilities or claims arising from the business.

Here are the five key reasons why a trust is worth considering

Shield your personal assets from any business liabilities:

If your business faces bankruptcy, lawsuits, or significant debt, your personal assets can become vulnerable. This is especially true for sole traders or partnerships, where you don’t have the protection of limited liability as an incorporated company.

By transferring your assets to a trust, these assets are legally owned by the trustee, not you personally. This makes them inaccessible to the owner's personal creditors, in most cases.

Mitigate the risk of being an entrepreneur:

Being an entrepreneur involves taking on certain risks. Sales can plummet, businesses can fold and unexpected external conditions can scupper your well-laid plans as a business owner.

With your personal assets held in a trust, you can take calculated business risks knowing that your family home, savings and other personal investments are safeguarded. The family trust provides you with a crucial safety net to secure yours and your family’s future.

Enhance your estate and succession planning:

Protecting your personal assets is the key function of the trust. But a well-managed family trust can also help with the orderly transfer of your assets to future generations.

Having the family trust set up prevents your hard-earned assets from being tied up in your estate upon death. This is great for estate planning and helps your immediate family achieve a smoother transition and protects these important assets from potential claims against the estate.

Balance control vs. ownership:

As the business owner, once your assets are held in a trust you are no longer the legal owner. However, through a trustee or appointor role, you can still maintain a significant degree of control over how the assets in the trust are managed and distributed

Even though you no longer hold legal ownership of these assets, you can still balance a level of control over the assets, while also enjoying the benefits of reduced liability and risk.

Benefit from better tax planning, in some instances:

Asset protection is the primary driver of a family trust. But having the trust in place can also make it easier to distribute income among beneficiaries in different tax brackets. As such, there may be an opportunity to enhance the overall tax position of the whole family.

Tax planning within a trust structure is a complex area and should always get professional advice from your tax adviser.

Helping you enjoy the protection of a family trust

Having worked so hard to create a profitable business, it’s vital to take every opportunity to protect your personal assets and the future prosperity of your family and loved ones.

Talk to our team about the key benefits of setting up a family trust, and the potential benefits you could achieve in your own specific business and family situation.

Bank of England cuts interest rates: the impact for your small business

Thu, 21 Aug 2025 18:39:48 GMT

On 7 August 2025, the Bank of England cut the UK’s interest rate by quarter of a percent, down from 4.25% to 4.00%.

The impact of this drop in the inflation rate can be both positive and negative for your small business, so it’s worth understanding the effect that interest rate changes can have.

Let’s take a look at how a drop in interest rates may affect your finances.

Reduced cost of borrowing

Lower interest rates on loans. This directly translates to lower interest payments on your existing loans and potentially more favourable interest rates on any new loans you take out.

Increased access to credit: With lower borrowing costs, you may find it easier to secure financing for expansion, investment in new equipment, or to overcome and present challenges.

Improved cashflow

Reduced debt service: Having lower interest payments frees up cashflow. This can be used to reinvest in the business, used for marketing, or distributed to shareholders.

Increased consumer spending: Lower interest rates help to stimulate consumer spending. This can mean increased demand for goods and services, higher sales and boosted revenues.

Better opportunities for investment

Lower cost of capital: With cheaper borrowing costs, you can invest in growth, including research and development, technology upgrades or hiring new staff.

Increased confidence: Lower interest rates can boost investor confidence. This makes it easier for you to find investors and raise capital through equity financing.

Economic growth

Stimulate the economy: Lower interest rates can boost economic growth by encouraging borrowing, investment and consumer spending. This creates a more favourable environment for your businesses to thrive in. A stronger economy = a more stable future.

Investing in the future of your business is a vital step. With interest rates currently lower, now’s the time to think about borrowing and putting your 2025 strategy into action.

Talk to our team about your growth plans and how these interest rate changes may impact your business. We’re here to help you reinvest, grow and keep on evolving.

Tax E-News

Mon, 11 Aug 2025 11:10:33 GMT

LEGISLATION DAY 2025 - WHAT WAS PUBLISHED?

On ‘Legislation Day’ (21 July 2025), HM Treasury released a range of draft legislation and tax documents. The key measures to be implemented by the new legislation can be categorised into the following areas:

CLOSING THE TAX GAP

Several measures are proposed that will target tax avoidance. In addition, tax agents will be required to register with HMRC in order to deal with HMRC on their customers’ behalf. One of HMRC’s main reasons for introducing Making Tax Digital (MTD) for Income Tax is that it will supposedly reduce errors. MTD is covered in more detail in the article below.

PUTTING THE TAX SYSTEM ON A FAIRER, MORE SUSTAINABLE FOOTING

Key measures in this category include:

The controversial restrictions on the amounts of inheritance tax relief available for agricultural and business property from April 2026 (see below);
Proposals to include inherited pension pots in a deceased person’s estate for inheritance tax purposes from April 2027; and
Proposals to bring Employee Car Ownership Schemes into scope of the benefit in kind rules as company cars.

MAINTAINING THE TAX SYSTEM

Key measures in this category include:

A proposal to introduce an easement that will help to mitigate the significant increase in benefit in kind (BiK) for plug-in hybrid electric vehicles (PHEVs) following a potential introduction of the new Euro 6e standard. If the standard is introduced in Great Britain, it would significantly increase the BiK tax due on PHEV company cars, which is linked to CO2 emissions.
Technical guidance that aims to provide clarity on the tax implications of PISCES. PISCES stands for “Private Intermittent Securities and Capital Exchange System”, which is a new type of stock market that will allow private companies to have their shares traded intermittently.

HMRC’S TRANSFORMATION ROADMAP

On 21 July 2025, HMRC launched their Transformation Roadmap, which sets out ambitious plans for HMRC to become a digital-first organisation by 2030, with 90% of customer interactions taking place digitally. This compares to 76% as at today. HMRC will automate tax wherever possible and offer new digital self-serve options across a number of tax regimes.

It is estimated that the plans will save HMRC £50 million a year, including by moving customer letters and reminders to a digital-first approach and reducing the reliance on paper correspondence by 2028/29. Paper post provision will remain for critical correspondence and for the digitally excluded.

The Transformation Roadmap sets out timescales for delivery and HMRC is committed to reporting on progress. Work is underway to deliver some of the measures set out in the roadmap this tax year, including:

Improving Self Assessment registration service and streamlining the exit process for those customers who no longer need to file a Self Assessment tax return.
A new service to give employed parents, who are newly liable for the High Income Child Benefit Charge, the choice to pay it directly through their tax code without needing to register for Self Assessment.
Launching an enhanced reward scheme for informants, targeting information on serious non‑compliance in large corporates, wealthy individuals, offshore and avoidance schemes.

Longer-term improvements include:

From April 2026, the pre-population of Self Assessment tax returns with Child Benefit data.
From 2027-28, digitising the inheritance tax service.
Simplifying payments and refunds, including direct bank repayments and easier National Insurance contribution refunds.
Single Customer Account Programme to provide a unified view of the taxpayer's overall income and tax position in their digital account.

Lastly, in what will come as good news to many, HMRC announced that MTD for Corporation Tax will not be implemented.

MAKING TAX DIGITAL - WHAT’S NEW?

HMRC are pushing ahead with the implementation of Making Tax Digital (MTD) for Income Tax, set to commence from 6 April 2026. Legislation Day saw the publication of draft MTD legislation, which makes the following recently-announced changes to the planned regime:

More individuals will be exempt from MTD – Ministers of religion, Lloyds underwriters, recipients of Blind Persons’ Allowance and donors of Power of Attorney.
Certain kinds of income will be outside the scope of the MTD rules, namely Qualifying Care Income (e.g. foster care income) and the UK earnings of non-resident entertainers and sportspeople who have no other sources of income caught by the MTD rules.
The requirement to use MTD-compatible software to file the individual’s year end tax return.
A new concept introduced in the draft MTD Regulations is ‘latency’, which is the term being used for the concept of a newly-commenced trade or property business not being subject to the MTD rules until 6 April following the tax year in which a filing obligation arose for the tax year of commencement. As an example, if a trader is mandated into MTD in 2026/27 because of her property income, then starts a new trade in December 2026, 2027/28 is the year in which the filing obligation (31 January 2028) arises for the year of commencement and she will need to start complying with MTD rules for the new trade from 6 April 2028.

If you are an individual who receives income from a trade or property business, you are likely to be mandated at some point over the next few years if your combined sales from property businesses and self employment (‘qualifying income’) exceeds £20,000. The first group of individuals to be mandated, from 6 April 2026, will be those who had qualifying income in excess of £50,000 in the 2024/25 tax year.

Being mandated into MTD for Income Tax will mean that you need to keep your trade and property business records in MTD-compatible software and use the software to send quarterly summaries to HMRC. The changes mentioned above are relatively minor - the key requirements of MTD for Income Tax have not changed.

PROPOSED CHANGES TO INHERITANCE TAX

As announced at Autumn Budget 2024, the government has published draft legislation to reform Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026 to make them “fairer and more sustainable”

In addition to existing nil-rate bands and exemptions, APR and BPR will continue, but a cap will be introduced that will restrict the 100% relief to the first £1 million of combined agricultural and business property. The rate of relief will be 50% thereafter.

Relief will also be reduced to 50% (with no £1m allowance) for quoted shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM. The changes will take effect from April 2026.

In inevitable disappointment to business owners and farming communities, no significant changes have been made to these plans since the Autumn Budget 2024 announcement.

The government has, however, announced that it will not proceed with the proposed extension of the related property rules for qualifying property settled into multiple trusts.

It has also been announced that:

The option to pay IHT by equal annual instalments over 10 years interest-free will be extended to all property which is eligible for agricultural property relief or business property relief.
The £1 million allowance for agricultural property relief and business property relief will be indexed in line with CPI, but will remain fixed up to and including tax year 2029/30 in line with maintaining the IHT nil rate bands at current thresholds.

CLASS 2 NICs - 2024/25 ERRORS

HMRC have identified an issue affecting some Self Assessment taxpayers in relation to Class 2 National Insurance contributions (NICs) for 2024/25. Some self-employed taxpayers with profits above £12,570 have seen a Class 2 NICs charge of £358.80 added to their accounts when they shouldn’t have been. In some circumstances it will be less.

HMRC say that they have taken action to correct the Class 2 NICs figure where the information they hold has allowed. If this applies to you, you will have received a message to let you know.

HMRC will correct the records of other taxpayers after the issue has been resolved and will notify them once this has been done. Taxpayers will be issued with a new SA302 tax calculation after their record has been corrected.

The issue seems to have been caused by reforms to NICs that took effect from 2024/25. Self employed taxpayers and partnership members no longer have to pay Class 2 NICs - if their profits are over the small profits threshold (£6,725 for 2024/25), Class 2 NIC is treated as having being paid.

DIARY OF MAIN TAX EVENTS

AUGUST / SEPTEMBER 2025

Reducing the uncertainty: strategic business reviews

Thu, 24 Jul 2025 17:10:28 GMT

In a world where evolving political events can change the market in an instant, and economic instability is still the norm, finding certainty in your business strategy is a rarity.

Business plans and your overriding strategy are no longer written in stone. This means being flexible about your next steps and regularly reviewing your business strategy.

Let’s see how frequent strategic business reviews can help you reduce the uncertainty.

1. Get proactive with your financial forecasting

Review your financial position, metrics and reporting as regularly as possible.

Produce rolling cashflow forecasts to keep on top of your cash position and run scenario planning to look at the best, base and worst-case scenarios. This gives you the best possible visibility into the company’s financial health, and gives you enough time to spot the potential shortfalls, understand your cash runway and make adjustments to your spending.

2. Diversify your revenue streams to reduce risk

As part of your strategic review process, you should be looking for opportunities to diversify as a business, generating new and potentially profitable revenue streams.

Explore whether there are new products or services you might offer, and whether you could target new and, as yet, untested customer segments. Increasing your online presence to sell more through e-commerce channels is another option. If you can reduce your reliance on a single income source, this reduces the risk level and strengthens your resilience against sudden market shifts or economic downturns that might, potentially, affect one area.

3. Make your operations more agile and efficient

A key part of any strategic review is to focus on driving operational efficiency in the business.

Review your operational workflows on an ongoing basis and look for inefficiencies you could remove, or efficiencies you could add. Embrace flexible models, like outsourcing or adaptive supply chain strategies. This gives you the agility needed to adjust your production or service delivery in response to changing demand or disruptions.

4. Strengthen your customer and supplier relationships

Trusted relationships with your key stakeholders are a vital element of broadening your network, adding stability and making the company a stronger proposition.

As part of your strategic review, analyse your existing customer relationships and supplier relationships. Look for simple ways to strengthen and nurture these connections. Customers want to feel valued, and suppliers are always looking for ways to build greater trust. So, make sure you’re building bridges, communicating openly and nurturing these critical relationships.

5. Invest in technology and data analytics

Digital technology forms the foundations of any forward-thinking small business.

Collecting and analysing data gives you the foundational information needed to make informed decisions during your strategic review. Use the latest data analytics tools to review market trends, customer behaviour and your own internal performance as a business. These outputs will provide actionable insights, making it easier to define your strategy and change direction. Let’s review your business strategy

Doing business is unpredictable at the best of times. But taking the time to review your performance, strategy and business plan is a vital way to reduce this uncertainty.

Book in some time for a strategic review of your business and let’s work together to spot the inefficiencies and find the opportunities for diversification and increased efficiency.

Selling your business: getting a good deal

Thu, 24 Jul 2025 17:08:31 GMT

You’ve spent years growing your business and adding value to the company. Now it’s time to sell up, get a good deal and liquidise the equity you’ve had locked up in the business.

In this series, we’ll give you all the advice you need to plan your exit, add value to the business, negotiate a great deal and define your new pathway once the business is sold.

Let’s look at some important ways to achieve the best possible deal for your business sale.

Selling your business is generally the end step in a much longer journey. If you’ve put together a detailed exit strategy, you’ll have been planning this sale for some time.

The important thing at this point is to make sure you get a great deal and realise the best possible sale price – giving you the return you deserve for all your hard work.

To put yourself in the optimum position when looking for a buyer, here are a few tips:

Know the value of your business

Make sure you’ve conducted a thorough valuation to understand the true market worth of your business. This gives you a strong negotiating position and helps you set a realistic asking price that’s attractive to buyers.

Research the market in your industry

Take a deep dive into current market trends and comparable sales to understand what a fair price is for a business in your industry. Armed with this info, you’re in a good position to negotiate a competitive price.

Highlight the strengths in your business

Use your sales materials to emphasise the unique selling points and competitive advantages of your business. This could include having a strong customer base, explaining the experience of your management team, or outlining the benefits of your proprietary technology and intellectual property etc.

Know the funds you need to realise

You’ll have plans for what happens after the sale, whether that’s a comfortable retirement, or the founding of a new enterprise. Make sure you know how much equity will be needed to fund this lifestyle, or startup plan. This number will drive your asking price for the business and your own profit from the sale.

Be prepared to negotiate

You may have a price in mind that your prospective buyer is unwilling to meet. Be prepared to negotiate on price, terms, and other aspects of the deal. Understand your bottom line, know the return you need to achieve and be willing to compromise in some areas, when necessary, to seal the deal.

Always seek professional advice

Mergers and acquisitions is a specialist area. Think about consulting with a business broker or legal adviser to guide you through the negotiation process. With the benefits of experienced, professional advice, you’re far more likely to get the best possible deal for the company.

Talk to us about planning the sale of your business

Finding the best buyer and securing a mutually beneficial deal is one of the most critical points in your exit strategy. Getting it right now is vital for your long-term plans and financial security

If you’re ready to sell and want some expert advice, come and talk to the team. We’ll help you work out the value of your assets, assess the current market and can link you up with brokers and M&A specialists to get the key advice you need.

If I’m working ON my business what should I be doing?

Thu, 24 Jul 2025 17:06:12 GMT

I’m sure you’ve heard about the need to work ‘on’ your business as well as working ‘in’ your business. But have you ever stopped to think what exactly you should be doing?

First some practical distinctions to compare working ‘on’ and working ‘in’.

With the above in mind here are the 5 most important activities you should do:

Prepare a business plan and update it annually – do this in the last month of your financial year or the first month of the new financial year
Prepare a budget and forecast for the upcoming 12 months at the same time as you prepare your plan (and of course review this annually too)
Report against that plan and budget monthly
Communicate the plan and the results to the owners and team
Meet monthly for 1 to 2 hours to review your progress, your numbers, your business structure and any risks and opportunities that exist to improve the business

Working on the business is by no means a full-time role – you should be able to do this effectively with 1 to 2 hours per week, ½ a day per month (to review the information and then have an effective monthly meeting) and then 1 to 2 days off-site every year to update the plan and structure.

Best practice is to get someone independent of your business to help you establish and maintain these regular disciplines and hold you to account to really improve your business.

What do you need to change to work more effectively ‘on’ your business?

The business is there to serve you; not the other way round. You should not be a slave to your business - Anon

Making Tax Digital for Income Tax: Are you exempt or eligible?

Thu, 24 Jul 2025 17:03:40 GMT

Making Tax Digital for Income Tax (MTD for IT) is being introduced from 6 April 2026.

If you’re a sole trader or landlord, this will mean complying with the new rules around keeping digital records and submitting quarterly digital updates to HM Revenue & Customs (HMRC).

However, there are potential exemptions to the new MTD for IT rules. So, it may be that you can, for the moment, escape the mandatory move to digital tax returns.

Let’s see who will have to use MTD for IT, and who won’t be required to sign up.

Who WILL need to use MTD for IT?

MTD for IT is being introduced in a number of phases, starting with sole traders and landlords from the start of the 2026/27 tax year.

It’s mandatory to use MTD for IT if all of the following apply:

You’re a sole trader or a landlord registered for Self Assessment
You get income from self-employment or property, or both
Your qualifying income is more than £20,000

There’s more info here on what qualifying income is included.

Who will NOT need to use Making Tax Digital for Income Tax?

Not all sole traders and landlords will need to use the new MTD digital system. You’ll be exempt from using MTD for IT if:

You meet certain conditions that make you automatically exempt from using the service
You have applied for an exemption and HMRC approves your application
Your qualifying income is £20,000 or less

When will you need to begin using MTD for IT, if eligible?

The qualifying income threshold for MTD for IT begins at £50,000 for the 2024/25 tax year, and will drop progressively over the next three tax years.

If your qualifying income is over:

£50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026
£30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027
£20,000 for the 2026 to 2027 tax year, where the Government has set out plans to introduce legislation to lower the qualifying income threshold.

Business partnerships will be required to use Making Tax Digital for Income Tax in the future. The timeline for this is yet to be announced by HMRC.

Talk to us about getting ready for MTD for IT

You’ll start using MTD for IT once you submit your first Self Assessment tax return. However you can choose to sign up to the MTD scheme early, if you want to.

Talk to our team about Making Tax Digital and how we can help you select the right accounting software, understand the MTD rules and get ready for the start of MTD for IT

Bringing your cashflow processes into the digital age

Wed, 02 Jul 2025 14:58:02 GMT

Keeping on top of your cashflow is even more important during tough economic times.

With global uncertainty, recent high inflation, energy prices soaring, supply chain challenges, cash is likely to be tight over the coming year. Cloud technology and fintech apps, can give your business the best possible control over its cash.

Why is cashflow so important?

To keep your business operating, you need enough money coming into the business to cover your outgoings – with enough surplus cash to deliver a profit.

In recessionary periods consumers have less disposable income to spend on your products and services. Business customers will be looking to reign in their spending on suppliers. As a net result, your business is likely to make fewer sales and will bring in smaller revenues.

This means:

Reduced income coming into the business.
Less cash in the business to cover your operational expenses.
Not enough money in the bank to pay suppliers, utility providers or payroll costs.
In the worst-case scenario, insufficient cashflow for you to continue trading.

What can you do to improve your cashflow situation?

The more informed you are about your cash position, the more you can do to prepare for any cashflow gaps. It’s this foresight that can make all the difference when you’re battling against tough external economic forces and a downturn in sales.

If you want to safeguard your cashflow, these are some sensible steps to take:

Switch to cloud accounting – accounting and finance technology has moved on in leaps and bounds in the past decade. The best cloud accounting platforms all offer a detailed reporting of your cash position. These software tools will generally offer real-time data, giving you up to date cash numbers.
Integrate with cashflow forecasting apps – cloud accounting platforms let you add third party apps to create a custom app stack of helpful business tools. There are plenty of cashflow forecasting apps to choose from, giving you the ability to predict your future cashflow position.
Plan ahead for the cashflow gaps – when your forecast shows a shortfall of cash coming up, that’s the time to take evasive action. If you can see that there’s a cash hole approaching next month, it’s time to look at ways of raising extra finance to fill that hole. That could mean extending your bank overdraft, taking out a small business loan or taking out an invoice finance facility with a lender.
Look for opportunities to cut your overheads – one way to even up your cashflow is to cut down on your expenditure. If you can cut back on overheads, expenses and unnecessary costs, this can help you re-balance your cash position, even when cashflow is getting tight. Look for cheaper suppliers, buy in smaller quantities and take every opportunity to cut costs and keep your spending more sensible.
Update your prices and your sales strategy – raising your prices is one way to bring in more cash, with the same volume of sales. But it's a balancing act. Putting your prices up can alienate existing customers and could see you losing customers, but if you can find the sweet spot for your pricing AND also drum up more sales, you can quickly increase revenue and give your cash inflows a healthy boost.
Review your cashflow reports regularly – it’s important to look at your cashflow numbers and reporting regularly, not just at period-end. This is particularly important when economic times are tough. With the most current cash information to hand, you can make informed business decisions and aim to keep the business operational.

Talk to us about updating your cashflow processes

With your business in a healthy cashflow position, you give yourself some solid financial foundations for riding out the global recession. No business is invulnerable in these conditions, but with liquid cash in the business, you have more flexibility and more capital to play with.

Book a meeting and let’s see how we can improve your cashflow processes.

Making your business work for you: making enough to retire

Wed, 02 Jul 2025 14:55:32 GMT

You may love running your business. But in the back of every owner’s mind is the knowledge that one day you’ll need to sell the company and retire.

But with global markets in upheaval and the future less certain than ever before, how can you guarantee that your business will be worth enough on the open market for you to retire?

In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals, now and into retirement.

Creating a business that will fund your retirement plans

Your business has to be the nest egg that provides the equity for you to retire. But how do you secure that nest egg, the value of the business and your retirement plans?

We’ve highlighted five strategies that will add to the value of your business – so, when you come to sell, you’ll get the return on investment (ROI) needed to retire comfortably.

Build a business that can run without you

You may be the boss, but your business needs to function independently of you to hold its value at sale. One way to do this is to systematise your operations, so the day-to-day procedures exist outside your own head and are scalable as the company grows.

It’s vital to train up a strong management team that can keep the business trading when you’re no longer in the picture. This autonomy significantly boosts the value of the company, as potential buyers want businesses that won't collapse when the founder leaves.

Focus on recurring revenue streams

Recurring revenues give your business more stability. Think about focusing on subscription services and other predictable income sources to help build up value in the company.

Recurring revenue dramatically increases business valuation multiples (often 2-3 times higher than transaction-based models). By creating a stable, valuable business, you can sell the company for a premium price, providing the equity you’ll need to fund your retirement.

Invest in intellectual property and licensing

Having valuable assets in the business boosts the potential price of the company. Your intellectual property (IP) and brand equity are two intangible assets that can have a significant impact on the value and asking price when the company is put up for sale.

Think about developing products, processes or technologies that can be patented and then licensed to other third parties. This is a great way to use your IP effectively, boost your brand and create passive income – something that will appeal strongly to any potential buyers.

Keep detailed records and keep finances healthy

A viable business with a good financial health score is the holy grail for buyers. So keeping your financial health, company credit score and cashflow position under control is vital.

It’s important to have rigorous financial tracking in place and to keep a close eye on your key financial metrics. Clean books with 3-5 years of strong profitability make your business significantly more attractive to buyers and can justify higher valuations and better ROI.

Create a strategic exit plan well in advance of retirement

The key to a successful exit is having an exit plan in place as early as possible. Work with your advisors to add value to the business, identify ideal buyers and find the most tax-efficient exit structures that will deliver the funds you need on retirement.

Ideally, you should start this exit strategy at least 3-5 years before you intend to retire. This gives you time to think about succession planning, boosting the underlying value of the business and making sure you’ll have sufficient capital for your retirement needs.

Helping you secure your income and lifestyle

You deserve a restful and comfortable retirement after many years of leading and growing your business. But to do this, it’s important to start planning now and getting your exit strategy ready.

Come and have a chat about your retirement plans and exit strategy. We can also introduce you to independent financial advisers who can offer personalised wealth management advice.

Business tips: Budgeting and managing cashflow

Wed, 02 Jul 2025 14:53:30 GMT

If you want to stabilise your finances and grow the business, working to strict budgets becomes a necessity. Managing the cashflow twists and turns of a project can be hard work. But it’s easier to do when you have an agreed budget and can track your spending and performance.

So, what’s the best way to stay in control of the budgets you’ve set? And how can you manage your cashflow position to make sure there’s always enough cash to fund the project?

Understand the costs of each project

Starting a project without fully understanding how much it will cost is a no-no. To keep on top of costs, overheads, staff expenses and general spending, you need at least a ballpark figure for this expenditure. In an ideal world, you’ll want to be as precise as possible with these costs.

Run through the project from start to finish and highlight every point where there will be costs to incur. It might be the cost of your raw materials. It may be the cost of buying new equipment. It could be the payroll costs for the people actively working on the project. Break everything down and come up with a total expense for the project. This is your starting point.

Set your budget and track it over time

Once you know your baseline cost for the project, you and your team should decide on the amount of funds to allocate to the budget. Your baseline cost is a starting point, but don’t forget to include extra for specific contingencies. What if the project overruns? What if your raw material costs go sky high? What if you need more people to get the job over the line?

Agree on a clear budget and set up your finance system to track spending against this budget. With a cloud accounting system at the heart of the business, it’s very easy to create a budget and then record and track your spending over time.

Keep a close eye on budgets and project cashflow

One of the big things to remember is that a budget is not a static thing. You’ll obviously aim to stick to your initial costs, but prices and availability will affect the total spend over time. Because of this, it’s vital to not just write the budget and then forget about it.

Keep a close eye on your budget performance and the cashflow for each project. Being able to review this performance, in real time, should help you avoid overspending, or running out of cash for the project. And when the cash in the kitty is getting low, you can get proactive and look at ways to top up the budget, or rein in spending in other areas of the project.

Take action to maintain your positive cashflow position

Balancing the cashflow scales on a project isn’t easy. But when you spot that there’s a potential hole in the budget, the important thing is to do something about it, pronto!

Running any project with your fingers crossed that ‘it will all work out in the end’ is a recipe for disaster. And with such detailed budget reports and cashflow forecasts available with today’s finance apps, there’s really no need to be disorganised about your spending.

Think about:

Setting up key metrics for each project, to measure spending, cashflow and progress
Run worst-case and best-case cashflow scenarios, so you’re prepared for anything
Regularly reviewing your spending and looking for areas to make savings
Taking on finance facilities to plug any cashflow holes as they appear.

If you’re thinking about scaling up your established startup, please do get in touch. We’ll help you build solid, workable budgets that can be easily tracked through your accounting system.

Making your business work for you: passing the business to the next generation

Wed, 02 Jul 2025 14:51:22 GMT

As the owner of the business, you’ve set your company up so it delivers on your own personal goals. But you also want the business to deliver for the people you hand the business on to – whether that’s your kids, your management team, or a brand-new buyer.

Let’s take a look at how you pass the business on to the next generation, and the key steps to plan for, consider and get in place before you exit the company.

Getting the business ready to hand over

When you pass the business to your successor, you’ll want to do so with the company in the best possible shape. No successor is going to want to take on a failing business that has operational issues and little or no future in the current market.

Here are five steps to action before your planned exit date:

1. Start adding value to the business:

A big part of getting ready is about optimising the business so it’s a viable and profitable enterprise to hand on. Adding value to the business is key to creating a business you’re proud to hand over to the next generation – but it takes time and plenty of planning.

Invest in new systems, machinery and property, so the business is efficient, productive and able to remain competitive. Do the same with your human talent by hiring in the best people and making sure you have a team that’s ready to take over the reins.

2. Develop a succession plan:

Choose your successor(s) well in advance, whether it’s a family member, someone from your top team or a new, external hire. And put together a detailed succession plan.

Mentor your successor and provide training and development to get them up to speed with your strategy, internal processes and overall brand. Set a timeline for transitioning your leadership and operational responsibilities over in as smooth a way as possible.

3. Formalise your valuation and deal structure:

It’s a good idea to get an independent business valuation early on. This helps you set a fair price for the company and start the wheels in motion for the sale of the business.

Work with a broker or a mergers & acquisitions adviser to define the deal structure, whether it's a gradual sale, staged payments, or gifting the company to your successor. Being clear about the deal helps keep all parties happy and limits any issues further down the line.

4. Address any legal and tax implications:

You’ll need to engage both legal and financial advisers to help you navigate the more complex areas of the deal, sale and handover.

Areas to consider will include reviewing wills, trusts, shareholder agreements, capital gains tax and inheritance tax. Proper planning at this stage helps both parties – you as the outgoing owner and the incoming generation – avoiding any potential disputes.

5. Plan for business readiness and continuity:

The business you hand on must be attractive to a buyer, or a viable business proposition for your incoming successor and their management team.

To keep the business trading smoothly, make sure you’ve documented all your key processes, listed your customers, and have maintained the company’s financial health. Clear up any legal issues or outstanding debts and be ready to hand over a business that has a profitable and competitive future in your chosen industry sector.

Talk to us about your exit strategy and succession plan

Getting ready to exit the business takes a lot of planning. Ideally, a five-year exit strategy is advisable, giving you time to plan, prepare, add value and choose a worthy successor.

Come and talk to the team about your exit strategy and succession plan.

Grow your numbers – Increase leads generated

Tue, 03 Jun 2025 16:36:43 GMT

No one can deny that to grow your business, you must attract new potential customers (or leads). It’s how you generate these leads that’s important though.

STEP is a lead generation acronym to help you generate quality leads without pointlessly blowing your marketing budget:

S = Strategy T = Target E = Efficiency P = Process

Strategy = your bigger picture plan.

What are your long-term goals for your business? Do you need lots of new customers or will you focus more on selling additional services to your existing customers? Are there better ways you can grow your business without chasing new customers, i.e. should you focus on developing your strategic partnerships? Document your strategy and goals in an annual plan that you update quarterly and refer to monthly.

Target = your target market or your ideal customer.

Your customer selection criteria should not be customers who have a heartbeat and a wallet. Who will benefit most from your offering? Who do you want to work with and what specific services do you want to offer them? Finally, where do these future customers hang out in the greatest numbers?

Efficiency = how much does it cost you to generate a new lead?

For example, if you spend $500 on a radio campaign and get two enquiries, then the cost of each lead is $250. Or, if you spend $5,000 on advertising and marketing per annum and generate 100 new leads per year then each lead has cost you $50 (plus the time taken to generate these leads). There are bound to be much cheaper ways to generate new leads.

Process = the system and software you use to track the effectiveness of your marketing activity.

Carefully develop a process and ensure it’s followed consistently by your team. Having an up to date CRM (or database) is essential. You should also review your website analytics and produce reports to help track your marketing spend efficiency for continuous improvement.

Here are 10 cost-effective ways ideas to generate new leads:

Ask your existing customers for referrals.
Develop a referral reward system.
Nurture your customers by sending newsletters and blogs (that they can forward on to others).
Publish eBooks and resources on your website for prospects to download (after providing their contact details).
Be active on social media (with a focus on education not selling).
Create an online forum.
Identify strategic partners so that you can refer each other work.
Speak at networking events and webinars (this is educational marketing).
Ask customers to complete Google and social media reviews.
Book a complimentary meeting with us to discuss more ideas specific to your business.

"You attract what you are, not what you want. If you want great, then be great." – Tony Gaskins

Grow your numbers - Reporting and accountability

Tue, 03 Jun 2025 16:33:08 GMT

Key Performance Indicators (KPIs) are essential to measure the performance of your business in order to grow your numbers. Of course, the measures themselves are pointless unless there’s reflection and discussion to ensure they’re met. Here’s a simple and effective way to link KPIs to a reporting and accountability framework.

Firstly, make sure there is ONE leader for each of the departments in your business: Director, Leadership, Product / Service Development, Operations, Marketing, Sales, Finance, HR, and Admin / IT. One person can lead more than one department, but two people can’t lead one department. You can also contract out departments to avoid needing a large head count of team memebrs (finance, marketing and IT can be outsourced relatively easily).

Be clear on who reports to who . One person can only manage 5 or so people effectively. Consider establishing teams with team leaders to enable you to achieve a ratio under 6 to 1.

Set up regular department meetings . This may be the CEO with each of the other department heads, the Operations Leader with the Operations team (if less than 5 in the Operations team) or with the Operations Team Leaders (if more than 5 in the Operations team).

Set an agenda for each meeting:

What were your activities and targets last week or month and how did you go?
What support do you need?
What suggestions do you have for improvement?
What are your activities and targets for this week or month?

Have team members report one working day PRIOR to each meeting, using the reports and KPIs you established as part of their Job Description.

Most importantly, make sure the meeting is limited to 15 minutes and in a stand-up format so it doesn’t run over time.

Contact us for more business support and advice.

"The measure of who we are is what we do with what we have." - Vince Lombardi

Grow your numbers – Control overhead expenses

Tue, 03 Jun 2025 16:28:29 GMT

One of the simplest ways to grow your bottom line is to tighten your belt and spend less.

As the business owner, you get to choose what you spend, with who, how often, and how much. However, as simple as this seems, reducing overhead expenses can be a double-edged sword.

Your fixed costs (or overheads) are largely incurred no matter what level of sales or activity you have; things like rent, power, telecommunications, interest, insurance, and so on. Issues can arise where you cut costs which form an essential part of your level of service.

For example, let’s say you reduce your rent cost by choosing a cheaper location, but in doing so, make your business less visible to your customers, resulting in reduced sales. Another scenario could be reducing your advertising or marketing spending and, as a result, getting fewer leads or enquiries.

It’s important to determine what your return on investment is from the costs you are incurring. Do you really need to spend as much on advertising, or could you achieve more growth simply through networking and referrals? Do you even know what return you are getting from that advertising spend?

Likewise, is there any element of wastage in your costs? Could you change providers to achieve the same level of service for a lower cost (e.g. by changing power or telecommunications providers)?

And while you’re thinking about overheads, do you consider the price of your accounting services to be a cost or an investment? If you consider your accounting fees to be a cost, then these costs could be reviewed and maybe cut. However, if you consider your spend with your accountant as a strategic investment to help you to run a better business, then you need them now more than ever.

Talk to us about how to trim the fat in your costs without compromising your ability to grow your business.

"The biggest expense is opportunity cost." - Anon

Grow your numbers - Increase your transaction frequency

Tue, 03 Jun 2025 16:24:13 GMT

Have you ever done the maths on your average spend per customer?
That is, how much your customers spend (on average) each time they buy from you. Simply take your total sales for any period (e.g. 12 months) and divide this by the total number of transactions or invoices for that period.

When you know your average transaction value, you’ll start to see the value of getting your customers to buy from you more frequently. If only 50% of your customers buy from you one more time per year, your sales will increase significantly.

Consider the example of a house maintenance business that does window cleaning, house washing, and gutter care. Imagine the business has 500 customers and turnover of $130,000. There are 460 invoices for the year so the average spend per transaction is $283. Some customers are vigilant about getting their house and windows washed and others leave it until the mould and leaves in the gutters are causing leaks.

If you are able to get one more transaction per customer per year, then sales will more than double (500 customers x $283 = additional turnover of $141,500). More importantly, you will be able to prevent an unmanageable flood of job requests after each rain storm!

Here are 10 ideas to increase transaction frequency:

BAMFAM: Book A Meeting From A Meeting. When finishing a job, discuss the value of doing the job again and book it in then and there.
Articulate the benefit of doing the additional work and the potential consequences if it’s not done.
Follow up your customers if they don’t book in the next job when recommended.
Network and attend events where your existing customers hang out.
Create a service plan with monthly payments to lock in a commitment for repeat work.
Offer a loyalty or frequent buyer programme.
Surprise and delight your customers by sending them the occasional gift, e.g. if they refer you work.
Widen your product offering and promote this to your customers.
Visit, call, or send helpful content to your customers.
Talk to us about specific ways you can increase the transaction frequency in your business.

Repeat customers become more loyal as you build your relationship with them. So, as long as you do a good job and send the right signals (that you have capacity for more work), they will buy more frequently and become your advocates. Advocates endorse what you do and give you referrals, and referrals are the cheapest way to grow.

"It’s not the customer’s job to know what they want." - Steve Jobs

Grow your numbers - Increase transaction value

Tue, 03 Jun 2025 16:16:31 GMT

The endless pursuit of new customers to grow a business often distracts us from looking after our existing ones.

This pursuit can unintentionally cause a downward spiral. Spending more on marketing, while neglecting existing customers (and their sales needs), can put pressure on pricing. This can lead to a reduction in prices or a change in product mix, resulting in less sales and the apparent need for more marketing… so the spiral continues. This is not the answer.

The Answer

Did you know that it’s six times cheaper to sell products and services to existing customers than selling to new customers?

Add to this that most customers don’t buy all of your products or services (they probably don’t know the extent of them) and you have a compelling reason to focus on serving your existing customers better.

All that’s needed is better education. Better education on your products and services, the problems they solve, how your offering adds value, and why it’s different to your competitors'.

Serving existing customers better often results in new business referrals, especially if you ask for and encourage them. Not only will you increase the transaction value from your existing customers, but you can also reduce your marketing spend - as you’ll be getting new leads from those happy customers.

Here are 10 ideas to help increase transaction value:

Identify standard ‘up-sells’ - especially those that have a higher margin.
Offer ‘four for the price of three’ options.
Give limited time offers.
Provide free delivery with a minimum spend.
Drop cheaper product options.
Create product or service checklists to increase sales outcomes.
Run events for VIP customers with special event offers.
Adjust your sales pitch to focus on quality and benefits as opposed to cost.
Work in a niche market / specialisation (as there should be less competition).

And the tenth way to increase average customer spend? Talk to us - we’ll help you identify more ideas specific to your business.

"If you don’t ask, you don’t give them the opportunity to say yes." - Jennifer Gue

Grow your numbers - Improving your margins

Tue, 03 Jun 2025 16:13:55 GMT

Measuring your sales and margins provides insight into which parts of your business are performing well and which ones need improvement.

With improved margins, you don’t have to generate as many sales to get the same profit. Better still, lift your margins and achieve higher sales; you’ll get even more on your bottom line!

10 improvement strategies to lift your margins:

1. Set targets and budgets for team members and jobs, and share these with your team.
Have brief weekly meetings to celebrate achievement and share ideas to improve results.

2. I dentify the products you sell that have the highest margin.
Share these with the team and make sure they know how to sell them well!

3. Consider products or services that give you a poor return.
Either increase their price or stop selling them. The only exceptions here are ‘loss leaders’ - products or services which bring customers in the door. E.g. milk and bread in a grocery store. Ever noticed how these are always at the back of the store so you’re tempted to buy other items as well?

4. Put your slowest moving stock items on sale and set maximum stock levels.
Slow moving stock or materials ties up your cash.

5. Ensure your pricing includes the cost of consumables, administration time and software.
Adding a simple admin or consumables charge of just $10 to every invoice will make a big difference over a year.

6. Back cost individual jobs or projects.
Then compare the actual results to the quote you provided or the margin you expected from your price list.

7. Keep your price lists current and increase them annually.
If you’re using a pricing tool for quoting, make sure costs are up to date with what you’re being charged by your suppliers.

8. Up-sell and offer options to your customers.
Options give the customer a ‘choice of yeses’ and you’re able to increase your average transaction value; often more return for the same amount of effort.

9. Keep in regular contact with your customers.
Network with them and create opportunities to contact them - or for them to come and see you. More contact will result in more sales. Did you know that it’s six times cheaper to sell to an existing customer than a new one?

10. Use a system or checklist to ensure your sales team knows your product range.
Especially the most profitable items and when to offer them. Give your team members a checklist so that when they scope a job they have add-on offers at front of mind.

Of course, there will be many other specific strategies relevant to your business. Talk to us about creating your margin improvement plan.

"Many receive advice, only the wise profit from it." - Harper Lee

Understanding Your Statement of Cash Flows

Wed, 07 May 2025 18:09:25 GMT

The statement of cash flows, (also known as the cash flow statement), shows how your business has generated and used cash (and cash equivalents) within a specific time period.

For each of the reporting categories, receipts and payments are listed (money in and money out), and this is reported as a net increase or decrease in cash held for that category.

The net change in all categories is added to the amount of cash on hand at the start of the reporting period to arrive at the current cash on hand figure at the end of the reporting period.

It is another important financial statement to understand in conjunction with the Profit and Loss statement and the Balance sheet. These three reports provide a good understanding of the financial position of your business.

How Does it Work?

The cash flow statement integrates the information provided by the profit and loss statement and the balance sheet into a current cash position. The cash flow statement is reported on a cash basis, while your other financial statements are usually reported on an accrual basis. Accrual income (from the profit and loss statement) is converted to cash by calculating the changes in the balances of asset and liability accounts.

Report Categories

The statement of cash flows is organised into sections that report on different types of business activity.

Operating activities - all business income, expenses, assets and liabilities (except for those assets and liabilities reported in investing and financing activities).
Investing activities - the purchase and sale of long-term investments, property, plant and equipment as well as security deposits paid to suppliers or received from customers and dividends received.
Financing activities - the changes in balances of equity accounts, for example, issuing and repurchase of stocks and bonds and payment of company dividends if applicable. Loans are also included in financing activities.

Formal financial report packages usually include notes to the financial statements. The notes contain supplemental information that explain significant items or activities that did not involve cash transactions. The notes may also include detailed reporting of categories that may have been reported as summary totals only in the profit and loss, balance sheet and statement of cash flows. Other items such as taxes, employee provisions, risk management or related party transactions may also be detailed in the notes.

Why is it Useful?

The statement of cash flows gives you a valuable measure of cash flow in and out of the business over a given period. It shows the ability of the business to pay its bills and fund its operating activities. This gives you a picture of overall performance.

It also shows the relationships between assets, liabilities, equity and cash accounts. It shows changes and movements over time, whereas the balance sheet and profit and loss reports show account values at a single point in time.

The statement of cash flows gives you vital information on your business.

How strong is your cash position?
What is the long-term outlook for your business?
What activities generate the most cash flow?
What is the relationship between your net income and your operating activities?

If you’d like to understand your financial statements, cash position and future outlook in more depth, arrange an advisory session today.

We’ll help you identify and appreciate the strengths of your business.

Business tips: Have you achieved your goal for the business?

Wed, 07 May 2025 18:00:21 GMT

Founding, managing and growing a business is a BIG commitment. For most business owners, it will take years to build a customer following, turn a profit and create a truly scalable business. It's a journey that can sometimes be pressurised, stressful and risky. – But when your plan really does come together, there is the chance of real success, a lasting legacy and a business that delivers on your initial dream.

So, how do you know when you've truly achieved your goals for the business?

Has the business met its growth targets and scaled up as intended?

You’ll have seen your business idea grow from being a fledgling startup, to an established business and on to become a scaled-up, ambitious enterprise with a solid customer base.

If you’ve met these growth targets, then you know you’re on pretty solid ground as a business. Your idea clearly has legs and you’re delivering a product and/or service that your customers see as valuable – and which they’re willing to part with their hard-earned cash to purchase.

Are you running a profitable enterprise that's in good financial shape?

Running a tight financial ship is crucial. You need solid revenues, positive cashflow and good liquidity to keep your business ticking over.

In the early days of being a startup, cash will have been tight. And your own personal income as a founder and director will probably have been scarce too. But as the business has become more established, you should have found that your business revenue became more stable and predictable – and that your own personal wealth also followed this same reliable pattern. If the business has a solid balance sheet, great cashflow and meets your intended profit targets, you’re onto a good thing – and can be sure that your financial position is in good shape.

Do you have a stable customer base who say good things about you?

Without customers, you don’t have a viable business. Finding your first customers as a startup was probably a significant turning point in your journey. A good customer base brings with it the bonus of new sales, fresh revenues and a business that can actually turn a profit.

When customers engage with you and buy your goods and services, that comfirms your original faith in your business idea. You’re providing something they value and want to purchase, and you’re also building a community of like-minded people who all think your brand is great.

Do you have a team who can operate the business without you?

In the early days, you’ll probably have become a jack (or jill) or all trades. You’ll have run the sales and marketing campaigns, taken care of all the main operational tasks and dealt with the many invoicing, accounting and bookkeeping tasks. Turn the clock forward, and you probably have a team of people around you to take care of these jobs – but could they function with you?

This is really the acid test of whether you’ve scaled and succeeded. If the business is still reliant on you, personally, you have a problem. To be a saleable proposition, a business needs to function effectively without the founder. If not, you’ll never be in a position to sell up. To make this possible, you need a team of engaged and talented people around you – people who share your vision and talents and who can keep the ship on an even course, even once the original captain has set sail on fresh, new adventures.

Do you feel you've achieved what you wanted to achieve?

In your formative years as a founder, you’ll have sat down to draw up a startup plan. In that plan you’ll have outlined a clear vision for what this business was going to achieve.

This vision might have been:

To scale up over five years, sell-up and retire
To deliver a new kind of technical widget and make it the global standard
To help your target audience improve their lives, helped by your product/service
To provide the income needed for you to live your desired lifestyle
To plough your profits back into the local community and be a force for good.

We all have different goals, and whether they are financial, personal or moral comes down to the individual. The important thing at this point is to assess whether you’ve actually met the vision that you set out to achieve. If your aim was to sell for a profit and then retire, are you ready to do this? If the goal was to become a household name and move your sector forward, do your customer engagement figures and market share stats reflect this?

Deep down, only you and your fellow founders know whether you’ve truly met your intended goal. But if the general consensus is that you aced it, then it’s time to think about the future.

What’s the next chapter in your business story?

If you can answer yes to all five of these questions, then congratulations! You've built a successful, stable and profitable business.

But what do you do now? Do you continue to plough this fertile furrow and live off the profits? Do you find a buyer for the existing business and start on your next business idea? Or do you sell up and look at retirement and enjoying the benefits of your money and lifestyle?

It's a good idea to talk to us before you make what is, essentially, a life-changing decision. If you’d like to talk through your options, do get in touch.

Business credit: the importance of a good business credit score

Wed, 07 May 2025 17:53:57 GMT

Access to additional funds is what allows you to invest in your business and grow the company. But to be able to borrow from lenders it’s vital to have a good business credit score. So, what is a business credit score and how is it calculated? And what proactive action can you take to improve your all-important credit profile

What’s a business credit score?

Your company’s business credit score is a measurement of your creditworthiness as a company. In other words, it gauges how risky you are to lend to, based on factors like your credit history, payment history, cashflow position and publicly available information like your accounts.

A low score means you’re classed as high risk. A high score means you’re low risk.

Who gives the scores and what do they mean?

Credit scores are calculated by the major credit reporting agencies (CRAs). These are agencies that collate financial data and information to make informed assessments of your risk rating.

Each CRA uses slightly different metrics and scoring scales, with some using a 0 to 100 scale, some a 0 to 1000 scale and some a 0 to 300 scale. But the Experian scale of 0-100 is one of the most commonly used.

Key ways to improve your credit score

If you fall into the high-risk category, you’ll find accessing finance – like bank overdrafts, business loans or asset finance – extremely difficult.

If you fall into the medium-to-low risk categories, access to finance will be much easier.

To increase your ability to borrow money and access credit, it’s important to be proactive about managing and improving your business credit score.

Here are five ways to boost your credit score:

Pay your suppliers and bills on time

Make sure you always pay invoices from suppliers, utility companies and other creditors on or before their due date. This shows your financial management is reliable and responsible – a key factor in building a positive business credit history with the CRAs.

Keep your credit utilisation low

If your business has existing credit facilities, aim to use only a small portion of the available credit limit. High credit utilisation can have a negative impact on your score, and suggests a high state of ‘financial distress’ to potential lenders and credit providers.

Establish trade credit with your suppliers

Agree on trade credit terms with your suppliers and make sure you settle the bills on time. These payment histories are often reported to credit bureaus and can be a significant factor in building up a positive business credit profile, especially for newer enterprises.

Monitor your business credit report regularly

Obtain copies of your business credit report from relevant agencies (like Equifax or Illion in Australia) to check for inaccuracies or errors. Addressing any negative information promptly can prevent it from further harming your credit score.

Avoid defaults and public record filings

Minimize the risk of defaults on loans or other financial obligations, and be mindful of public record filings like court judgments or bankruptcies. These events can severely damage your business credit score and make future borrowing difficult.

Get in touch to talk about your business credit score

There are plenty of options for checking your business credit score and getting a solid overview of your credit profile as a business.

Talk to the team about signing up for regular credit reports and how we can help you monitor and manage your credit score.

Happy customers, happy bottom line

Wed, 07 May 2025 17:44:14 GMT

“Loyalty is when people are willing to turn down a better product or price to continue doing business with you” - Simon Sinek.

If customers are unhappy, they’ll leave you for one of your competitors. If they’ve had a poor experience or been treated badly, some will go as far as making a scene on social media or leave a bad business review to warn others.

Customer satisfaction is important to any business, but the earlier you are in the growth of your business, the more critical it is to ensure that your early customers are highly satisfied. When you sign up your first customer, that person represents 100 percent of your customer-base, so their opinion of your business, along with the next handful of customers matters greatly.

Think about your early customers and who these people are. If they’re still known to you, you should be proud that they had faith and were one of your earliest customers who backed you.

Here's 3 ways you can do this

Everyone likes to be told they are valued. Start by saying thanks to your loyal customers and be genuine about it.
Could you do something to recognise their loyalty? – with a gift, discount or a special offer just for them.
If they’re still using your product or services, ask them to be a referral customer, review you on Facebook or your Google business listing, or to be featured in a published customer case study. Send a link to your Facebook or Google business listing so that it's easy for them to add their review.

Keeping your cashflow strong in tough times

Tue, 29 Apr 2025 13:30:12 GMT

Small businesses are particularly vulnerable in tough economic times.

When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.

Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.

If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.

Minimise the stress of cash-flow

Invoice early - Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.

Chase payment - Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.

Talk to suppliers - A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.

Review Inventory - Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?

Review your costs - It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to.

Talk to the bank or tax department - If cashflow is tight, make sure you have conversations early so you have everything in place to see you through.

We can help you implement strategies to protect your business for the long term and help you alleviate cashflow worries.

HMRC penalties for late payment updated for 2025

Tue, 29 Apr 2025 13:28:54 GMT

Did you know that if you don’t pay your taxes on time, HM Revenue & Customs (HMRC) can charge you interest on your late payment?

HMRC can use its powers to charge interest on late payments of tax and pay interest on overpayments you’ve made to them. And those rates changed from April 2025

How does interest on late payments work?

If you’re late paying your taxes, HMRC will charge interest from the original due date of the payment until the date payment is received.

So, the later you are paying your tax bill, the more you’ll end up paying overall.

What are the current interest rates?

From 6 April 2025, the rate on late payments increased to 8.5% p.a., an increase that’s in line with current rates of inflation and the Bank of England’s interest rate.

Interest is charged at the Bank of England (BoE) base rate plus 400 basis points, credited at BoE base rate, less 100 basis points, with a minimum of 0.5%.

If you overpay your tax bill, or pay early, HMRC will pay you interest on that overpayment. The rate HMRC will pay on refunds and overpayments of tax changed from 3.75% to 3.50% from 25 February 2025.

What happens if I can’t pay on time?

There may be times where you owe tax and simply can’t pay on time. As long as you agree a formal ‘time to pay’ arrangement with HMRC then the interest rate they charge is relatively low.

Simply not paying, without having any agreement in place, is a bad idea. HMRC may charge you a penalty, on top of charging interest on your late payment.

How can we help you manage these payments?

As your current tax agent, we’ll give you plenty of prior warning of the tax amount that’s due and the payment deadline, as a matter of course.

If we’re not already acting on your behalf, we can still help. You might be unsure of the deadlines for the taxes, or need help working out what you’ll need to pay. We’ll help you run projections to check if you have the funding to make these payments. We can also liaise with HMRC to put ‘time to pay’ arrangements in place.

When it comes to tax, it’s always best to talk to us sooner rather than later.

Five steps to better cash flow

Tue, 29 Apr 2025 13:27:41 GMT

Need a hand managing cash flow? You’re not alone. The key is getting your invoicing right, by invoicing customers as soon as possible and using tools like Xero’s invoice reminders to move payments along.

That said, there are a few other simple rules you can apply to manage your cash flow and get your invoices paid even faster:

Keep your books accurate and up to date - so you can see your financial state at a glance.
Don’t be too lenient with your customers - you can be direct and still polite. Keep a close watch on your accounts receivable turnover at all times and act sooner rather than later.
Keep your accounting simple - so you have a good handle on these business metrics. We can help with this.
Keep your business and your professional finances separate - this is essential to understanding your true cash flow position. Mixing your business and personal finances can leave you uncertain about business performance.
Build a cash reserve - so you are prepared for unexpected events and can take advantage of opportunities when they pop up.

First you want to get your invoicing right. Get into a habit of sending invoices quickly. Then follow the steps above to collect revenue and keep your finances organised.

Get in touch for guidance on your invoicing and business cash flow.

Business plant and equipment: Buy or lease?

Tue, 29 Apr 2025 13:25:54 GMT

When your business needs new plant or equipment, what’s the best choice – buy or lease? The answer will depend on your specific circumstances, but there are some basic considerations to help you weigh up the options.

The advantages of buying

Buying gives you certainty and ownership, at a higher upfront price, but a lower total price. Owning an item of plant or equipment gives you unrestricted use for the lifetime of the item. You can alter it to suit your business, and you can sell it if you need to free up some cash. The full cost is paid up front, so you have no ongoing payments, and there may be opportunities for tax depreciation.

When equipment lasts for a long time and maintains its value, ownership can be a particularly good choice. Overall, the total price of ownership is usually lower than the total cost of leasing the item.

The advantages of leasing

Leasing tends to give you more flexibility, at a higher cost. It spreads out the cost of an expensive item – you don’t need to save or borrow the purchase price, and instead you make regular payments. You can return a leased item if it’s not working out, or upgrade to a better model as your business grows.

If the equipment or plant is something that quickly becomes obsolete, or that you’re likely to upgrade, or that you’re not totally certain is right for your business, leasing could be ideal. While leasing is generally more expensive across the lifetime of the item, it also frees up your money to invest in other areas of the business.

Running the numbers can help you find the right decision

The decision to invest in new plant or equipment can be a tricky one, but we can help. We can tally up the upfront and ongoing costs, and weigh these against the economic benefits you might get from the new equipment. We consider your cashflow, the cost of borrowing, and sales projections, so you can make an informed choice.

Drop us an email or give us a call – we’re here to help.

Making Tax Digital to be extended to more sole traders and landlords

Wed, 09 Apr 2025 15:06:16 GMT

Hiding in the HM Revenue & Customs (HMRC) announcements published on 26 March was a technical note entitled ‘Modernising the tax system through Making Tax Digital‘.

This note announces that the income threshold for Making Tax Digital for Income Tax & Self Assessment (or MTD for ITSA) is to drop to £20,000 per annum for sole traders and landlords.

If you fall into this category, this means moving your tax completely over to digital by April 2026.

But don’t worry, let’s see what MTD for ITSA is all about.

Your two-minute guide to MTD for ITSA

MTD for ITSA is part of HMRC’s ongoing initiative to modernise the UK tax system and move the tax-return process over to a fully digital system.

If you’re a sole trader or landlord, you’ll soon need to:

Keep digital records of all your income and expenses
Use MTD-compatible software for your bookkeeping and accounting
Submit regular quarterly digital reports to HMRC
Send a full digital tax return at the end of the tax year

Landlords and sole traders who fall into the following categories will soon find it’s mandatory to use the MTD for ITSA system.

From April 2026, for those with qualifying income over £50,000
From April 2027, for those with qualifying income over £30,000
From April 2028, for those with qualifying income over £20,000

What does this mean for your bookkeeping and tax returns?

If you’re a sole trader or landlord paying self-assessment tax, there’s a growing imperative to move your bookkeeping over to a digital platform.

The days of Excel spreadsheets and receipts in a shoe box are well and truly over. As of next year, any self-assessment taxpayer with over £50,000 income annually will need to have professional third-party software to meet the MTD for ITSA criteria.

This isn’t as scary as it sounds, though. Most of the major cloud accounting platforms, like Xero, QuickBooks and FreeAgent are set up for MTD.

We can help you get ready for MTD for ITSA

Getting compliant for MTD for ITSA should definitely be on your to-do list. But there’s plenty of time to get your bookkeeping system updated and ready, so don’t panic!

Come and talk to the team and we’ll explain the implications of MTD for ITSA, the need for digital records and how to get compatible cloud accounting software up and running.

Reducing the uncertainty: financial forecasting and planning

Wed, 09 Apr 2025 14:59:34 GMT

Uncertainty can be a major threat to your strategic financial planning.

Being unsure of what lies around the corner makes it difficult to make those important financial decisions around operational budgets, investment and growth funding.

But by using forecasting and scenario-planning, you make it easier to manage your finances and reduce some of the financial uncertainty.

Looking to the future with your financials

Analysing your cashflow statements, profit and loss reports and quarterly management accounts gives you an indication of where you’ve been as a business. But these reports don’t tell you much about where you’re going, and what your financial future may look like.

By looking forward, rather than backward, you can start to get a better idea of the landscape that lies ahead – including future cashflow, revenue, profits and operational budgets.

Five key techniques you can use to reduce your financial uncertainty

Cashflow forecasts

Cash is king, so having a detailed overview of your cashflow trajectory is vital.

With cashflow forecasting apps, like Fathom, you can predict your cash availability and spot potential cash shortfalls – while there’s still time to plug the hole. By cutting expenses or seeking short-term funding, you can keep the business in a positive cashflow position. It’s this forecasting and foresight that keeps you trading, despite the uncertainty in the market.

Revenue forecasts

Knowing the future patterns in your sales and revenue data helps you keep your income stable.

Revenue forecasting apps, like Clari analyse your sales data, revenue trends and market shifts to anticipate fluctuations in your revenue. Armed with this future view of your potential revenue, you can adapt your pricing, invest in more marketing and make your income more consistent.

Scenario-planning

There’s always more than one potential outcome of any business situation. Having a plan B (or C, D and E) allows you to understand the multiple potential possibilities – and plan for them.

An app like Modana helps you model potential ‘what-if’ scenarios, so you can see the possible outcomes of an economic downturn or disruption to your supply chain disruptions. This kind of scenario-planning makes it easier to make contingency plans and mitigate the potential risks.

Profit projections

Being a profitable enterprise is important for a number of reasons. It shows lenders you’re a low-risk borrower, allows you to invest in the business and drives your dividend payments.

A tool like Teamwork helps you track your performance and estimate future profitability, factoring in variable costs, sales and market changes. This helps you determine your price point, drive cost-cutting measures or make investment decisions that keep the profits rolling in.

Budget forecasts

Tracking and forecasting your budget performance keeps your expenses in check.

Budgeting apps, like Jirav, help you build dynamic budgets and remain on budget to achieve your financial goals. Budget forecasts help you track your performance, control your expenses and cut any unnecessary spending, keeping you on track with your agreed budget.

Making your financial future clearer and easier to navigate

With so many ups and down in economic conditions and the costs of raw materials and labour, getting serious about financial forecasting really is a must.

Come and talk to us about the key areas of financial uncertainty in your business – and find out how we can guide you through these uncertain times and out the other side.

What's new in Xero (Spring 2025)

Wed, 09 Apr 2025 14:53:12 GMT

Some great new enhancements have come to Xero in the first few months of the year, here's some important features that have been released:

Enhancements to the new invoicing

Keyboard shortcuts.
Drag and drop attachments.
Date Picker quick select.
Exchange rate adjustments in the invoice.
Tracking categories for invoices.

Automated bill entry

The ability to upload bills directly to Xero, create one or many bills by dragging and dropping multiple files. Xero creates draft bills with the key details, and the original document is attached.

Other important features (region dependent)

Bank feed updates (Australia adds Suncorp Bank, United States gains PNC Commercial).

Simplified whole operations with improved sales orders (United States).

Easier 1099 reporting and filing (United States).

Streamlined tax workflow and compliance (United Kingdom).

Easier reporting (United States Schedule C compliance report, New Zealand not-for-profit tier 3 & 4 PBE reports).

For the full breakdown read Xero's update .

Your Newest Team Member is… Software?

Wed, 09 Apr 2025 14:45:57 GMT

Imagine this: you hire a new team member. On their first day, you throw them into the deep end with no onboarding, no guidance, and no feedback. Then, a month later, you wonder why they aren’t thriving.

Sounds ridiculous, right? And yet, this is exactly how many businesses treat new software and processes. They buy a system, plug it in, and expect it to immediately deliver top-tier performance. But just like any human hire, technology needs time, support, and a structured path to success.

So, how do you embed new software or processes into your team the right way? The same way you would with any team member—by making sure it’s nurtured, monitored, and given the opportunity to grow with your business.

Step One: Onboarding Your New “Hire”

The first step in embedding technology into your team is a structured onboarding process. When you bring on a new employee, they get training, introductions, and a clear role within the business. Your software or new process needs the same approach:

Set expectations : What is this tool meant to do? What problems is it solving?
Assign ownership : Who’s responsible for ensuring it gets set up and used correctly?
Provide proper training : If you expect your team to use a system daily, they need to know how. This might mean formal training, a buddy system, or ongoing coaching.
Start small : Just like you wouldn’t dump a new hire into their most challenging project on day one, don’t unleash a new process at full scale without a gradual rollout.

Step Two: Regular Check-Ins

Once a new team member settles in, they get performance reviews, check-ins, and coaching. Your software deserves the same.

Schedule review meetings : Set aside time at 30, 60, and 90 days to evaluate how the new system is working. What’s going well? What’s not?
Gather feedback : Talk to the people using it daily. They’ll spot friction points that you may not have anticipated.
Tweak and refine : Rarely does a process work perfectly out of the box. Make adjustments based on what’s working in practice.

Step Three: Growth and Capacity Checks

Over time, your best employees grow within their roles. They take on more responsibility, get promoted, and develop new skills. Your technology should do the same.

Does it scale? If your business has doubled in size, does the software still work, or is it holding you back?
Are you using it to its full potential? Many companies only scratch the surface of what a system can do. Are there features you’re not using that could add value?
Is the team evolving with it? As the system matures, so should the processes around it. Ongoing training ensures that both your team and the software remain aligned.

Step Four: Making it a True Team Member

If you’ve done everything right, your software is no longer just “the new system” but a core part of how your business operates. To keep it that way:

Include it in team discussions : When talking about workflows, deadlines, or projects, ensure the system is part of the conversation.
Celebrate its success : Just as you’d acknowledge a team member’s contributions, celebrate the wins your software brings—whether it’s reducing admin time, improving accuracy, or streamlining reporting.
Plan for its future : Eventually, every system either grows with you or gets replaced. Keep an eye on how well it continues to serve your needs.

The Bottom Line

Technology isn’t just a tool; it’s a team member. If you treat it like one—giving it onboarding, training, feedback, and opportunities to grow—you’ll get long-term success instead of frustration.

So, next time you bring in a new system, ask yourself: are you setting it up for success, or just hoping for the best?

The Spring Statement: the impact for small business

Thu, 27 Mar 2025 13:50:18 GMT

The Chancellor of the Exchequer, Rachel Reeves, delivered the Spring Statement on Wednesday 26 March. With the full Budget now moved to the Autumn, the Spring Statement was a chance for the Labour Government to respond to the latest economic forecasts from the Office of Budget Responsibility (OBR) and to set out its wider economic strategy.

But, as widely predicted, there were also announcements of spending cuts across both the benefits system and the public sector as a whole.

We’ve summarised the key points and the impact they may have for you and your business.

Overview of the Spring Statement 2025

Background to the Spring Statement

The Spring Statement was intended to be a routine response to updated analysis by the OBR. But because of the deteriorating outlook for international trade, and additional pressure on security and defence, this was flagged as being a more significant event.

Had nothing changed in the tax and spend plans from last year’s Autumn Budget, the previously forecast headroom of £9.9 billion forecast at the end of 2029/30 would have become a deficit of £4.1 billion. This is now restored to (exactly!) £9.9 billion.

Growth is actually up slightly against the previous forecasts (apart from a dip in 2025). But this growth is driven by public sector investment, rather than investment from the private sector. The announcement in last year’s Budget of an increase in employer’s National Insurance has dented private-sector confidence.

Don’t forget that this NI increase takes effect from April this year .

Fiscal Rules

There are two elements to the fiscal rules that Labour has put in place.

Debt reduction target: Borrowings (public sector net debt, excluding the Bank of England) as a percentage of the UK’s economy (GDP) to be lower by the fifth year of the forecast period.

Stability rule: The Government’s current spending should be covered by its income, primarily taxes.

The OBR calculates that there’s a 51% chance of the debt reduction target – i.e. the £9.9bn headroom – being met.

Economic Growth Forecast Adjustments

The OBR’s forecast for growth has been cut from 2% to 1% for 2025. However, forecasts for the following years are higher than previously forecast, meaning that, overall, the economy is projected to be larger by 2029 than in last year’s autumn forecasts.

Real household disposable income is expected to grow nearly twice as fast this year, making households, on average, £500 per annum better off.

Fiscal Headroom and Budget Balance

Fiscal headroom has been restored to £9.9 billion by 2029–30, compared with the ‘no change’ forecast of a £4.1 billion deficit.

The Institute for Fiscal Studies warns that there is a significant chance of likely future tax rises if the Government is going to meet its targets.

Welfare Reforms and Impacts

Cuts to some welfare benefits were announced before the Spring Statement, and these figures were tweaked slightly in the statement.

The main welfare changes are:

Incapacity benefit to be halved to £97 per week for new claimants, and frozen, saving £4.8 billion by 2029–30.
Universal Credit standard allowance to rise from £92 to £106 per week. The health element is to be cut by 50% and frozen for new claimants.

Defence and Security Spending

With an eye on escalating instability on the world stage, an additional £2.2 billion has been allocated to the Ministry of Defence for 2025–26.

Defence spending is to reach 2.36% of GDP next year; on course for 2.5% by 2027.

At least 10% of the equipment budget is to be spent on advanced tech (e.g. drones, AI).

Investment is expected on advanced manufacturing capacity, including a £400 million fund for innovation.

Taxation and HMRC Measures

As widely predicted, no new tax increases were announced.

HMRC will take on an additional 600 staff to tackle tax evasion, targeting £1 billion of additional tax revenue collections by 2029.

Public Spending and Efficiency Drives

Departmental spending growth is down, overall, from 1.3% to 1.2% above inflation, annually.The Government is instigating a Civil Service efficiency drive aimed at a 15% cut in administrative costs by 2030. This will mean cuts to staff and more use of technology, such as AI and software automation.

Overall, it seems like the Government’s focus was on retaining the previous £9.9 billion headroom. But that target is so tight that there’s expected to be continuing uncertainty between now and the Autumn Budget around the possibility of future tax rises. The direction of travel may be a bit clearer when the departmental spending reviews are published in June.

Helping you plan for the economic challenges ahead

If you believe your business will be affected by the tough economic conditions the UK is facing over the coming year, we’re here to help you plan, cut costs and get your cashflow on track.

Drop us a line to book a meeting and chat with the team.

Making your business work for you: securing your lifestyle

Tue, 18 Mar 2025 10:33:17 GMT

Making your business a success story may be what drives you to get out of bed every morning. But your business also needs to deliver on your personal goals as well.

Profits, dividends and bonuses need to be stable enough to help you maintain your desired lifestyle, whether that’s two holidays a year, or paying the mortgage on a new family home.

In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals.

Delivering the income that fuels your chosen lifestyle

When you start a business, you make some fairly major decisions about your quality of life. Building a start-up could mean several months, or even years, of reduced income. But, ultimately, you’ll want an income from the business that helps you fund your chosen lifestyle.

Here are four key ways to make sure your business can secure your lifestyle:

Focus on high margins or high volume

Prioritise products/services that offer either high margins or high volumes of sales. Your key focus is to help the business provide stable, predictable revenue and profits. This will help you draw down the necessary income for your desired lifestyle.

Get strategic with your pricing

Adjust your pricing so you’re competitive but making some healthy margins. Value-based pricing and bundling helps to increase the value from each transaction. The more you do to boost the price of an average sale, the easier it will be to supply the income needed for your lifestyle.

Hang on to valued customers

You can quickly improve your customer loyalty stats by offering personalised services and programs. Retaining your existing customers is cheaper than acquiring new ones, so keep these customers sweet and enjoy consistent revenues that power your personal income.

Automate your most costly processes

Labour costs can quickly eat into your profits. Think about automating basic tasks and outsourcing non-core functions, so you’ve got more time for high-value revenue generation. Reducing your overheads can directly influence your own potential income as a director.

Creating a profitable, cash-rich enterprise is the dream. And if you can stabilise your sales, revenue and profitability, you increase your chances of a healthy income from the business.

Come and have a chat about working smarter, not harder.

Making your business work for you: work/life balance

Tue, 18 Mar 2025 10:23:53 GMT

You started your business to have the freedom of being in charge. But are you actually working harder than ever and drowning in admin, meetings and other demands on your time?

Don’t worry, there are ways to get your work/life balance back under control.

In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals.

A business that’s designed to balance work and downtime

Running a company can be all-consuming. You have a business idea you believe in and a team that’s working hard to bring your product or service to market. It’s easy to let the multiple tasks on your to-do list take over, so you end up working around the clock, with no downtime.

But, ultimately, working this hard is counter-productive. You burn out, have no energy to lead and start to make silly mistakes. So, dialling down the workload is a must.

Here are four key ways to get your work/life balance back on track:

Prioritise tasks and block out time

Schedule specific blocks of time for work tasks, personal appointments and downtime to relax and decompress. Be ruthless about prioritising tasks and focus on the 20% that yields 80% of the results. This prevents work from bleeding through into your leisure and family time.

Learn to delegate and outsource

Don't try to do everything yourself. Find the tasks that can be delegated to team members or outsourced to freelancers and other contractors. If data entry is your nemesis, hire a bookkeeper. This frees up your time for higher-value activities and reduces your workload.

Establish boundaries between work and leisure time

Set clear boundaries between your work and personal life. This might mean turning off work-related notifications after a certain time, or designating specific days or times for family and friends. If you work from home, think about having a home office that you can only use during these agreed working hours – so you create a separation between work and downtime.

Schedule regular breaks and downtime

Burnout is a real risk for entrepreneurs. Be sure to take regular breaks throughout the day, even short ones, to recharge. Schedule proper downtime – evenings, weekends and holidays – and stick to it as much as possible. This gives you time to breathe and keeps you fresh. Helping you set and track your personal goals

No company has ever prospered with a tired, burnt-out and frazzled CEO at the helm. If your business is taking over your time, now’s the time to take a new approach to your workload.

Come and have a chat about working smarter, not harder.

Making your business work for you: the big goal

Tue, 18 Mar 2025 10:14:18 GMT

You spend a lot of time making sure your business runs like clockwork. But is your business delivering for you personally, as the owner and/or founder?

In this series, we’ll look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals.

A business that supports your personal vision and life goals

When you started your business, you’ll have had a clear idea of how this new venture would provide for you and your family. But, over time, your attention can become focused on the day-to-day operations, with less awareness of how the company is delivering on your own personal and entrepreneurial goals.

In this series, we want to reverse that flow. We want you to think clearly about what you want from life, your business and your wider position as an entrepreneur.

We’ll look at:

Maintaining a healthy work/life balance

Think about how you structure your business to allow for flexibility and time for your own personal pursuits. This could involve working remotely to spend more time with your family, flexible working hours or having the right team to delegate work to.

Securing your lifestyle

Make sure your business generates enough income to support the lifestyle you’re aiming for. This may mean reviewing your budget and expected income, setting financial goals and developing a business model that delivers the revenue you need.

Making enough to retire

If the end game is to retire, you need a nest egg to do this. Funding a comfortable retirement might mean reinvesting dividend income into a pension, exploring tax-efficient strategies and developing a long-term financial plan.

Investing in your passions

What gives you joy outside work? You can use your business as a platform to pursue your passions, whether it's supporting local charities, promoting sustainability or creating products that reflect your personal and ethical values.

Passing the business to the next generation

Before you retire, it’s important to plan for a smooth transition to the next generation, whether those successors are family members or other members of your existing team. This will mean putting serious thought into succession planning and training.

Helping you set and track your personal goals

Over the course of this series, we’ll explore each of these five goals in more detail. In the meantime, we’re here if you want to track how you’re performing against your personal goals.

Come and have a chat about what you want from your business.

HMRC is sending letters re MTD for ITSA

Tue, 18 Mar 2025 10:08:47 GMT

You may find a brown letter from HM Revenue & Customs (HMRC) dropping onto your doormat soon, with details of the soon-to-be-mandatory MTD for ITSA.

But what is ‘MTD for ITSA’ and why do you need to know about it?

Your two-minute guide to MTD for ITSA

Making Tax Digital for Income Tax & Self Assessment (or MTD for ITSA) is part of HMRC’s ongoing initiative to convert the UK tax return process over to a digital system.

If you’re a sole trader or landlord, you’ll soon need to:

Keep digital records of all your income and expenses.
Use MTD-compatible software for your bookkeeping and accounting.
Submit regular quarterly digital reports to HMRC.
Send a full digital tax return at the end of the tax year.

Landlords and sole traders who fall into the following categories will soon find it’s mandatory to use the MTD for ITSA system.

from April 2026, for those with qualifying income over £50,000.
from April 2027, for those with qualifying income over £30,000.

A brown envelope with your MTD ITSA reminder

From April 2025, HMRC will be starting a campaign to raise awareness of the looming deadline to become compliant with the MTD for ITSA rules.

This will be kickstarted with an official HMRC brown envelope being sent to sole traders and landlords with a total self-employment and/or property income of over £50,000.

You’ll receive a letter if your 2023 to 2024 self assessment tax return shows your total income (turnover, not profit) as being either over, or close, to £50,000.

Don’t panic! We can help you get ready for MTD

An official letter from HMRC can sometimes be cause for concern. But there’s no need to worry unduly about MTD for ITSA. The mandatory deadline for compliance is still a year away, so there’s plenty of time to update your systems and get yourself compliant.

Come and talk to the team and we’ll explain the implications of MTD for ITSA, the need for digital records and how to get compatible cloud accounting software up and running.

How will inheritance tax changes affect your farming business?

Tue, 25 Feb 2025 18:14:36 GMT

If you’re involved in UK farming, the recent changes to inheritance tax (IHT) won’t have escaped your notice. There have been protests from the farming community and big questions about how these IHT amendments will affect the industry.

But what are these IHT changes? And is your farming business likely to be affected?

What are the main changes to IHT for farming businesses?

The Chancellor, Rachel Reeves, announced reforms to agricultural property relief (APR) and business property relief (BPR) from inheritance tax in the Autumn Budget 2024.

Currently, your farming business can make use of APR and BPR at a rate of 100% or 50%, with no cap on the total amount of relief for businesses that meet the eligibility criteria.

The big change is that inheritance tax relief for business and for agricultural assets will be capped at £1m from April 2026. There will be a new reduced rate of 20% charged above that £1m threshold, instead of the usual inheritance tax rate of 40%.

The tax will be payable in instalments over 10 years, interest free, with the government aiming to supply a technical consultation by early 2025 and the reforms coming in from April 2026.

Who will actually be affected by the new £1m threshold?

If you’re wondering how you’re likely to be affected by the new £1m threshold, and the impact it will have on your succession planning, HMRC has provided a helpful table.

Talk to us about preparing for these IHT changes

If your farming business falls below the £1m threshold, you’ll be able to continue claiming the APR and BPR reliefs as usual. If the value of your business is over the threshold then now’s the time to assess the impact and to take appropriate tax-planning measures.

Come and talk to the team and see what steps you can take to minimise the impact.

The SPIN Cycle of Cloud Software: Solving Issues, One Question at a Time

Tue, 25 Feb 2025 18:11:50 GMT

If you've ever found yourself tangled in a web of cloud software issues, you're not alone. Many SMBs dive into new tools hoping for miracles, only to find themselves stuck in a cycle of frustration and confusion. But what if the solution lies not in throwing money at more software but in asking the right questions? Enter the SPIN Selling framework—Neil Rackham’s 1988 method for uncovering customer needs—and let’s give it a cloud-software twist.

SPIN stands for Situation, Problem, Implication, and Need-Payoff , and it’s a roadmap for cutting through the noise to find real solutions. Let’s see how this approach can help you tackle cloud software issues head-on.

Step 1: Situation—Getting the Lay of the Land

Before you solve a problem, you need to understand your starting point. This means asking questions to uncover the current state of your software setup. Examples:

“What tools are we using for project management, invoicing, and reporting?”
“How many systems are currently integrated, and how well do they work together?”
“What’s our monthly spend on software?”

These questions help clarify whether your tech stack is overcomplicated, underused, or a patchwork of half-working solutions. The goal is to map out your situation clearly before diving into fixes.

 Step 2: Problem—Identifying the Pain Points

Once you know the situation, it’s time to dig into what’s not working. Problem questions focus on the frustrations, inefficiencies, and bottlenecks holding you back. Examples:

“Are we duplicating work across multiple platforms?”
“Is our team consistently using the tools we’ve invested in?”
“Do we have accurate, real-time reporting when we need it?”

This stage is all about surfacing the issues that are draining time, money, and morale. Don’t shy away from specifics—honest answers here lead to better fixes later.

Step 3: Implication—Exploring the Ripple Effect

Here’s where things get serious. Implication questions go deeper, uncovering the real impact of these problems on your business. This step often highlights the hidden costs of “making do” with a subpar system. Examples:

“How much time are we wasting on manual processes each week?”
“Are delays in data reporting affecting decision-making or client satisfaction?”
“What’s the risk if we continue using outdated or poorly integrated software?”

By connecting day-to-day frustrations with long-term consequences, you create urgency around finding a solution. After all, who wants to waste resources or risk their reputation over bad software?

Step 4: Need-Payoff—Highlighting the Benefits of Change

Now for the good news: there’s a light at the end of the tunnel! Need-payoff questions focus on the positive outcomes you’ll see once the right solution is in place. This is where you shift the conversation from problems to possibilities. Examples:

“How much time could we save with an automated workflow?”
“What would seamless integration mean for team productivity?”
“How would accurate forecasting help us hit our growth targets?”

Framing the conversation this way makes the benefits of change feel tangible and worth the effort.

Bringing It All Together

Here’s how a SPIN-based conversation might look in action:

Situation: “We’re using five different tools, and none of them talk to each other.”
Problem: “It’s a nightmare pulling reports, and we’re spending hours reconciling data manually.”
Implication: “This is delaying projects, causing errors, and frustrating our clients.”
Need-Payoff: “With an integrated system, we’d cut admin time in half, boost accuracy, and focus on growth.”

Why SPIN Works for Cloud Software

Cloud software isn’t one-size-fits-all, and adopting new tools without asking the right questions is a recipe for disappointment. By applying the SPIN Cycle, you can move past surface-level issues to uncover the real needs of your business—and find solutions that work.

So, the next time your tech stack feels like it’s spinning out of control, try this SPIN instead. You’ll go from problem-laden to payoff-ready in no time.

Inspirational podcasts for your business

Tue, 25 Feb 2025 18:09:42 GMT

Podcasts are often on our list of things to do, but for many business owners, there are often not enough hours in the day. The recent challenges and changes in business mean it's the perfect time to make the opportunity to think about where you want your business to head in the future.

Here's 9 podcasts to provide inspiration for your next business planning session, and are great to listen to when exercising. Find them on the author’s website, Spotify or iTunes.

TED Talks - super popular and there are thousands to choose from. Top picks include Simon Sinek and Brene Brown.
Lewis Howes School of Greatness - Downloaded over 4 million times a month, hear interviews with world-class game changers in entrepreneurship, health, athletics, mindset, and relationships.
The Bite-Size BizRoom - 15-minute podcasts with business advice you can easily action to grow your business.
The Mike Dillard Podcast - Captivating interviews with inspiring leaders to help you fulfill your potential.
The Happiness Lab - Surprising and inspiring stories based on the latest scientific research that will change the way you think about happiness.
Building a Storybrand - Donald Miller has helped thousands of businesses grow by getting them to clarify their marketing messages.
How I Built This - Guy Raz dives into the stories behind some of the world's best-known companies. Hear about innovators, entrepreneurs and idealists — and the movements they built.
The Mindset Mentor - 10-20 minute podcasts designed to give small business owners a motivational boost.
Entrepreneurs on Fire - John Lee Dumas is the founder and host of this award winning podcast. With over 100 million listens and more than 3000 episodes it delivers high energy inspiration and valuable insights.

The Project Management Triangle: Quickly, Cheaply, or Done Well - Pick Two!

Tue, 25 Feb 2025 18:08:12 GMT

Every project manager has heard the saying: "You can have it done quickly, cheaply, or well - pick two." This timeless concept is known as the Project Management Triangle, or the Iron Triangle. At its core, it reflects the delicate balancing act between three constraints: time, cost, and quality.

The Triangle forces us to confront reality: perfection across all three is impossible. Let’s unpack this concept and explore how understanding the trade-offs can help you make better project decisions.

The Three Points of the Triangle

Quickly (Time)

Time is the driving factor when deadlines loom large. When speed is a priority, you’ll likely need to compromise on cost or quality. Faster timelines often require more resources - such as hiring additional help - or cutting corners to save time.

Example: Releasing a new service before a competitor. You might launch on time, but processes could still need refinement.

Cheaply (Cost)

Budget-conscious projects aim to keep costs low, but this can stretch timelines or reduce quality. Limited funding often means fewer resources or less experienced workers, which can lead to delays and subpar results.

Example: Opting for an affordable tool that meets basic needs but lacks the customisation to work seamlessly for your team.

Well (Quality)

High-quality projects produce reliable and robust outcomes, but they demand both time and money. Quality requires skilled professionals, thorough planning, and attention to detail - all of which come at a cost.

Example: Implementing a comprehensive software solution like a new accounting or stock management system. Done properly, it transforms your business, but the process won’t be cheap or fast.

The Trade-Offs: You Can Only Pick Two

The Triangle teaches us that something must give. Let’s explore what happens when you prioritise two points at the expense of the third:

Quickly + Cheaply = Not Well

Speed and affordability rarely result in high quality. This combination often leads to errors, rework, or an end product that doesn’t fully meet your needs.

Quickly + Well = Not Cheap

High-quality results on a short timeline require significant investment. You’ll need to hire top talent, work overtime, or pay for premium services to deliver both speed and quality.

Well + Cheaply = Not Quickly

Prioritising quality on a tight budget takes time. With limited resources, progress is slower, but the outcome will meet your standards.

Using the Triangle to Make Smarter Decisions

The Project Management Triangle isn’t just a theoretical concept—it’s a practical tool for setting expectations and making informed decisions. When kicking off a project, consider these steps:

Identify Priorities

Ask yourself (and your team): What matters most? Is it meeting a deadline, staying within budget, or achieving top-notch results? Ranking these factors helps guide your decisions.

Communicate Clearly

Use the Triangle to frame discussions with stakeholders. Explaining the trade-offs can prevent unrealistic expectations and keep everyone on the same page.

Plan Accordingly

Once priorities are set, allocate resources to align with them. If speed and quality are key, invest in experienced professionals. If cost is the focus, plan for longer timelines or simpler deliverables.

Why It Matters

Ignoring the Triangle often leads to frustration, budget blowouts, or rushed results. Embracing it, however, helps you set realistic goals, build trust with stakeholders, and deliver projects that meet the most critical needs.

The next time someone insists on having it all—fast, cheap, and perfect—pause and ask: "Which two matter most?" It’s not about settling; it’s about making choices that serve the project’s ultimate goals.

What's happening with Making Tax Digital?

Wed, 05 Feb 2025 19:51:10 GMT

Keeping up to date with HMRC’s Making Tax Digital initiative is important, whatever size business you run and however you currently record, submit and pay your business taxes.

Let’s take a quick look at the goals of Making Tax Digital (MTD), which requirements are currently mandatory and which elements are likely to change in the near future.

What is Making Tax Digital?

The aims of MTD are to modernise the UK tax system by requiring businesses and individuals to keep digital records and file their tax returns using compatible software.

Key goals of MTD are to:

Improve accuracy by pushing businesses, and some individuals, to use accounting software to keep accurate digital records – moving away from paper-based records.

Increase efficiency by using digital filing and tax submissions to reduce the time and effort required for tax returns.Enhance compliance, by moving to quarterly returns that make it easier for HMRC to monitor tax compliance and identify potential fraud.

Which parts of MTD are currently mandatory?

MTD has been in the works for a number of years, with several delays and setbacks to the original agenda. Some elements of MTD are now in use, and others are likely to be introduced in the near future. Here’s a breakdown of what’s currently expected of your business.

Current elements of MTD for businesses:

MTD for VAT – under the MTD for VAT rules, all VAT-registered businesses must keep digital records and file quarterly VAT returns using compatible software. This has been mandatory since April 2019.

Upcoming elements of MTD for businesses:

MTD for Income Tax Self Assessment – MTD for ITSA is currently being piloted. From April 2026, it will become mandatory for sole traders and landlords with annual income above the £30,000 p/a threshold. All qualifying individuals will need to keep digital records and submit quarterly updates.

MTD for Corporation Tax – the government has announced plans to introduce MTD for Corporation Tax (CT), and held a consultation on how MTD for CT might work. The exact timeline for introducing MTD for CT has not been confirmed, but, at present, it’s unlikely to happen before April 2026.

Talk to us about getting MTD compliant

If you’re not yet registered for MTD for VAT and are worried about complying with the regulations, please do come and have a chat with our tax team.

Setting up accounting software and digital recordkeeping tools can be extremely straightforward, making your bookkeeping and tax management far more effective

What are your business goals for the year ahead?

Wed, 05 Feb 2025 19:38:37 GMT

The beginning of a new calendar year is an excellent time to review last year and reflect on what worked, what didn’t, what you’d like to change and new things you want to implement.

Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the coming business year. Planning and goal setting will help provide a focus for your business efforts.

Your Yearly Business Review

What were the most significant impacts on your business in the last 12 months? How well did you meet the challenges?
What worked well last year? What systems, technology, products or services were successful?
What accomplishments can you celebrate?
What situation, event or experience provided the biggest learning opportunity?
What is the biggest challenge or frustration you face as you prepare for the year ahead?
What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it!
Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable?

Get Ready for a Great Year

While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for a positive start to the year.

If you’d like to chat about what you can do differently this year to enable your business to thrive, book a time with us today.

Should you buy a building for your business?

Wed, 05 Feb 2025 19:35:38 GMT

Tired of paying rent for your commercial premises and considering buying a premises for your business?

Owning a building works best if your business is well-established, you have money to invest, and you’re taking a long-term approach – it can take many years for this decision to pay for itself.

The advantages of owning a commercial property

You no longer need to worry about dealing with a landlord. You’re the landlord now, so your lease won’t end and you get to make all the decisions about how the premises is used. If you want to make changes to the fitout, it’s up to you.
You don’t have to worry about rising rent. Eventually, owning a premises will be cheaper than leasing. When you continue leasing, you can expect the rent to keep going up – sometimes the jump may be substantial.
If your business moves or closes, you still own the building. This can be a highly valuable long-term asset, depending on the type of building and the potential tenants.

The advantages of leasing your business premises

Leasing gives you more flexibility. You can move if your business gets too big for the space, or downsize if more people are working from home.
You don’t have to worry about paying building expenses like rates, warrants of fitness, and insurance.
Your rent is likely to be lower than the servicing costs for a commercial property loan, boosting cashflow so you have more to invest in the growth of the business.
The landlord will take care of repairs and maintenance on your building – when there’s a leak, for example, it’s not your problem.
Commercial buildings are typically expensive and financing is costly, so you’ll need to do plenty of research before you decide to make a purchase.

We can run a cost-benefit analysis

Could buying a building be the right choice for your business? We can work with you to analyse the costs and benefits of each option, to help you make an informed decision about which one will put you on track to achieve your goals.

Get in touch today, we’d love to hear from you.

Getting ready for MTD for Income Tax and Self Assessment

Tue, 21 Jan 2025 13:28:02 GMT

HM Revenue & Customs’ (HMRC) Making Tax Digital initiative has been gradually evolving for several years now. But did you know that it will soon be mandatory for landlords and small businesses that pay tax through self-assessment to use HMRC’s digital tax system?

Making Tax Digital for Income Tax & Self Assessment (or MTD for ITSA, as it’s more commonly known) is likely to be a major change for some taxpayers.

So, are you ready for the upcoming MTD for ITSA rules?

What is MTD for ITSA?

Making Tax Digital (MTD) aims to bring tax into the digital age, moving from annual paper and online tax submissions to quarterly digital uploads of your tax information.

Having to keep detailed digital records sits at the heart of MTD. Taxpayers will need to record all incoming and outgoing transactions using compatible accounting software, and then share this information in an approved digital format with HMRC.

Who will be affected by the MTD for ITSA rules?

MTD for ITSA is already at the beta testing stage and some self-assessment taxpayers have opted in to the system already.

But if you’re a landlord or sole trader who falls into the following categories, MTD for ITSA will soon become a mandatory requirement:

From April 2026, for those with qualifying income over £50,000
From April 2027, for those with qualifying income over £30,000

How do you get ready for MTD for ITSA?

If you’re already using cloud accounting software to manage your finances, MTD for ITSA won’t be a major challenge. You’re already recording your numbers in a digital format and most of the popular accounting platforms will have MTD for ITSA templates you can fill out.But if you’ve not embraced the latest in accounting tech, it’s important to upgrade ASAP.

To stay compliant, you’ll need to:

Keep your records in a digital format
Provide digital quarterly updates to HMRC
Be able to provide your ITSA return information to HMRC through MTD-compatible software.
Talk to us about preparing for MTD for ITSA

If you’re concerned about how MTD for ITSA may affect your finances, come and talk to us.

We’ll advise you on the best accounting software and give you guidance on upgrading and preparing your bookkeeping, accounting and tax procedures for MTD for ISA.

Should your small business adopt AI tools?

Tue, 21 Jan 2025 13:22:40 GMT

We’re living through what the World Economic Forum has called ‘ The Fourth Industrial Revolution ', and artificial intelligence (AI) is one of the formative technologies of this revolution.

AI is no longer the stuff of science fiction. AI solutions and business tools are here right now, demonstrating new ways to operate, manage and staff your small business.

So why are only one in three UK small businesses using AI?

And where could AI be lending a helping hand in your own business?

Keeping pace with the speed of technological change is a key responsibility for any business owner. If competitors are using AI to gain efficiencies and streamline their operations, it stands to reason that your business must match this innovation and find ways to embrace AI.

But, as with any technological or software investment, there has to be a fundamental role for the new AI tools you take on. ‘Going AI’ just to be seen to be at the cutting edge, is not the goal here. Your aim is for AI to have a function and to make your life easier.

Here are five areas where modern AI tools can help the average small business:

Answer customer calls and improve customer service .

Fast responses to customer queries are essential for good customer service. AI-powered phone agents, like Lucy from Curious Thing , can have human-like conversations with customers, answer routine customer enquiries and free up your team to focus on high-value customer interactions.

Record and summarise meetings.

Pulling out the key points from in-house and customer meetings can be time-consuming. A tool like Fireflies records your in-person and online meetings and then forwards you an AI summary of the meeting, with bullets of the key themes, a full transcript and clear action points for everyone to follow.

Speed up your marketing content creation.

Generative AI tools, like ChatGPT and Google Gemini can revolutionise your marketing efforts. Ask AI to draft you an email campaign, sales deck or web page, based around your foundational knowledge of the product. But make sure to edit and personalise the output to make it your own.

Automate your social media posting.

Being present on social media is vital for brand awareness and connecting with customers. A social media tool like Buffer helps you manage your social media accounts while also using the built-in AI tool to generate posts and repurpose existing posts, keeping your feeds fresh.

Manage HR and employee performance.

Managing the objectives and key results (OKRs) for your team can be a challenge. With an AI tool like Peoplebox , much of the goal-setting and performance management can be automated, helping you keep everyone on the team focused on the same goals, while you focus on the business.

Talk to us about areas where AI can add value for your business.

The world of business-focused AI solutions is growing at a fantastic rate, so the suggestions above are just the tip of a very large AI iceberg.

Mastering expense management in your business

Tue, 21 Jan 2025 13:04:41 GMT

Effectively managing your expenses is crucial for sustaining growth and ensuring profitability of your business, while ensuring you have a smoother journey along the way. Whether you're a start-up or an established enterprise, maintaining control over your finances can be the difference between success and failure. Here are eight strategies to help you better manage your business expenses and keep your finances and operations running smoothly.

1. Establish a Comprehensive Budget

Creating a detailed budget is the foundation of effective expense management. A budget shouldn't just be a one-time task but a dynamic tool that adapts as your business grows. Start by identifying your fixed and variable costs, and use historical data to forecast future expenses. Regularly review and adjust your budget to reflect changes in your business environment, ensuring it remains relevant and accurate.

2. Monitor Cash Flow Diligently

Cash flow is the lifeblood of any business. Keeping a close eye on your inflows and outflows will help you avoid cash shortages. Implement a system to monitor your cash flow in real time — this could be through accounting software that alerts you to discrepancies or potential problems. Regular cash flow analysis enables you to identify trends and make informed financial decisions promptly.

3. Separate Personal and Business Finances

Mixing personal and business finances can lead to confusion, making it difficult to track business expenses accurately. Open dedicated business banking accounts and ensure only business transactions are conducted through them. This separation not only aids in clear financial analysis but also simplifies tax preparation and legal obligations.

4. Implement Expense Tracking Tools

Technology offers numerous solutions to streamline expense management. Consider using expense tracking software or apps that allow you to photograph receipts and automate entries. These tools can generate comprehensive reports, providing insights into spending patterns and helping you identify areas for cost reductions.

5. Review and Reduce Unnecessary Expenses

Regularly review your expenses to identify non-essential costs. This could include subscriptions, services, or supplies that are rarely used or that don't add significant value to your operations. Make sure expenses are worthwhile, and approach vendors for better rates or seek alternative suppliers.

6. Foster a Cost-Conscious Culture

Encourage your team to be mindful of spending by promoting a culture that prioritizes cost efficiency. Educate employees about the impact of expenses on your business bottom line, and empower them to suggest improvements. When everyone is aware of financial goals, they are more likely to contribute to cost-saving initiatives.

7. Plan for Taxes Early

Taxes can be a significant expense, so it's crucial to plan for them well in advance. Work with a tax professional to ensure compliance with all tax obligations, and take advantage of any deductions or credits available to your business. Setting aside money for taxes up front helps prevent cash flow issues at tax time.

8. Regular Financial Audits

Conduct periodic audits of your financial statements. This doesn't necessarily mean hiring an outside firm; instead, engage a team member or business partner to review the records. These audits can help you discover discrepancies, unexpected expenses or even fraudulent activities early, allowing for timely correction.

Conclusion

Effective expense management is not a one-time task but an ongoing process that requires vigilance and adaptation. By establishing a robust budget, employing the right tools, and fostering a cost-conscious company culture, you can ensure your business maintains financial health. Implement these strategies to transform your expenses from a potential pitfall into a pillar of your business strategy, driving growth and sustainable success.

Need assistance with managing your business finances? Contact us today to learn how we can help streamline your expenses and improve your cashflow and profits.

Five big business challenges for 2025

Tue, 21 Jan 2025 13:01:12 GMT

‘Uncertainty’ has been the defining phrase for the first half of the 2020s. The markets are unstable, supply chains have been wobbly and finding talent has been difficult.

But as we head into 2025, and the second half of the decade, what are the major threats, opportunities and challenges that your business should focus on?

We’ve highlighted five of the big business challenges.

Five big business challenges for 2025 (and beyond)

However well-organised you are, there are elements in the external environment that you just can’t control. These external factors can have a serious impact on your ability to trade, grow and turn a profit. So, are you on the ball and ready to tackle them in 2025?

Let’s look at five of the external factors you should be focused on:

Climate change and sustainability

It’s an unpleasant truth, but the environment is in real trouble. As a business, there’s a growing need to demonstrate your environmental responsibility. This means developing a sustainability strategy, investing in green technologies and demonstrating your environmental commitments.

AI and technological disruption

Artificial intelligence (AI) and automation have changed the game in a fantastically short timeframe. Finding the value in this tech is crucial, as well as understanding its limitations. Getting your digital transformation underway will be vitally important in 2025, as will exploring how AI and automation can kickstart your productivity, boost your customer service processes and create a real competitive advantage for the company as a whole.

Skills shortage and transforming your workforce

The ongoing skills shortage, combined with the reality of an aging workforce and changing employment expectations, is a major issue. To overcome the talent challenge, you’re going to need to rethink your recruitment policy, your training and what you do to retain your key people.Things like flexible working arrangements, continuous professional development (CPD) and a great company culture are all ways to attract and maintain your top talent.

Inflation and an unstable economy

The global and local economies are not out of the woods yet. Forecasts may be looking more positive but there’s still the ever-present threat of recession, rising inflation and high interest rates. Getting granular with your financial forecasting will help, as will exploring your options for additional revenue streams, better cashflow management and ready access to business finance.

Regulatory compliance and reporting

Regulatory environments are getting increasingly complex, as governments wrestle with the need for tighter structures. Regulations around your environmental reporting, workplace relations and digital privacy are all likely to get tighter over the coming years. This means allocating time and resources to understanding and implementing the relevant compliance requirements.

Talk to us about overcoming the big challenges

There’s no magic wand that can change these macro environmental and economic factors. But awareness, detailed planning and good use of forecasting can be a major boost.

Come and talk to our team about your concerns for the year ahead. We’ll help you understand the major external factors and what you can do to make your business more resilient.

Dealing with uncertainty – tips for business owners

Wed, 18 Dec 2024 16:09:40 GMT

Inflation may be down but there’s still real uncertainty for business owners. We’ve been trading in challenging times for a number of years now. Knowing what step to take next is a key worry, we know you invest more than simply time and money into your business. It is more than a job but part of your identity.

So, how do you get more clarity for your future plans? And how do you work on the short-term future of the business, when sales, income and cash may be in short supply?

Focusing your efforts in the right places

As a business owner, you can always think of new business-critical issues – but the reality is that you CAN’T control all these elements. This sense of mounting uncertainty is likely to raise your stress levels and make you more anxious.

So, how do you overcome these worries and find a practical solution?

Try to focus on the things you can control:

Identify the things that matter to the short, medium and long-term success of the business
Find the things you can control and over which you have some influence.

It's too overwhelming to try and work on everything at the same time. Instead, try to focus on one major thing you can achieve each day to improve business performance.

Review your overheads and costs – one way to reduce your cashflow worries is to reduce your spending. Look at your controllable overheads and see if there are ways to negotiate better terms with suppliers, cut down on expenses or pause any subscriptions.
Talk to debtors and creditors – if you can bring down your aged debt, that will help your overall financial health. Talk to any late-paying customers and agree when these debts will be paid. And talk to suppliers about extending payment terms, if possible.
Consider alternative revenue streams – if your current business model isn’t working well, are there other services that you could diversify into? Any new revenue streams will help to bolster your income and cash position, working with partners could be a key way to grow your revenue.
Update your website and marketing – having a great online presence is vital, is yours up to date with all the changes we've seen over the last 4 years?
Encourage your team – maintaining motivation and nurturing team spirit is even more crucial in this more rapidly changing world. The more engaged your team is, the easier it will be to embrace change together.

Talk to us about other strategies for dealing with uncertainty in your business.

How to optimise your business: six areas to focus on

Wed, 18 Dec 2024 16:05:59 GMT

We’re trading in uncertain times at present. But there’s still a pressing need to refine your business model, add value and look at the opportunities for growth.

In this series, we’ll look at some key ways to optimise your business, exploring different avenues to evolve your enterprise and create a legacy you can be proud of.

Six ways to optimise your business

Your game plan might have been to sell the business, achieve a great deal and retire on the profits. But in the current market, it’s possible you’ve had to press pause on this exit strategy.

However, instead of letting the business just tick over, why not get proactive about improving and enhancing your business model, so it’s a more profitable and viable business?

Here are six key areas you should be looking at:

Go digital and automate the business

Now’s the ideal time to embrace digital technologies. With the latest cloud tech, AI and automation solutions you can streamline your operations, improve your overall customer experience and boost sales. You can also explore e-commerce solutions, social media marketing and digital marketing.

Get proactive with your finances

Strong financial management sets the foundations for making the business profitable. Switching to the latest cloud accounting software helps you get a handle on your cashflow, a better overview of costs and a more informed view of your overall financial position. Many accounting platforms will also offer integrations with other helpful business tools, such as inventory, invoicing and point-of-sale (POS) tools.

Build on those customer relationships

Exceptional customer experience helps to build loyalty and drive repeat business. This means getting granular with your customers’ needs, providing excellent customer service and listening to (and acting on ) your customer feedback. It’s the best way to improve your customer service and brand.

Diversify into new areas

It’s easy to get stuck in a rut when it comes to your product range and industry focus. One way to shake things up is to diversify and explore new product ideas, new customer audiences and new niches. Diversification can reveal a whole new customer demographic, not to mention additional revenue streams.

Nurture your team and employee experience

Engaged employees are the foundation of a great business. Invest in training and development to improve your team’s skills and motivation and do everything you can to build a positive work culture. When hiring, look to create a diverse and inclusive team of people, so you have a real melting pot of talent, ideas, skills and experience in the business.

Look for strategic partnerships

Navigating the market is far more successful when you explore the benefits of business partnerships. Connecting with other businesses can extend your market reach, reduce costs and allow you to share resources. You also open up your brand to a whole new customer audience, boosting sales and growth.

Talk to us about optimising your business model.

There’s no single strategy for turning around the success of your business. But looking at new ideas, markets, products and business tools can certainly add considerable value.

If you’re looking to add some pizazz to your business model and operational effectiveness, drop us a line. Our team will be happy to review your current business and identify the opportunities for a great start to 2025.

Taking on the family business legacy: becoming the successor.

Wed, 18 Dec 2024 16:03:42 GMT

Becoming the successor to the family business is a genuine honour. But taking over control of the family legacy, and taking the business to new heights, can be daunting.

The older generation has been the curator of this business for years and will want to pass the company on to a trusted pair of hands – someone who can continue their hard work.

But what are the key skills you need as the new leader of the business?

You may already be fundamental to the operation of your family business. Or you may be returning to the company after a period in industry, or pursuing other life goals. Whatever your experience, it’s important to hone your skills, so you’re ready to take on the role.

We’ve outlined five of the most important skills and capabilities you’ll need as the leader of the family business:

A deep understanding of the business.

As the head of the company, you’ll need to have a real grasp of the inner workings of the whole business. That means getting acquainted with the company’s everyday operations, finances, sales, marketing and the overall competitive and economic landscape that you’re trading in.

Leadership skills and the ability to develop.

You’re the boss now, so that’s going to mean developing some strong leadership. Learning these interpersonal and motivational skills will be critical when you’re managing internal teams, making decisions with your management team and board, and navigating the challenges that every business faces.

A clear focus on building good relationships.

Good business is always based on solid, trusted relationships. It’s important to nurture these key relationships, whether it’s with your family members, employees, customers or suppliers. Be open, honest and transparent with all your stakeholders to promote the best long-term relationships.

An eye for strategy and business planning.

You’re the person leading the business now, and that includes being the strategic thinker behind the company’s future direction. Think carefully about your goals for the company and create a clear vision for the business's future, with a strategic plan to guide your next steps.

Excellent financial management skills.

Cash is king, so being in control of your finances is a must. Getting to grips with the financial aspects of the business may not seem that exciting, but being in control of budgeting, cashflow and profitability is a key driver to making the company successful in the mid-to-long term.

Talk to us about getting ready to take over the family business

You’ll want to do the family proud and be the best head of the business you can. But you can’t do that alone. It’s invaluable to have the best advice, support and guidance along the way.

Talk to our team about developing your skills as a business leader, setting the best goals for the family business and putting some strategic thinking behind your future plans.

What's Business Asset Disposal Relief: and how's it changing?

Wed, 18 Dec 2024 15:59:30 GMT

When you invest in the first faltering steps of a new venture or enterprise, you want to be pretty sure that you get a decent return on this entrepreneurial investment.

One way to do this is to make use of Business Asset Disposal Relief – an important relief that allows you to lower the amount of capital gains tax you pay when disposing of certain assets.

Everything you need to know about Business Asset Disposal Relief

The UK Government has always been keen to promote and encourage entrepreneurialism. A long-standing way to do this was via Entrepreneurs’ Relief, a way to reduce the amount of capital gains tax business owners paid following the disposal of some business assets.

In 2020, Entrepreneurs Relief was rebranded as Business Asset Disposal Relief (BADR), continuing the use of this enterprise-focused relief for ambitious investors.

Here’s a quick overview of how BADR works:

A reduced rate of capital gains tax

BADR allows eligible taxpayers to pay a reduced capital gains tax (CGT) rate of 10% on qualifying gains. This compares favourably to the current 20% standard rate of CGT.

Your lifetime limit

There's a lifetime limit of £1 million on gains that are eligible for BADR relief. Once over the £1m threshold, you’ll pay CGT at the standard rate.

Who’s eligible for BADR?

To qualify for the relief, you must typically have owned and run the business for at least two years. The shares or assets you own must also be directly connected to the business.Which assets qualify?BADR can apply to shares in a trading company, business assets like machinery or property, and certain intellectual property rights.

How do you make a claim?

To claim BADR, you'll need to complete a tax return and provide supporting documentation regarding the assets and disposal to HMRC.

How is BADR changing for future tax years?

In the Budget 2024, the Chancellor, Rachel Reeves, announced that BADR would remain as a relief, but that the rate of CGT paid would increase over successive years.

In April 2025, the BADR tax rate will rise from 10% to 14%In April 2026, the BADR tax rate will rise from 14% to 18%

Talk to us about the best time to make a BADR claim

If you’re thinking of making a BADR claim, some careful planning will be needed to get the optimal benefit from the relief. Remember, you need to have owned your business for two years or more to be eligible, and that the lower 10% rate will only apply until March 2025.

Talk to our team and we’ll help you assess your eligibility for BADR and the most tax-efficient way for you to dispose of your business assets.

Celebrating Success: Rebecca Hayles Appointed Director of The Chartwell Practice

Tue, 26 Nov 2024 17:09:05 GMT

We are delighted to announce that Rebecca Hayles (known as Becky) has been appointed as a Director of The Chartwell Practice. This exciting milestone marks a significant moment in Becky’s career and reflects her dedication, hard work, and contributions to the business since joining the team in 2016.

During her time at The Chartwell Practice, Becky has demonstrated an unwavering commitment to professional excellence. While balancing her responsibilities within the company, she achieved her Chartered Accountancy qualification through the prestigious Institute of Chartered Accountants in England and Wales (ICAEW). Now two years post-qualification, Becky is continuing to develop her leadership skills and build her experience, ensuring she is well-equipped to help steer the company toward future success.

Becky brings a fresh perspective and energy to the board, which will be instrumental as The Chartwell Practice continues to evolve in the dynamic world of accountancy. Her appointment reflects the company’s commitment to investing in its people and cultivating talent from within.

Fellow directors Martin Chilver and Steven Bourne shared their enthusiasm about Becky’s new role, stating:

" We are delighted to welcome Becky to the board. Her determination and dedication have been clear from the beginning, and we are confident she will make a significant impact in her new role. We look forward to supporting her as she grows into this position and contributes to the future success of the company. "

Speaking about her appointment, Becky said:

" It is an honour to take on this role, which has been an ambition of mine since I started to study accountancy. I’m grateful for the support and encouragement I’ve received from my family, colleagues and clients throughout my journey. This is a brilliant opportunity for me to continue my professional development and contribute to The Chartwell Practice’s success as we move forward together. "

Becky’s promotion is a testament to her hard work and the supportive environment at The Chartwell Practice, which values the growth and development of its team members. Her appointment marks a new and exciting chapter for both Becky and the organisation, and we are confident she will rise to the challenge with passion and dedication.

Please join us in congratulating Becky on this remarkable achievement and wishing her every success in her new role as Director !

Managing change in your business

Tue, 19 Nov 2024 15:44:37 GMT

Successfully implementing change in your business

Research by Kotter International found that more than 70% of change projects within a business fail. Why is this?

The research findings show that employee engagement is the biggest factor. Whether it is a small change to one or two processes, or a company-wide change, it's common for staff to feel intimidated by it.

So what can you do for successful implementation of change? Here are the principals from Kotter’s 8-Step Program:

1. Get the team onboard

Build support and create momentum behind the changes you are making by communicating the benefits with the whole company early on.

Start honest discussions with your team and give dynamic and convincing reasons to get people talking and thinking about the change.
Demonstrate what would happen if you don’t make the change and what else it could affect in the future.
Request support from customers in this instance who may love the product, outside stakeholders and others known in the industry to strengthen your argument.

Kotter suggests that 75 percent of a company's management needs to support a change in order to succeed.

2. Form a powerful coalition from all areas of the business

Share the support you have from all areas in the business (not just the leadership team). Visible support from key people within the organisation will bring others on board and create a sense of urgency. Give these people key roles in the change process to help progress it.

Once formed, your "change coalition" needs to work as a team, continuing to build urgency and momentum around the need for change.

What you can do:

Identify the influencers in your organisation for this change, as well as your key stakeholders.
Ensure that you have a good mix of people from different levels within your firm.
Ask for a commitment from these key people.
Work on team building within your change coalition.

3. Create a vision for change

Create an overall vision that helps everyone understand why you're asking them to do something.

What you can do:

Develop a short summary (one or two sentences) that captures what you "see" as the future of your organisation.
Create a strategy to execute that vision.
Ensure that your team leading the change are all on the same page.

4. Communicate the vision

Embed this in everything you do so it is not lost in the day-to-day operation but a powerful part of this.

What you can do:

Talk often about vision and change.
Make sure the vision is applied to all aspects of the operations. For example, ensure it’s added to the training and induction program and is encapsulated into the relevant job descriptions and evaluations.
Address people’s concerns and anxieties about it openly and honestly.
Lead by example.

5. Remove obstacles

Check constantly for processes and structures that need to adjust to allow you to execute the vision and help the change move forward.

What you can do:

Look at your organisational structure, job descriptions, and performance and compensation systems to ensure they're in line with your vision.
Recognise and reward people for making change happen.
Identify, or hire, change managers whose core role is to deliver the change.
Identify areas or team members that stand in the way of change, and find solutions.
Take action to quickly remove barriers rather than letting them fester.

6. Create short-term wins

Create short-term targets – not just one long-term goal. Each "win" you produce helps further motivate all staff, this is crucial especially if it’s a big change requiring a longer process and helps them stay on track.

What you can do:

Reward people who help you meet the targets.
Look for sure-fire projects that you can implement without help from strong critics of the change.
Don't choose early targets that are expensive. You want to be able to justify the investment in each project.

7. Build on the change

Keep looking for improvements to the system to ensure the long term goals are achieved.

What you can do:

After every win, analyse what went right, and what needs improving.
Set goals to continue building on the momentum you've achieved.
Develop a culture of continuous improvement.
Keep ideas fresh by bringing in new people to lead the change.

8. Anchor the changes in your culture

Finally, to make any change stick, it should become part of the core of your organisation. Make continuous efforts to ensure that the change is seen in every aspect, giving it a solid place in your organisation. It's also important that your company's leaders continue to support the change. This includes existing staff and new leaders who are brought in.

What you can do:

Talk about progress every chance you get. Tell success stories about the change process, and repeat other stories that you hear.
Include the change ideals and values when hiring and training new staff so it is enforced from the start.
Publicly recognise key members and enablers of the change.
Create plans to replace key leaders of change as they move on. This will help ensure that their legacy is not lost or forgotten.

Could your double cab pickup truck be classified as a car?

Tue, 19 Nov 2024 15:29:23 GMT

If you currently own, lease or drive a double cab pickup (DCPU) truck, one announcement made in the 2024 Budget will be of particular interest.

Double cab pickups will now be treated as cars, for tax purposes.

DCPUs with a payload of one tonne or more will no longer be classed as goods vehicles and will be classed, instead, as cars – potentially affecting your tax and benefits in kind (BiK).

The move to change the classification of DCPUs from goods vehicles to cars, was first suggested by the previous Conservative government, back in February 2024. But following outrage from the farming and motoring communities, the then government swiftly carried out a U-turn (in keeping with the motoring theme) and cancelled this idea.

In the 2024 Budget, Rachel Reeves, has now reversed the U-turn and new legislation will be brought in to switch the tax treatment of DCPUs.

From 1 April 2025 for corporation tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for:

Capital allowancesBenefits in kindSome deductions from business profits

The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025, according to the latest legislation. Transitional benefit-in-kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.

Talk to us about whether your DCPU is affected.

This change to the tax treatment of DCPUs is likely to have a significant impact for fleet managers and sole traders that use their DCPU as both their trade and personal vehicle.

If you’re currently driving a DCPU and are worried about whether your tax and benefits in kind will be affected, we’ll be happy to run you through the changes and how they apply to you.

Do You Have Direct Debits and Online Payments Set Up for Your Business?

Tue, 19 Nov 2024 15:27:17 GMT

Do you have direct debits and online payments set up for your business? Making it easy for your customers to pay you is vital to business success. Getting direct debits and alternative payment methods linked to your business is so easy these days there's no excuse not to give your customers multiple ways of making payment.

Many service-based businesses choose direct debit arrangements with their clients to avoid late payment. If you’re often chasing overdue payments, consider implementing direct debit arrangements to reduce your administration time.

If you’re already using online accounting software, check the add-on solutions and choose one that integrates with your accounts. This means the payment platform information feeds directly into your accounting software to be easily matched to customer transactions.

Make it Easy

You probably already have bank transfer information set up, but adding several other methods such as PayPal, debit cards, and credit cards allows customers to choose the method most convenient for them. Many customers appreciate the automation and simplicity of direct debits. Make sure your payment terms and conditions are clear on your website and invoices and don't forget to include all your chosen payment methods for customers!

Worried About Costly Fees?

You have the option to choose whether you will absorb the cost of the payment gateway processing fees or whether you will add the cost to your invoice and charge clients extra. Your accounting software will then allocate the funds accordingly to invoice payment and fees received.

Better Transaction Recording

When you integrate direct debits and online payment methods with your accounting system, you dramatically reduce errors in recording customer payments – which means less time spent on your accounts!

Not Sure Where to Start?

If you’d like to make it easier for customers to pay you, talk to us about which solutions are best for your business. We can discuss which platforms have the best and most secure integrations with the accounting software you use. We’ll help streamline your payment systems.

Data-driven decision-making: cashflow and financial health

Tue, 19 Nov 2024 15:25:29 GMT

In this series, we continue to look at how data-driven decisions sit at the heart of running a successful business in 2024.

Today, we’re looking at how proactive use of data can improve your small business cashflow, and the overall financial health of your company.

Do you know the positive impact that data analysis could have on your cashflow?

We all know that ‘cash is king’, but keeping tabs on the unpredictable path of your business finances can be hard work. Cashflow can ebb, flow and suddenly dip, leaving you without the working capital you need to trade, grow and expand the business.

How can data-driven decision-making help you get in control of your cash?

Here are five ways that data puts you back in the driving seat:

Enhanced financial forecasting

Forecasting apps, like Float and Fathom, take the historical data from your account, analyse the current trends and project your cashflow and revenue forward in time to give accurate forecasts of your future cash position.

Optimised inventory management

Instead of guessing when to replenish and buy new stock, data analytics can help you identify the best inventory levels. This reduces the risk of running out of stock or having excess inventory that can tie up valuable cash.

Targeted marketing

With some analysis of your sales data, you can quickly identify your most valuable customers. This gives you the customer data needed to tailor your marketing efforts, reach the most engaged audience and drive higher revenues.

Improved pricing strategies

Data-driven pricing allows you to set prices that are competitive but still profitable for the business. Thorough analysis of the price points in your market help you fix a price that sells, while also maximising your revenue potential.

Cost reduction

Deep dives into your operational data and spending can be revealing. You can quickly spot the areas where costs can be reduced, budgets can be trimmed and better profit margins are possible – all of which helps to improve your cash position.

Talk to us about using data to improve your financial health

Putting data-based reporting, key performance indicators (KPIs) and forecasting at the heart of your financial management is a no-brainer. But where do you start?

Our team can talk you through the best way to record, filter and analyse your financial data, so you can make informed decisions that keep your cashflow in a positive position.

Everything you ever wanted to know about PAYE codes

Tue, 29 Oct 2024 13:43:11 GMT

Everything you ever wanted to know about PAYE codes

Pay As You Earn (PAYE) is an integral part of the UK income tax system. But what do the PAYE codes issued by HMRC to you and your employees actually mean?

Here’s our lowdown on PAYE codes and how they help you understand your tax allowance and the amount deducted in tax on your monthly salary and income.

PAYE codes and what they tell you about taxable pay

When individuals are paid in whole or in part through a payroll, income tax is deducted from each payment part and that tax then paid to HM Revenue & Customs (HMRC).

Generally, some of the income is tax free, and HMRC tells you (the employer) how much is tax-free by issuing a tax code. The tax code is in two parts:

A number which usually indicates the tax-free amount that can be paid – The numerical part indicates the individual’s personal allowance, and is one-tenth of the annual tax-free amount.

And an alphabetical suffix which provides further information – the most common code is 1257L where the 1257 is one-tenth of the normal annual tax-free personal allowance of £12,570. The ‘L’ simply means that it’s the standard allowance.

The £12,570 equals £1,047 per month for an employee. So, ignoring National Insurance (NI) and any other factors, this employee earning £2,500 would pay tax of (£2,500 - £1,047 @ 20% =) £290 per month.

Other alphabetical suffixes and what they mean

'0T' - A code of ‘0T’ means there is no tax-free amount to be taken into account. All earnings are subject to basic, higher and additional rate tax, depending on the total earned by the employee.

'BR' - A ‘BR’ code means that all earnings are taxed at the basic 20% rate.

'D0' - A ‘D0’ code means that all earnings are taxed at the 40% higher rate.

'D1' - A ‘D1’ code means that all earnings are taxed at the 45% additional rate.

'M' - 'M’ denotes that the employee is in receipt of the marriage allowance from their partner.

'N' - ‘N’ denotes that the employee has transferred the marriage allowance to their partner.

'NT' - ‘NT’ denotes that no tax is to be deducted.

'C' & 'S' - Suffixes beginning with ‘C’ are for employees who live in Wales, and ‘S’ for those who live in Scotland.

How does HMRC work out what tax is payable?

Generally, tax is calculated on a cumulative basis throughout the year.

For each pay period, the entire earnings and allowances for the year to date are used to calculate the total tax due. Then the tax that’s been deducted up to the previous pay period is subtracted to work out the amount to deduct in the current period.

A few other suffixes to be aware of:

Sometimes HMRC requires each period to be calculated in isolation, in which case an additional suffix of ‘W1’ or ‘M1’ will be added.
There are some occasions where tax on the payroll is calculated on a higher amount than the employee’s total pay, and in those cases a ‘K’ prefix is used in front of the numerical value.
‘T’ arises where there is unpaid tax from previous years or where the employee has other income which is not taxed at source.

Talk to us about your PAYE codes

It’s not just your employees’ tax codes that you must keep an eye on. If you’re paid a salary as a director through the business, then you will also have a PAYE tax code.

If you receive a coding notice from HMRC, you should ask us to check if it’s correct. It’s always best practice to ensure you have the right code and that the right tax deductions will be made.

If there are any additional questions about PAYE codes, please do get in touch. We’d be happy to explain your codes, tax allowances and what any specific suffixes may mean.

Planning for seasonal dips in income

Tue, 29 Oct 2024 13:40:59 GMT

Seasonal dips in income can be highly challenging when you’re a small business. But there are proactive ways to predict, plan for and overcome these dips in revenue.

The key to dealing with seasonal dips is to know when they’re most likely to occur, and to have measures in place to spread your income and revenue pipeline over the course of the year.

Understanding seasonality in your sector

If your business is seasonal such as pool supplies, or a ski gear specialist, you’ll be used to the peaks and troughs, but many 'non-seasonal' businesses experience times during the financial year where sales and revenue peak – and, on the flipside, where sales and revenue experience a pronounced dip.

When income is low at certain times of the year, it makes for challenging times.

So, what are the key ways to plan for this kind of seasonality?

Forecast your seasonality – it’s vital to know WHEN you’re most likely to experience any seasonal dips. Looking at benchmarking reports for your industry is one way to predict the seasonality in your niche or sector. But you can also use your own accounting data to great effect. Look back through your profit & loss reports and spot where the peaks and troughs have occurred over preceding years.
Charge a premium in peak time – one straightforward approach is to apply premium pricing for your products/services during the busy season. By increasing your pricing, you boost your overall revenue, giving you more working capital to see you through the leaner months when sales and income are at their lowest.
Offer additional peak-time services – offering added extras and other additional service lines during peak time is another way to maximise the season. In the months where customers are most engaged, look to upsell these premium services and offer more value. Satisfied clients will be more inclined to pay for added extras, giving you an increased revenue stream from the same number of customers.
Target other markets – exploring other related markets is another useful tactic. When you’re experiencing downtime, look for other ways to monetise your existing assets, products or services. For example, if you’re a hotel where sales peak in summertime, offer discounted conference space in the winter months to boost revenue.
Diversify your products/services – if one product/service has a known seasonal dip, look at adding an additional product or service to offset this downtime. For example, a a ski resort could promote bike-riding or hiking breaks during the warmer summer months to keep revenue constant. Likewise a pool maintenance firm could establish an outdoor fireplace business for the colder months.
Have a regional e-commerce strategy – If you’re dependent on a small local market, broadening your marketing and e-commerce strategies can help to attract a wider customer base – and bolster sales. Paid advertising through Facebook, LinkedIn or X/Twitter can easily target new geographical markets, bringing in new customers and giving your revenue a much-needed uplift during seasonal troughs.

Talk to us about planning for seasonality

If your business is struggling with seasonal dips, and the resulting impact on cashflow, come and talk to us. We’ll help you identify the timing of your seasonal downtime, and come up with a clear strategy for stabilising your income across the year.

Get in touch to start beating those seasonal dips.

5 ways to improve the governance of your family business.

Tue, 29 Oct 2024 13:34:19 GMT

Running any kind of business is tough work. But when you add in the additional challenges of running a family business, things can begin to get complicated – and personal!

In a family business, you’re not just dealing with professional relationships. You have close, personal relationships to factor in, alongside the nuanced dynamics of several family members all working in close proximity within a business environment.

But there are ways to ensure you run the governance and management of your family business in a smooth, sensible (and stress-free) way.

Families occasionally disagree and argue – that’s a fact we can’t change! But what you can do is put agreements, processes and good governance in place to make sure these disagreements are not detrimental to the future of your family business.

We’ve highlighted five simple steps you can take to improve your governance:

Family charter.

A family charter (or constitution) establishes shared values, principles and expectations for all family members involved in the business. This gives you a clear vision for the family business and fosters a sense of purpose within the company.

Family council.

Getting the whole family together in a room is invaluable. A family council provides a forum for open communication and decision-making, allowing everyone in the family to discuss business matters and address potential conflicts.

Clear shareholder agreement.

Well-defined shareholders’ agreement outlines the rights, responsibilities and expectations of each shareholder, so everyone understands where they stand. This is a huge help in preventing misunderstandings and conflicts.

Succession plan.

With a comprehensive succession plan you ensure a smooth transition of leadership and ownership when the head of the family business retires, sells up or exits. This maintains a sense of stability and continuity within the company.

Independent board.

Having an objective, external board is vital. An independent board of directors brings objectivity and expertise to the business. They can also deliver guidance and oversight to help you achieve truly ethical and responsible governance.

Talk to us about the future of your family business.

If you want the governance of your family business to run like clockwork, it’s important to have the right governance infrastructure and documentation in place from the beginning.

We’ve advised hundreds of family businesses over the years, and can help you set up the processes, agreements and strategic thinking that keeps the company on track.

Talk to our team and let’s see how we can take your family business to the next level.

Digging deeper into cloud accounting

Tue, 29 Oct 2024 13:32:14 GMT

If you’re managing a small business, the chances are that you’re using one of the current crop of cloud accounting platforms. Whether your chosen software is Xero, QuickBooks or MYOB, these online accounting tools are now the standard for business accounting.

But are you exploring the full benefits of your cloud system?

The basic benefits of running your finances in the cloud

Not so long ago, business owners were reliant on paper ledgers and manual accounts to understand their financial performance and cashflow position. Thankfully, accounting technology has moved on in leaps and bounds in the past two decades.

The average business owner will almost certainly be using some form of cloud accounting to manage their finances. And the advantages of the cloud don’t just lie in the convenience and easy access of being able to do your bookkeeping in the online space.

Whatever cloud platform you’re using, you get:

A simple, straightforward way to record all your transactions – every sale, purchase and expense is recorded in your cloud accounting software, with some of this record-keeping process even happening automatically, using tools like Dext Prepare.
A real-time view of your finances – instead of your accounts being weeks, or even months out of date (as in previous decades), you now have an almost instantaneous view of your profit and loss (P&L), cashflow position and expenses.
An easy way to collaborate with your advisers – it couldn’t be easier to invite your accountant, tax adviser or business coach into your accounts. In the cloud, you can all access the same numbers and have one point of truth for all your financial metrics.

Going beyond the basics of your cloud accounting platform

Managing your bookkeeping and accounts with cloud accounting software gets the job done. But the reality is that you could be doing so much more besides. If you’re just using your cloud accounting to do the accounts, you may just be scratching the surface of the potential value.

Here are just a few of the deeper benefits:

A growing ecosystem of add-on apps – Most of the big players in the accounting space have sizable app stores, where you can choose from hundreds of different ‘add-on apps’ and integrations. These apps add different functionality to your basic accounting system, allowing you to add automated bookkeeping like Auto Entry, debtor chasing with Chaser or an expenses management app like Expensify.
Extensive forecasting and scenario-planning – there are plenty of sophisticated forecasting tools that integrate with your cloud accounting. Tools like Spotlight Reporting, Float and Fathom all allow you to extrapolate your cash numbers forward in time. And because these forecasts and projections are based on your own historic and real-time data, you can be sure that they’re based on solid information that’s a sound basis for your future planning, cash management and business decision-making.
Job management and industry specific apps – a helping hand with your operations and project management is always going to be welcome. Most app stores will have a wide selection of industry specific apps, that help you manage the operations in your specific business sector. This might be Tradify for tradies and contractors, Re-Leased for property managers, or Dentally for dental practices.
A fully integrated tech stack to manage your whole business – by picking and choosing the most helpful and relevant apps from your platform’s ecosystem, you can quickly build up an entire tech stack that becomes the operational heart of your business. Whatever your industry, you can create a bespoke business system that does far more than just keeping your bookkeeping in check. With an evolving tech stack, you’re ready to streamline and automate each process and operation, so you end up with a lithe and agile business that’s ready to scale as your business prospers.

Talk to us about maximising your business tech stack

Getting your accounts and compliance done and dusted in the cloud is a great start. But we’d advise digging a little deeper into your cloud accounting platform to really get the best value.

We’ll help you find the most useful apps to add to your tech stack. We’ll also help you get integrated, automated and connected – putting you in complete control of your business.

Measuring the health of your business with ratio measures

Wed, 02 Oct 2024 17:28:07 GMT

When you’re running a business, it’s easy to get caught up in the day-to-day activity and lose sight of the big picture. Taking stock of the health of your business is important. Knowing where you are allows for more effective planning, early warning about any issues, and the chance to better chart a course for success.

There are some quick ratios that will help you to gauge the health of your business. We can help you to assess your business health and show you how to calculate these vital checks.

Liquidity Ratios

Liquidity ratios are about how quickly you can turn your business assets into cash - which helps you assess whether you’ll be able to pay the bills if cashflow gets tight.

High ratios are better, as this means you’ve got more assets than liabilities.

Current ratio

Current ratio = Total current assets / Total current liabilities

As a general guideline, 2:1 is a good current ratio, but this does depend on the kind of industry you’re in, and the nature of the assets and liabilities.

Quick ratio

Quick ratio = (Current assets – stock on hand) / Current liabilities

This measure excludes your existing stock, which you may not be able to quickly turn into cash, and is seen as a more realistic quick snapshot of your position.

Solvency ratios

Solvency ratios look at sources other than cash flow to see whether your business will be able to settle debts.

Leverage ratio

Leverage ratio = Total liabilities / Equity

This is a measure of whether your business is reliant on debt financing or equity to fund your assets. A higher ratio can make it harder to borrow money.

Debt to assets

Debt to assets = Total liabilities / Total assets

This tells you what percentage of assets is being financed by liabilities.

Profitability ratios

Profitability ratios will let you know how efficient your business operations are. Where possible, it’s good to measure your business against others in your industry.

Gross margin ratio

Gross margin ratio = Gross profit / Total sales

This ratio tells you whether you can cover the necessary business overheads from your sales.

Net margin ratio

Net margin ratio = Net profit / Total sales

This measure tells you the percentage of sales dollars left after you’ve settled your expenses, except for your income taxes.

Checking in on your business health is a great habit to get into. Using these ratios helps you to understand your current business health and allows you to plan. Talk to us about how to calculate the factors in these ratios in order to keep your business on the right track.

Changes for non doms: what you need to know

Wed, 02 Oct 2024 17:24:32 GMT

If you’re domiciled outside of the UK for tax, you’ll need to get yourself up to speed on the recent announcement from the new Labour government regarding ‘non-dom’ status.

As the recent policy note from HM Treasury outlines, ‘the government is committed to addressing unfairness in the tax system, so that everyone who is long-term resident in the UK pays their taxes here’. This move seeks to remove the unfair tax advantages enjoyed by UK taxpayers who intentionally domicile themselves for tax purposes outside of the UK.

What does this mean for non-doms?

The key aim of this new policy is to ensure that entrepreneurs, high-net-worth individuals and investors that base themselves in the UK pay the right amount of tax on their earnings, whether these are UK-based or generated in overseas territories.

This is a major policy change and will mean that:

The outdated concept of domicile status will be removed from the tax system. A new residence-based regime will be introduced which is internationally competitive and focused on attracting the best talent and investment to the UK. The 4-year foreign income and gains (FIG) regime announced by the previous government at the Spring Budget will be introduced. The advantages for existing non-doms that remained in the proposed FIG regime will be ended to make the system fairer and to generate greater tax revenues for HMRC.

Talk to us about reviewing your non-dom status

If you’re currently non-UK domiciled for tax, these proposed changes may have a significant impact on your tax planning and ongoing tax costs as a UK resident and taxpayer.

We’ll keep you up to date with amendments to the non-dom system and can help you plan your UK tax to ensure you’re adhering to the new legislation.

What key announcements could be in October's Autumn Statement?

Wed, 02 Oct 2024 17:21:56 GMT

It’s no secret this year’s Autumn Statement may well contain some sweeping changes to the UK tax code and fiscal legislation.

The new Chancellor of the Exchequer, Rachel Reeves, has made it clear that there are ‘difficult decisions to be made’, primarily due to the £22 billion deficit in the public finances that the Labour Government has inherited from the previous administration.

Savings must be made and government revenues must be improved if the Government is to get the UK economy back on track in the medium to long term.

Autumn Statement 2024: possible announcements we may hear.

So, what announcements are we likely to hear from the Chancellor on 30 October 2024? Here’s a quick rundown of some of the rumours, announcements and possible changes:

Proposed cuts to winter fuel payments for some pensioners.

Cuts to the winter fuel allowance have already been passed in Parliament, with the possibility of further paring back of benefits across other welfare and social payments.

VAT on private school fees.

The Chancellor has also announced that all education services and vocational training supplied by a private school, or a connected person, for a charge will be subject to VAT at the standard rate of 20%, from 1 January 2025.

No rises in taxes for working people.

Rachel Reeves has made it clear that she won’t target taxes for working people, like income tax, NI or VAT. Keeping consumers spending and businesses trading will be vital to any kind of economic recovery.

Corporation tax changes not impossible.

Back in February, Labour pledged not to increase corporation rates if elected to government. However, there’s potential for the standard rate of 25% to be reduced to make the UK more competitive.

Rises in capital gains taxation.

While working taxes won’t be increased, there may be changes to some taxes, such as capital gains tax and inheritance tax. This could be bad news for business owners and high-net-worth individuals.

No introduction of a wealth tax.

The Chancellor made it clear in the run-up to the General Election that a wealth tax was off the table, so we’re unlikely to see any changes to the higher bands of income tax in this Autumn Statement.

Changes to pensions.

The annual total of the state pension will rise by £460 from April 2025, but key changes to private pensions legislation are also possible. This could involve restricting tax deductions on contributions to either the basic rate (20%), or possibly 30%. There could also be reductions in the amount that can be withdrawn tax-free from your pension, currently 25%, capped at £268,275.

More detail on changes to non-dom rule.

Changes to the non-domiciled rules for UK business owners and high-net-worth individuals were previewed in July.

There could be more details around how the new Foreign Income & Gains (FIG) system will work and what the potential impact could be for owners with overseas assets.

Want a breakdown of all the big announcements from the forthcoming Autumn Statement? Our summary of the Autumn Statement will be out the next day for UK business owners.

Get a concise breakdown of all the key business announcements and how they might affect your business, your finances and your personal wealth.

Keeping your tax and expenses in check when you are self-employed

Fri, 30 Aug 2024 12:16:59 GMT

Contracting or freelancing requires you to wear a lot of hats. Relationship-building, keeping track of your time, marketing your skills and actually doing the work. But one of your priorities should also be establishing how you handle your money and setting the groundwork for good habits.

Understand your deductions

Before you start, it’s essential to understand what expenses you can and can’t claim. This means you’ll keep the right receipts and track the right expenses. Figuring out what’s what can be a little confusing as everyone has a different working set up and what you can claim for can vary between industries and occupations. Talk to us about your business expenses from the beginning. This will also help you plan for any bigger work-related purchases that you may need to make.

Get a system sorted

You’ll thank yourself later for setting up a good system now. Getting your expenses recorded and your invoices collated means you’ll be able to spend more time doing the important stuff in your business. It’s not just about saving time - keeping on top of your cash means you’re more likely to succeed. Do your research and choose a system that will work for you. Consider choosing a software platform which allows you to record your time spent on projects, it’ll make sending those invoices that much easier!

Stash that cash

When you’re running your own business or working for yourself, it’s important to always keep your tax obligations top of mind. Make sure you have money set aside in a separate account or consider entering into voluntary instalments.

One way to budget and keep on top of your business tax is to pay yourself a wage. Keeping your accounts separate also prevents you from thinking of all your business income as spending cash! Remember to also put aside a little extra to cover your holidays and any quiet periods.

We can help make this process easier, so talk to us about setting up systems that take the headaches out of your finances.

Top 10 time wasters to avoid

Fri, 30 Aug 2024 12:15:00 GMT

We all have the same 1,440 minutes each day, but some of us achieve so much more than others. How can we free up time to help lead a better business and ultimately achieve a happier life?

The top 10 time wasters:

1. Lack of clear goals.
Start by setting clear 12 month goals, then break these down into 90 day goals. Your actions each day should be steps towards achieving those 90 day goals, which will ultimately lead to the achievement of your 12 month goals.

2. A messy desk.
Desk clutter results in mind clutter. Tidy your workspace each day before you leave so you don’t arrive to a mess. Also consider how paperless you are; paper becomes clutter.

3. Procrastination and shifting priorities.
Spend a few minutes planning tomorrow’s tasks before you leave for the day or planning today’s tasks as soon as you arrive. Avoid unnecessary pick up and put down. Multitasking is a productivity myth.

4. Interruptions (from humans and technology).
Set clear parameters to reduce distractions, e.g. turn off your email and phone notifications, only check emails between tasks, etc. If it’s urgent, they’ll call or tap your shoulder.

5. Ineffective delegation (and abdication).
Ensure you give clear instructions when delegating tasks and empower others to do more for you. Responsibility still falls on you… without a clear process you are setting someone up to fail which will ultimately reflect badly on you.

6. Ineffective systems.
Mistakes are often attributable to ineffective systems. Involve your team and LEAN up processes where possible. Eliminate systems that don’t add value; implement new systems that aid efficiency.

7. Inability to say 'no'.
We are defined not just by what we say yes to, but what we say no to. Planning helps us to say no to things that don’t align with our purpose and goals. “No” is a complete sentence.

8. Ineffective meetings.
Ensure every meeting has a purpose, an agenda and clear objectives. Don’t stray from the agenda; refer back to the purpose if you’re going off track. Record clear outcomes and next steps in Meeting Minutes.

9. Ineffective email use.
Think twice before playing email tennis. Ask yourself if a phone call would be more efficient so you don’t find yourself constantly checking for a reply.

10. Poor planning.
Effective planning has three key components: a one-page plan (with goals, KPIs and required actions), regular reporting to ensure continuous improvement, and accountability.

What are your biggest time wasters? Identify your top three and take ownership and responsibility to minimise them today!

"Regretting wasted time is wasting more time." - Anon

Get in touch to find out how we can help you plan more effectively!

VAT on private school fees: what you need to know.

Fri, 30 Aug 2024 12:12:10 GMT

If you have children that attend a UK private school, the recent announcement around VAT on school fees is likely to be a major concern.

We’ve summarised the main points of the announcement and what they mean for school fees.

20% VAT on private school fees from 2025.

Bringing private schools within the VAT system is aimed at generating higher revenues for HM Revenue & Customs (HMRC) and providing more money to invest in state education.

There’s a debate to be had around whether charging VAT on school fees is a good or bad move. But the reality is that it’s happening and it’s best to be prepared.

Here are the main points to be aware of:

On 29 July 2024, the Chancellor of the Exchequer, Rachel Reeves, announced that all education services and vocational training supplied by a private school, or a connected person, for a charge will be subject to VAT at the standard rate of 20%.

Boarding services provided by a private school, or a connected person, will also be subject to VAT at 20%.

VAT on these fees will commence from 1 January 2025.

Any fees invoiced or paid on or after 29 July 2024 that relate to the school terms after 1 January 2025 will be subject to the standard rate of VAT at the beginning of that term.

School fees paid before 29 July 2024 will follow the VAT treatment in force at the time of the normal tax point for these supplies, where the fee rate for the relevant term has been set and was known at the time of payment.

Adding 20% to school fees is a significant additional cost and will mean you reevaluating your budget for schooling and considering the overall impact on your expenses.

If you’d like to talk to us about the VAT changes, we’d be happy to run you through the implications and to help you break down the impact on your spending.

How to use forecasts and scenario-planning

Thu, 08 Aug 2024 14:22:20 GMT

For centuries, accounting was all about reviewing historic information – but that only told you about the past, not what was going to happen in the future.

If you’re only looking back at past periods and historic numbers, this limits the insights you can achieve for your business. With a backward-looking ideology, it becomes difficult to plan, run through different scenarios or understand the path of the business going forwards.

Forecasting changes this. With the right data analysis and forecasting tools, you can project sales, cash, revenue and profits into the future – and get in control of your business.

A forward-looking view of your business journey

Forecasting switches the focus of your financial management. By moving to a forward-looking view of your business journey, you can see further down the road – and that helps to spot any opportunities and avoid common business pitfalls.

Forecasting adds value by:

Highlighting the data patterns – a forecasting tool takes your historic data and projects it forward in time. This helps you and your advisers spot patterns, trends, gaps and opportunities, revealing the true ‘story’ behind your business accounts. For example, forecasting may reveal a predicted seasonal slump in the next quarter, allowing you to plan ahead and proactively take action to minimise negative impacts.
Giving you a future view of your business – instinctively, business owners will look back at prior periods to assess performance. There’s value to reviewing your historic actuals, of course, but using forecasting helps you to look forward, rather than just backwards. Forecasting is the satnav, showing you the road ahead, rather than the rear-view mirror showing you the road you’ve already travelled.
Helping you scenario-plan – with a financial model of your key drivers, combined with accurate forecasting, you can quick answer your burning ‘What if…?’ questions. Forecasting lets you run different scenarios, with different drivers, to see how business decisions may pan out over time. If option B performs better than option A, that’s invaluable information when defining your next strategic move.
Making informed, evidence-based decisions – having ‘the full picture’ of combined historic numbers, forecasts and longer-term projections aides your business decision-making. Forecasting gives you solid evidence on which to base your strategy, and helps to red flag any threats that are looming on the horizon – giving you the best possible information to keep your executive team informed and on the ball.
A deeper relationship with your accountant – forecasting also helps us to get a far more granular view of your business. This helps to spot potential areas of performance improvement, and to give you the best possible strategic advice, all backed up by solid, empirical data and management information.

Talk to us about the benefits of forecasting

If you want to get in control of the destiny and results of your company, come and talk to us. Forecasting helps you highlight your future threats and opportunities – and create a proactive strategy to improve the performance of your business.

How deep financial data helps you make better business decisions

Thu, 08 Aug 2024 14:19:43 GMT

As a business owner, you want to make the best possible decisions for your business. The choices you make regarding strategy, spending, revenue generation and cashflow management can all have a major impact on the long-term future of the company.

So, how do you give yourself that competitive edge when it comes to decision-making?

The answer is to make the most of your financial data and to use the outputs from today’s cloud accounting tools and finance apps to inform and guide your choices as a leader.

Five major benefits of having financial real-time data

Cloud accounting has revolutionised the ways that small business owners manage their business accounts and broader financial management.

With the right tech stack and cloud accounting software, it’s possible to have genuine real-time information about your business finances. That instant access to your financial performance numbers is a game-changer, for a number of reasons.

Here are five ways that deep financial data can help to drive your business success...

Real-time data gives you:

1. Informed decision-making – with access to the most up-to-date financial data, you’re no longer flying blind! Real-time data empowers you to make strategic decisions based on the most current business information. You can see how marketing budgets are performing, analyse your sales trends and identify areas for cost-cutting – with a dashboard that provides a real-time snapshot of your overall financial health. You’re informed, on the ball and can react like lightning to any pressing business opportunities, or unplanned threats to your funding and operating cashflow.

2. Improved cashflow management – cash is king, so it’s crucial that you have the best possible insights into your cashflow position, planning and management. Real-time cash data helps you plan for upcoming expenses, predict potential shortfalls and make informed decisions about borrowing or investment strategies. This real-time visibility ensures you always have sufficient funds to cover your operational costs, dodging the cashflow pitfalls that could otherwise hinder your business growth.

3. Enhanced budgeting and forecasting – you can ditch the static spreadsheets and embrace a more dynamic, real-time way to run your budgeting and forecasting. Track your progress towards financial goals, identify variances and deviations from key budgets, and adjust your plans and strategy accordingly. Accurate historic and real-time data also means more accurate forecasts, leading to better resource allocation and improved financial planning for the future.

4. Increased potential to turn a profit – with access to real-time data, finding the prime areas for cost reduction and revenue optimisation is made easy. You can quickly hone in on the products that are bringing in the biggest sales revenues, or the operational expenses that are costing you money but failing to deliver a healthy return on investment (ROI). If the majority of your sales income is coming from one product, by tracking key metrics like customer acquisition costs and conversion rates, you can identify and refine marketing strategies to maximise return on investment. Additionally, real-time sales data allows you to react quickly to customer trends and adjust pricing strategies to improve profitability.

5. Greater confidence in your business potential – modern accounting tech puts all this real-time data right at your fingertips, so you always feel in control of your finances. That’s a major boost to your confidence as a business owner, giving you the overview and insights you need to keep a tight grip on your financial health. Having this transparency makes it possible to share key metrics with your key stakeholders, like investors or partners. It also demonstrates your commitment to keeping good records and focusing on your financial management – a trait that investors, lenders and banks will see as a good sign of the viability of your business.

Talk to us about accessing your finance data goldmine

If you’re currently only tracking the most basic of finance metrics, now’s the time to dive deeper into your pool of valuable financial data. The more detailed and refined your finance dashboard becomes, the more you’re in control of the next steps of your business.

We can help you set up a tailored business dashboard and management reporting tools to track all the most valuable finance metrics for your business.

Get in touch to start exploring your real-time data

Using your network to create business development opportunities

Thu, 25 Jul 2024 23:02:11 GMT

People buy from people. It’s an obvious observation beloved of salespeople, but it’s also why networking is such a powerful tool for creating business development opportunities.

Networking helps build relationships with other professionals, share ideas and learn from each other. By connecting and partnering with the right people, you can create meaningful business relationships – relationships that may lead to new and innovative business opportunities.

Networking as your blueprint for success

Building a successful business network is essential. But how do you start developing these relationships with customers, suppliers and other business owners? And how does connecting with your peers help you broaden the scope of your opportunities?

Building up your network and connecting with people helps you:

Find potential customers and expand the reach of your brand – attending trade conferences and industry workshops gets you in front of your target audience. It’s a chance to chat, find out customer pain points and understand your audience.
Meet new business partners – networking at the right trade events also helps you meet other business owners in your sector, and in other complimentary industries. It’s an opportunity to forge new partnerships and create co-branded opportunities
Get referrals from trusted members of your network – when you have trusted relationships in your network, these people are far more likely to recommend your business to their own network. Word-of-mouth promotion is the best kind, after all.
Locate the perfect mentor – we all have something to learn from more experienced members of our network. This is a golden opportunity to seek out a mentor who can give you advice, share their experience and improve your management skills.

By taking the time to nurture your network and build relationships with the right people, you can open up a world of possibilities for your business. As a business adviser working across multiple sectors, we can introduce you to new people, connections and opportunities.

If you’re looking for an introduction to a new network, come and talk to us.

Will you be paying more tax on your savings income?

Thu, 25 Jul 2024 21:55:15 GMT

Low interest rates have had one positive side effect – less tax to pay on interest income for most savers. But as interest rates are rising after a long period of being extremely low, you’re more likely to be paying tax on the interest income you’ve accrued.

Let’s take a look at the impact of higher interest rates on your savings income and tax liabilities.

What is the personal savings allowance?

Most of us can earn up to £12,570 from any source without paying tax. Separate from (and in addition to) this income allowance is the personal savings allowance.

The personal savings allowance shields from tax interest income of £1,000 for basic rate taxpayers. This shielding is reduced to £500 for higher-rate taxpayers, and falls away altogether for additional-rate taxpayers.

How will rising interest rates affect my taxable income?

When interest rates were low, even people with quite sizeable savings didn’t need to consider paying tax on the interest earned. But as rates have increased, more taxpayers are going over the shielding threshold and are having to pay tax on their interest income.

This effect has been exacerbated by the freezing of tax thresholds, effectively pushing more people into the higher-rate and additional-rate tax brackets, where the personal savings allowance reduces or falls away.

What about if I have my savings in an ISA?

It’s worth noting that interest earned in cash ISAs (Individual Savings Accounts) is tax-free.

As a UK taxpayer, you can invest up to £20,000 per annum into an ISA. Although traditionally the rate of interest earned has been lower than that available elsewhere, the tax saving will affect the relative return. The funds are generally available to be withdrawn at any time.

Talk to us about mitigating the tax on your savings interest

Tax is only one of the considerations when looking at investment strategies. If you have surplus funds, simply putting them into the bank to earn interest may not be the best choice.

As an accounting firm, we cannot advise on investment strategies. But if you want to discuss your savings plans with an independent financial adviser (IFA), talk to us and we’ll arrange an introduction. IFAs will be able to give advice tailored around your specific circumstances and needs, and with the best possible outcomes when it comes to mitigating tax.

Get in touch to talk about your investment strategy

6 Powerful Reasons To Watch Your Financial Reports

Thu, 25 Jul 2024 21:48:50 GMT

Making time to look over your financial reports each month is an important task for any business owner. If you are not taking time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend you should start to.

But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following:

The Statement of Financial Performance – also known as the Profit and Loss report (P&L) or the Income Statement – tells you, as the name suggests, how your business is performing over a period of time, such as a month or a financial year. In broad terms it shows the revenue that your business has generated, less the expenses for that same period. In other words, it shows how profitable your business is.
The Statement of Financial Position – also known as the Balance Sheet shows the value of the business’s Assets, Liabilities and Equity.
Assets include things like money in bank accounts, Plant and Equipment, Accounts Receivable balances
Liabilities include things like Bank loans and credit cards, Accounts Payable, and Hire Purchase balances
Equity is the difference between your Assets and your Liabilities and includes Retained Earnings and Owner Funds Introduced
Accounts Receivable Ageing report (Aged Receivables) – this shows how much money is still owed to the business as at a certain date in time, and is usually segmented as to how overdue they are, or sometimes by how far past the invoice date they are. Generally, you will have Current, 30, 60 and 90 days columns.
Accounts Payable Ageing Report (Aged Payables) – this report shows who the business owes money to as at a certain date in time and, like the Accounts Receivable Ageing report, is usually segmented by overdue period.

So why bother?

Understand your business better - by looking at your Profit and Loss report monthly you will get a good picture of how your business is performing month by month and it gives you a better understanding of what makes up your profit. It can be helpful to compare periods, or to look at a month by month P&L, so you can clearly see on one page the revenue and expenses month by month. This also helps identify trends in your data and many also help to highlight anomalies in coding/categorising or unusual expenses or earnings.
Accurate information for lending purposes – If you are applying for a loan or an overdraft, the bank or financial institution will look closely at both your Profit and Loss report and the Balance Sheet as a lot can be learned about a business by looking at these reports together. If you are unsure what some of your balances are in your accounts, get in touch and we can explain them further.
Get paid quicker and reduce bad debts – by looking at your Accounts Receivable Aged Summary each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher the risk of it not being paid at all, so it is important to keep on top of this.
Better relationships with your suppliers – Assuming you are entering your supplier bills into your accounting software (recommended for most businesses to get an accurate profitability figure) your Aged Payables report will alert you to any unpaid or overdue amounts. Supplier relationships are an important aspect of your business and paying on time is crucial to maintaining those relationships.
Better cashflow – having an accurate understanding of how much money the business is owed, and how much money the business owes, can help with cashflow planning to ensure that there is enough money when needed. Additionally, understanding the trends of your business, its profitability drivers, its expenses, etc., can help to plan sales and marketing campaigns so that the revenue keeps coming in.
Better business decision making – Your financial reports tell the story of your business and it’s important that you understand the story that they are telling you. The better you understand what’s going on in your business the stronger position you will be in to make better business decisions that affect the profitability of your business and its financial viability.

If you would like to know which reports are relevant to your business, and you want to better understand what’s going on in your business, then get in touch so we can make a time to go through them with you.

Your business success is important to us and we are here to help you.

Three questions for business success. Part 3 Pricing.

Mon, 08 Jul 2024 10:49:40 GMT

In this series, we will see how three questions for business success are approached and provide some practical tools and techniques for the SME owner to answer them.

Since businesses have been in existence, these questions have perplexed most of their owners. Before AI, before the internet and even before electricity.

Who is my ideal customer?

What makes my product or service attractive?

How should I be pricing my product or service?

An article in the NZ Herald from June 2024; Big Red, What went wrong for The Warehouse, highlighted the struggles of one of New Zealand’s most famous retail brands, The Warehouse. A senior analyst at investment house Forsyth Barr posed the question, “I don’t know if they [The Warehouse] know what they are and how they fit into the New Zealand retail landscape, or what they are going to compete on”. Another analyst, Greg Smith of Devon Funds Management, commented, “They need to recalibrate what is the value proposition”. For The Warehouse, which has used bargain prices as it’s core attraction, now has its competitors like Kmart dictating to Warehouse customers what a bargain actually is.

Given The Warehouse is a large, complex business in a highly competitive market, you might believe that it’s relevancy doesn’t apply to SME’s. But it does. No matter what size of business, the principles of success are all the same. Who are you selling to, why should they buy it and how much will they pay, are the foundations of success for global conglomerates through to food trucks. In fact, these questions are all linked and once you unlock the first two, then the third is much, much easier to answer.

In this series we will take a look at each of the three questions and shed some light on some approaches to get to the answers. This article looks at identifying pricing.

How should I be pricing my product or service?

We’ve all heard the stories about the person that worked in the retail store, misheard an instruction from the owner about pricing a clearance product, mistakenly priced it double and sold them all in a day. Pricing touches everything from your business finances to your product’s positioning in the market, with considerations like whether it’s a timeless, bespoke, or a short-lived trending product. It’s a key strategic decision you need to make for your business, and it can be just as much an art as it is a science.

But it’s not a decision you only get to make once.

For example, if you’re trying to find the retail price of your product, there is a relatively quick and straightforward way to set a starting price.

To set your first price, add up all of the costs involved in bringing your product to market, set your profit margin on top of those expenses, and there you have it. This strategy is called cost-plus pricing, and it’s one of the simplest ways to price your product.

Another way is to use your existing customers to give you insight into whether or not you can raise your prices. Start by testing a higher price to a small segment of your existing customers and see how they react. But before you can worry about choosing your product's sell price, there are a few other important things to consider.

An effective pricing strategy comes down to understanding your costs. If you order products, you’ll have a straightforward answer as to how much each unit costs you, which is your cost of goods sold.

If you make your products, you’ll need to dig a bit deeper and look at a bundle of your raw materials, labour costs, and overhead costs. How much does that bundle cost, and how many products can you create from it?

That will give you a rough estimate of your cost of goods sold per item.However, you shouldn’t forget the time you spend on your business is valuable, too.

To price your time, set an hourly rate you want to earn from your business, and then divide that by how many products you can make in that time. To set a sustainable price, make sure to incorporate the cost of your time as a variable product cost.

At the end of the day, the price you choose should be what your target customers will pay on a consistent basis.

Here’s a “back of the envelope” calculation you can do to sense check where you are. Once you’re ready to calculate a price, take your total variable costs and divide them by 1 minus your desired profit margin expressed as a decimal. For a 20% profit margin, that’s 0.2, so you’d divide your variable costs by 0.8.

Variable costs aren’t your only costs.

Fixed costs are the expenses that you’d pay no matter what, and that stays the same whether you sell 10 products or 1,000 products. They’re an important part of running your business, and the goal is that they’re covered by your product sales as well.When you’re picking a per-unit price, it can be tricky to figure out how your fixed costs fit in, which is why testing different price points is key.

Of course there’s a lot more to it and the variable and nuances can be many and varied - but the point is to not be initially distracted by that and just set a pricing benchmark that will allow you a “compass bearing” on whether you are heading in the right direction or not.

So, it goes to show that if you are struggling to answer the three questions or want to step back from the day to day for a minute to consider these questions - then it’s a good exercise. If a publicly listed company like The Warehouse is struggling to answer them, then you are not alone and shouldn’t see it as a problem but an opportunity to ensure your business has some of the fundamentals of success covered.

Three questions for business success. Part 2 Value Proposition.

Mon, 08 Jul 2024 10:47:12 GMT

In this series, we will see how three questions for business success are approached and provide some practical tools and techniques for the SME owner to answer them.

Since businesses have been in existence, these questions that have perplexed most of their owners. Before AI, before the internet and even before electricity.

Who is my ideal customer?

What makes my product or service attractive?

How should I be pricing my product or service?

In this series we will take a look at each of the three questions and shed some light on some approaches to get to the answers. This article looks at identifying a value proposition.

What makes my product or service attractive - my Value Proposition?

Borrowing from the world of advertising, Rosser Reeves of US agency Ted Bates was the first to coin the single minded proposition phrase in his book Reality In Advertising back in 1961. He concluded that unless an ad (or any communication) had a core proposition at its heart, then what you are saying is a waste of both the readers and and the advertisers time.

A great value proposition should:Be easy to understand for your target audience, something that resonates with them.

Communicate specific results that the target customer will get.

Explain how you're different from an alternative they might be considering.

A good value proposition has to be both relevant and compelling. Click bait is sometimes quite compelling but often not very relevant. Making you click, only to reveal that the compelling nature of the message is completely missing. Don’t be that person.

Good value propositions that find their way into the wider world can stem from: The product: M&M’s: Melt in your mouth, not in your hands. Service: Avis: We’re no 2, so we try harder. Location: Disneyland, The happiest place on earth Price: Walmart: Save money, live better.

So, how do you go about writing one for yourself?

Answering these questions is a good foundation:

What difficulty do you solve for your audience?

What do you do to solve it?

How does your product or service do it differently from other options out there?

To the extent you can, fight the temptation to break your business down into different product lines or services. Try to think about the big picture — your business as a whole. To write your value proposition, start by aiming to answer all of these questions in a single sentence. It may be a long sentence, but that's OK. Then start to reduce the longer sentence down to something short and punchy. A good test is to think of it as if it was the only piece of signage you could have that told people passing in the street what was good about your shop or office. What would it say?

Three questions for business success. Part 1 Ideal Customer.

Mon, 08 Jul 2024 10:44:21 GMT

In this series, we will see how three questions for business success are approached and provide some practical tools and techniques for the SME owner to answer them.

Since businesses have been in existence, these questions have perplexed most of their owners. Before AI, before the internet and even before electricity.

Who is my ideal customer?

What makes my product or service attractive?

How should I be pricing my product or service?

An article in the NZ Herald from June 2024; Big Red, What went wrong for The Warehouse, highlighted the struggles of one of New Zealand’s most famous retail brands, The Warehouse. A senior analyst at investment house Forsyth Barr posed the question, “I don’t know if they [The Warehouse] know what they are and how they fit into the New Zealand retail landscape, or what they are going to compete on”. Another analyst, Greg Smith of Devon Funds Management, commented, “They need to recalibrate what is the value proposition”. For The Warehouse, which has used bargain prices as its core attraction, now has its competitors like Kmart dictating to Warehouse customers what a bargain actually is.

In this series we will take a look at each of the three questions and shed some light on some approaches to get to the answers. This article deals with the first question.

Who is my ideal customer - target audience?

Advertising copywriting icon, David Ogilvy, wrote about “man's unchanging needs”. What he meant by this was that no matter the time or circumstances, consumers had and were driven by, an unwavering set of needs. These needs for example, were about youthfulness in the beauty industry, safety and style for cars, refreshment for drinks, and security for banks. Some of Ogilvy’s ads for these products contain claims and descriptions that could have been written yesterday, rather than in the 1950’s.

It’s important to remember that a demographic never bought anything. People do. A requirement to understand who you are selling to as an actual person is vital to understanding how to pitch your product or service at them in a way that they identify with.

Gender, age and class form part but not the complete answer. A buyer's attitude to your sector, circumstances that might lead them to consider your product or service are the first steps to building a profile of your customer.

Think of your ideal customer as a person pen portrait. Like how a character would be described in a novel. What would they look like, where do they live, what would they drive, what would they wear? And more importantly, why would these things matter to them? And then, where does your product fit into their world and why? Are they suddenly different person when they purchase your product? Different attitudes and values?

Your typical customers might not be able to be contained in one person, as you might have a primary audience and a secondary customer. Write these portraits separately. Work out which is the larger of your audience and assign a rough percentage to what of your business they represent. Bring them to life. Make them real to you. Give them a name. Live with them in your mind for a few days. Imagine how they live. And again, imagine them making a decision to purchase a product or service from you or your sector. When you are making a decision you can now reference your customer portrait and ponder their likely reaction.

Yes, I get it - this might sound like a project out of high school and you are an adult running a business, but believe me, it works. Great brands throughout the years grew using this technique - why shouldn’t it work for you?So, it goes to show that if you are struggling to answer the three questions or want to step back from the day to day for a minute to consider these questions - then it’s a good exercise. If a publicly listed company like The Warehouse is struggling to answer them, then you are not alone and shouldn’t see it as a problem but an opportunity to ensure your business has some of the fundamentals of success covered.

Creating a small business budget

Mon, 08 Jul 2024 10:41:42 GMT

Small business budgets are empowering. They give you the knowledge and insight to eliminate wasteful spending and get to profitability faster.

When setting a business budget, you need good numbers. Don’t guess at what’s coming in and what’s going out. You could be making assumptions that just aren’t true.

Take the time to look into your accounts and dig out the real figures. It might sound like hard work but it’s worth it.

A forward-looking budget will tell you how much you:

spend running the business
can invest to improve the business
can pay yourself (and any shareholders)
could save in certain areas.

The following article by Xero gives you an overview of the numbers you need to be clear on when creating a budget. Read more here.

Setting a budget isn’t complicated but it can still help to involve an expert. We can double-check the numbers and help you make realistic predictions about business growth, upcoming expenses, and tax exposure. We'll also advise you on what to do if the actual numbers deviate from the predicted ones.

Get in touch, we are here to help.

Plain English guide to profit and loss

Thu, 20 Jun 2024 09:43:54 GMT

Here's our Plain English guide to profit and loss and what this report reveals about your finances.

What is profit and loss?

Your profit and loss statement is commonly called your ‘P&L’. It’s also sometimes referred to as your income statement or statement of earnings.

Your P&L is a breakdown of your company’s revenue (money coming into the company as sales and other income) and your expenditure (direct costs, overheads, expenses and other costs).

As a business, you obviously want to turn a profit and make money. Keeping a close eye on your P&L allows you to track your revenues and expenses over a set period, and look for ways to boost your profitability as a business.

How does profit and loss affect your business?

Being in control of your financial management is hugely important for any business. Your P&L is one of the main ways to track and analyse this financial performance.

To manage your P&L effectively, it’s important to focus on:

Revenue management – to keep your revenue (income) healthy, you need to be proactive about generating sales and monitoring your revenue streams. This helps keep your income steady and stable, while also identifying areas for growth and improvement.
Expense control – tracking and monitoring your operating expenses helps you spot where spending efficiencies could be made. Whether it’s overhead costs or inventory overspending, your P&L helps you spot unnecessary costs and boost profits.
Cost analysis – analysing your business costs can help you spot the opportunities for saving money. Whether it’s agreeing a discount for buying in bulk, or switching to a new supplier with cheaper rates, there are plenty of ways to cut costs and be more profitable.
Monitoring gross margin – reviewing the company’s gross margins helps you assess the profitability of each product or service. By pushing up prices, or cutting your production costs, you can boost those margins to drive up profits.
Financial reporting – preparing regular profit and loss statements is key to good financial management. Reviewing your P&L helps you assess the overall financial performance of the company and make better-informed decisions.

How can our firm help you with managing your P&L?

When you’re in control of your P&L, you have a tighter hold on the reins of your profitability.

As your adviser, we’ll help you run regular P&L reports as part of a monthly or quarterly package of management information. We can help you track, review and analyse your revenue and expenses to spot the best opportunities for boosting the company’s profits.

If you’d like to know more about the impact of profit and loss, we’ll be happy to explain.

Get in touch to chat about managing your P&L.

The art of networking: techniques for becoming a great networker

Thu, 20 Jun 2024 09:41:25 GMT

Leading a business can be hard work. But the good news is that you're not the only founder, owner-manager or CEO who's treading this path. Networking with your peers is a great way to make connections with other entrepreneurs, while also looking for new business opportunities.

5 ways to improve your networking skills

Being part of a wide network of entrepreneurs and business leaders is about being part of the business community. It’s about giving to the community, as well as being supported by it – and knowing that you’re surrounded by other entrepreneurs who share very similar goals.

So, networking is a valuable thing to take part in, whether you’re a brand new founder, or a seasoned business owner who’s been around the track a few times. But how do you get GOOD at networking? There’s no simple answer to this, but we’ve highlighted five key things you can do to get more from your networking and to give more back to your community.

To become a better networker:

Be authentic and relational – if you’re going to make a success of networking, it naturally makes sense to appeal to people. Being genuine and interested in getting to know your peers will help a lot. Be yourself, be friendly and take the time to learn about the people you meet. Ask questions about their work, their interests, their goals and what generally makes them tick. This isn’t just about ‘doing business’, remember; it’s about getting to know people as people, and being part of this community.
Be a good listener and ask thoughtful questions – in networking, listening is just as important as talking. When you're talking to someone, listen intently, look people in the eye and pay real attention. Resist the temptation to interrupt or start thinking about what you're going to say next. Instead, focus on understanding their perspective and asking thoughtful questions. Ultimately, you want to make it clear that you’re interested in what this person has to say, and that you’ve found some common ground together.
Be helpful and offer your expertise – one of the best ways to build relationships is to be an asset to your industry community. Look for ways to use your experience and skills, and offer ideas, advice and help (if people are looking for assistance). This could mean sharing your industry knowledge, providing resources, or making introductions to other people in your network. When you help others, you help the community, underline that you’re a valuable resource and that you’re interested in building relationships.
Be an asset to your niche/sector/industry – share new ideas, drive innovation and be a voice that stands out in the network. If you want to make an impact, it’s important to stand out from the crowd. A good approach is to be someone who’s known for their expertise, creativity and thought leadership. Get involved in industry discussions, and write articles and blog posts about the big issues in your sector. The more you contribute to your niche/sector/industry, the faster your star will rise.
Follow up after networking events – getting the networking right is one thing, but it’s important to also get your follow-ups right too. Get people’s business cards, phone numbers or emails and get in touch after the event to touch base. A quick email or LinkedIn message could well be the start of a blossoming new business relationship or friendship. It’s also a good idea to connect on social media and to comment, share and repost your new contact’s posts.

What are the best places for networking?

Industry-specific events and conferences – industry events are great places to rub shoulders with other professionals in your field. You can get involved in discussions, learn about the latest trends and developments and even present your own sessions.
Social media platforms – you’re spoilt for choice when it comes to social media sites to help your industry networking. LinkedIn, X(Twitter), Facebook, Threads and BlueSky all help you connect with the people you’ve met through your networking, and build on those relationships to share your insights and ideas more widely.
Local meetups and workshops – most cities and towns will have regular business meetups and workshops that you can dip into. Business breakfast events and evening get-togethers are a great way to meet local business owners and to find out what’s going on in your local community.

If you’re looking to raise your profile and improve your networking, we’d love to lend a helping hand. We’re connected to hundreds of different business owners and leaders – and we’re more than happy to introduce you.

Our advice is to put yourself out there in your industry community, track down your local business peers and get busy with your content marketing and social media posts.

DIY accounting vs hiring an accountant: make the right choice for your business

Thu, 20 Jun 2024 09:10:08 GMT

When you’re starting out as a small business owner, the temptation is to go DIY with your accounting. Hiring a professional accountant or tax adviser costs money and that’s an overhead that you can remove by doing all the financial management yourself, right?

But is DIY accounting the most sensible option for your business? And why might partnering with an experienced accountant be a valuable investment in your future?

The 5 big challenges of managing your own accounts

At the initial stages of founding your business, you might think that raising a few invoices, paying a few supplier bills and making sure there’s cash in the bank is well within your abilities.

However, as the business grows, and you take on more customers and employees, your finances are likely to get far more complicated – not to mention far more time-consuming. So, should you still be managing your accounts solo at this important stage of your growth?

Here are five of the common challenges of going down the DIY accounting route:

The knowledge gap – grasping the finer points of accounting principles and tax regulations is complex. If you try to navigate these financial complexities without the right knowledge and experience, you greatly increase the risk of errors, missed deductions, poor record-keeping and non-compliance with company tax law for your territory.
The drain on your time – Managing bookkeeping, payroll, day-to-day accounting and tax filings takes a lot of time out of your week. For example, recent stats show that Aussie business owners spend an average of 6 hours and 19 minutes per week on financial administration. If you’re spending a large chunk of your week working on finance admin, that’s time you’re NOT spending on growing the business. As an ambitious owner, you should be concentrating on business development and the other strategic tasks that will push your growth – not doing the books!
Staying up to date with the regulations – Company tax laws and accounting regulations change frequently. If you’re not on the ball with the latest regulatory changes, there’s every chance that you’ll fail to meet your compliance duties. And, you may also miss out on the latest government incentives and tax reliefs too – financial perks that could well be the key to funding the next stage in your business expansion plans.
Anxiety about a company audit – going through a company audit from an external auditor can be stressful. Depending on the status of your business, you may well have to comply with the rules for regular auditing. But with no accountant, your record-keeping may be haphazard, making the job more difficult, time-consuming and disruptive.
A lack of strategic insight – If you’ve never run a business before, it’s likely you’ll lack the awareness of how good financial management drives your strategic insight. The better your accounts, the higher the quality of your finance data, reporting and management information. And this data and reporting can be a goldmine of information when making big strategic decisions, setting budgets and forecasting cashflow etc.

How working with an accountant turns these challenges into business benefits

Having full responsibility for your own business finances is a major drain on your time as an owner and business leader. But the good news is that partnering with an accountant can very quickly lighten this load and get you back to focusing on your business.

By engaging an accountant to take on your financial management, you get:

The knowledge of an experienced finance professional – when you hire an accountant, you add a financial expert to your team. They'll help you navigate the complexity of accounting, will keep your records accurate and will make sure you comply with all relevant tax regulations. This minimises errors and maximises your deductions.
More time to focus on the business – by delegating your bookkeeping, payroll, accounting and tax filings to an accountant, you free up valuable time. This gives you more time in the day to talk to customers, develop growth strategies and build relationships with clients, partners, lenders and investors.
Stay ahead of the regulatory curve – a professional accountant knows exactly which legislative and regulatory changes are planned and will make sure you’re always ticking the right compliance boxes. They’ll also be aware of any new government tax deductions or funding incentives that may open up extra cash for your business plans.
Peace of mind when it comes to an audit – with an accountant managing your accounts, you can rest assured that you have the best possible record-keeping, reporting and financial compliance. This is a major bonus when you face an external audit process. Your accountant can even represent you during the audit process, cutting down the potential stress and keeping you focused on running the business.
Expert strategic guidance – accountants do way more than just crunching numbers. Your accountant will work with you to analyse your financial data, manage your cashflow, identify patterns and trends and provide the valuable insights you need to inform your decision-making. An accountant is a key part of your management and strategic team, helping you drive the success, efficiency and profitability of your business.

Talk to us about outsourcing your financial management

Hiring a great accountant is definitely a better investment in your business than opting for DIY accounting. Instead of getting bogged down in bookkeeping, or going red in the face with record-keeping, just hand over the financial management workload to the experts.

We’re here to lighten the load, sort out your accounts and put you back in complete control of your finances and strategic decision-making.

Get in touch to discuss taking on your accounting tasks

5 common accounting mistakes (and how to avoid them)

Wed, 29 May 2024 16:23:26 GMT

Starting a business can be a challenging experience, especially when it comes to managing your numbers and staying on top of your financial management.

Unless you’ve got some experience in finance, the bookkeeping and accounting requirements can be quite daunting. And even with today’s helpful cloud accounting platforms and fintech apps, there’s always the possibility of making a simple accounting mistake.

So, what are the most common accounting mistakes made by business owners? And what can you do to avoid these pitfalls and keep your finances looking healthy and shipshape?

The top five accounting mistakes to avoid

‘Doing the books’ is unlikely to be your favourite part of running a small business. But the better your accounting know-how and skills, the more oversight you have over the financial path (and future success) of your company. It really is that simple.

But there are plenty of traps that a newbie owner can fall into – and even a few hurdles that the more experienced business owner may trip over from time to time.

Let’s take a look at the five most common accounting mistakes:

1. Mixing your personal and business finances – when you don’t separate your personal and business transactions, this blurs the lines and makes it difficult to track your income and expenses accurately. It can also lead to personal spending being counted as business deductions, causing tax issues later on.

Solution: Open separate business and personal bank accounts and keep them entirely separate and distinct.

2. Skipping the record-keeping process – if you fail to keep receipts, log your invoices and keep proper records this can be a major problem further down the road. Detailed records are crucial for tax filing, budgeting and identifying spending trends.

Solution: keep digital copies of all receipts and be sure to keep your bookkeeping up to date and well-managed.

3. Miscategorising your expenses – throwing all your expenses under ‘miscellaneous’ makes it far harder to analyse your spending and cashflow. With every item of expenditure logged under a specific code from your Chart of Accounts, you can quickly run reports, review your spending and look at ways to improve budgets and cashflow.

Solution: Categorise your expenses properly (rent, marketing, supplies etc.) to understand where your money goes.

4. Winging it when filing your taxes – Taxation is complicated and it’s easy to make costly mistakes if you’re not prepared and organised. Don't wait until tax season to sort everything out and make sure you’re aware of all your business tax liabilities.

Solution: Set aside funds for taxes throughout the year, and consider consulting an accountant or tax adviser to ensure you're filing correctly and taking advantage of all potential government deductions and tax incentives.

5. Failing to get proper accounting advice – if managing your finances becomes overwhelming, don't be a hero. Cloud accounting software can automate some of the key tasks, and a bookkeeper can handle day-to-day record-keeping.

Solution: think about outsourcing and partnering with an experienced accounting firm to get real peace of mind and improved financial management.

Talk to us about outsourcing your key accounting tasks

You didn’t start your business to spend hours working on your bookkeeping and accounts. Why not outsource your key accounting tasks to us, and put those hours back into your business.

As your accounting partner, we can:

Show you how to clearly separate your personal and business finances
Set up your bookkeeping to be as streamlined, automated and efficient as possible
Show you the best software tools and processes for managing your expenses
Become your tax agent and take care of all the complex tax filing tasks
Provide reporting, management information and advice to guide your decision-making

Get in touch to talk about outsourcing your finance tasks

Preparing your business for a sale

Wed, 29 May 2024 16:17:00 GMT

Selling your business is a big move for any owner. You’ve built this company up, scaled it and put years of hard work into making the business a success story. So, when the time comes to sell, you’ll want to know that you’re getting the best price, and the best future for your legacy.

We’ve outlined five ways to maximise the value of your business, with practical steps for making your company the most attractive prospect on the market.

5 steps to prepare you for a sale

The first thing to underline is that selling a business is rarely a fast process. Most owners will begin planning their sale years in advance, working to an exit strategy that sets out all the key milestones. Your aim is to leave the business in great shape, with stable finances, a solid team and a customer base that will continue to provide solid revenues for years to come.

So, how do you achieve these goals?

Assess your reasons for selling and your desired timeline – what’s the key motivation for selling your business? Are you retiring, looking to move on to other opportunities or hoping to unlock your equity? Once you know your reasons, you can decide on some core goals for the sale, and set a realistic timeline for the sale.
Get your financial house in order – ‘doing your financial housekeeping’ will mean preparing financial statements, submitting outstanding tax returns and making sure you have access to any other documentation that potential buyers will want to see. You may also want to work with an M&A expert to discover the company’s true market value.
Make your business attractive to buyers – any buyer wants to know they’re taking on an attractive business proposition. Making the business feel more attractive means improving your marketing and sales strategies, beefing up your operations and ensuring you have a positive cashflow position. You should also think about creating a transition plan for the buyer, so the handover is as smooth as possible .
Find the right buyer – it’s important to feel like you’re handing your legacy over to the right owner – and getting the price you need. This may involve working with a business broker or marketing your business yourself. Make sure you vet potential buyers carefully to ensure that they are a good fit for your business and your existing team.
Negotiate the sale terms – achieving your desired price could involve a fair amount of negotiation. You’ll need to sit down with your buyer to discuss purchase price, payment terms and other conditions of the sale. Be prepared to compromise and be willing to walk away from a deal if the terms are not right for you.

Talk to us about getting your business ready for a sale

If you’re intending to sell your business in the next five years, it’s important to start planning now. Coming up with a sale plan and a robust exit strategy takes time, as does sorting out the business housekeeping and finding the best possible buyer for the company.

As experienced advisers in many business sales, we’ll help you:

Get organised, locate the relevant documents and improve your record-keeping.
Clean up your business and address any legal or financial issues
Come up with a detailed sale plan and help you market the business
Expand your business network, to find the best buyer for the company

Following these steps will greatly increase the market value and price of your business.

Get in touch to talk about your sale plan.

Business tips: Adding value to your business prior to an exit

Wed, 29 May 2024 16:14:13 GMT

Generally speaking, an exit strategy will be put in place years before your planned exit date. This gives you time to work on your sale plan and deal with any succession issues. But more importantly, it gives you the time needed to add additional value to the business prior to a sale.

Every business has its own unique sale value, based on the size of the business, the worth of its assets and the perceived value of the company on the open market.

But what can you do to add value to your business and achieve a better sale price?

Make sure you're running a tight ship

When you sell a house, estate agents will advise you to redecorate, clear out the rubbish and add more to your sale price as a result. The same is true of selling a business.

A potential buyer will generally want to purchase a business that’s in good shape. Sometimes a buyer will purchase a badly performing business to either a) whip it back into shape, or b) buy it cheap, sell off the assets and make a profit. However, if profit is what they’re looking for, a well-organised and efficient business is a better prospect.

Adding value starts by doing your housekeeping and making sure the whole business is in a good position to hand over. That means having:

Modern, digital systems to keep your operations efficient, secure and well integrated
Excellent record-keeping, compliance and governance procedures in place
An excellent customer base to provide stable sales and good revenues
A good brand awareness and positive reputation in your sector
Efficient executive, management, operational and administrative teams to run the business in the smoothest and most effective ways.

Resolve any ongoing business issues

Every business will have a few ongoing business issues to contend with. These could include legal worries, court cases or bad debt in the business, and they can all have a negative impact on the company's value. The more you can do to resolve these issues and present a worry free environment for the new owner, the better.

Work with your lawyers, solicitors, HR advisers and accountants to find resolutions for any long-standing problems in the business. If you can hand the business over without a long list of potential headaches for your buyer, that’s likely to add value to the business. Trust is also important in a sale. Being transparent and open about any previous issues will also create a better relationship between you (the vendor) and your buyer.

Improve your financial health

Most buyers will be looking to purchase your business and turn a healthy profit. To do this, they’ll want to know that the company is financially healthy. This means having books that balance and plenty of potential for them to continue this company as a profitable venture.

So, which areas of your finances should you be looking at? The key here is to be in control of your financial management, and to have a strategy in place that will improve each area of the business over time as you near your sale date.

This will include

Strengthening your balance sheet, so you can present an attractive set of accounts
Improving your profit and loss, by increasing revenues and cutting your expenses
Boosting your cashflow position through careful cashflow management
Reducing your debt liabilities, by resolving late payments and bad debts
Polishing up your credit score, by partnering with a credit improvement specialist
Making sure the business is well funded, by working closely with lenders.

Get your executive team ready to take over

You may well remain the lynchpin in your current business. But a business that’s still 100% reliant on its founder is not an attractive proposition to a buyer. If the business is still reliant on your everyday operational input, and you then walk away, that business can no longer function effectively. To remedy this, you need to step back and get your team ready to take over.

The easiest way to do this, is to think about the key areas where you still have input, and to then systemise these and put them under the remit of a member of your executive team. If you’re still signing off the payroll, pass this to your finance director. If you’re still taking part in all client sales presentations, defer this to your sales director.

You'll need to be able to sell up and step away from the business without there being any operational or leadership issues for the new owner.

Work with your advisers to proactively add value

Business advisers in the M&A market have the advantage of having worked on hundreds of different business sales, across a multitude of sectors. They know what looks attractive to a buyer and what the main red flags are in a purchase. And, importantly they know how important it is for your business to have a razor-sharp focus on adding value.

A good firm of advisers delivers a range of different advisory services. By gradually enhancing every element of the business, you’ll end up with a far more attractive business to sell.

Keep any staff problems, legal issues or accounting challenges to a minimum, so the business is as attractive as possible to potential buyers, and the sale can be completed quickly.

Talk to us about adding value your business

To meet your personal and financial goals for this business sale, you want your company to be an attractive proposition on the open market. This process of added value isn’t instantaneous, but with the right advice and planning, you can move towards a more valuable sale price.

If you’re in the process of planning your exit, do come and talk to us. We’ll help you plan your exit strategy, adding value at each stage of the plan to boost your return from the sale.

Are you hiring the best talent for your business culture?

Wed, 29 May 2024 16:10:56 GMT

Your people are a vital asset, so when you hire a new starter it’s critical that this new employee fits perfectly into your operations, your culture and your values as a company.

But how do you know if a potential hire is a ‘good fit’? Will they drive your business to bigger and better success, or could this new employee become a potential spanner in the works?

Be transparent about your company values

Your company values are central to your mission as a business. So making sure those values are clearly outlined and shared is essential for hiring the right talent. By clearly defining and sharing these fundamental values, you’ll attract candidates who share your ethics, values and core motivations – making them a great potential fit for your company culture.

To do this:

Identify your core values and what’s important to you as a business and an owner.
Communicate your core values to your employees and all new starters
Live your values. Reflect them in the way you do business and how you treat people
Communicate your values, mission and culture in your job advert

When you’re hiring, this process isn’t just about you choosing an employee – it’s also about a worker choosing your company and understanding what you stand for. Make sure your job advert gives the best possible indication of what the job entails, but also what you’re like as a workplace. This is a great way to appeal to like-minded people with the best skills.

When advertising and interviewing:

Describe your mission and ask candidates if they are on board with these goals
Talk about your culture and ask candidates why this might appeal to them
Paint the most honest and appealing picture of your workplace
Ask interview questions that reveal the real candidate

You obviously want to know that a prospective hire has the right mix of experience, knowledge and professional skills. That’s a given. But it’s also sensible to ask questions that reveal more about their underlying values, morality, work ethic and interpersonal skills. This will help you to assess whether the candidate is a good fit for your company culture.

Here are some examples of interview questions that did a little deeper:

What do you look for in an ideal employer? And how important are their core values?
Tell us about a time your faced conflict in the workplace, and how you resolved it
Our culture is front and centre. How do you see yourself fitting into our culture?
How do you see your career evolving as a valued team member in our business?
Ask your team for feedback on candidates

You may think a candidate is the bee’s knees, but what do the rest of your team think? Gauging the opinions of your management team and other team members is vitally important. These people will be working directly with this new hire, so they have to get a good vibe from them.

To encourage objective feedback, give your team members a chance to meet the candidate and take their feedback into account when making a hiring decision.

2. Monitor your new hire and have regular, ongoing performance reviews

Once you’ve made a hiring decision and have a new employee on the team, it’s vital to have regular and ongoing informal catch-ups and more formalised performance reviews. This helps you to measure how your new employee is settling in. It’s also an opportunity to gauge whether there are areas where they may need support from you and the wider team.

Don’t hold back. Be as open and transparent as possible:

Ask them how they’re feeling about their role, workload and their performance so far
Check their progress against set targets and objectives for their first three months.
Find out if they need help, support, further information or more onboarding support.
Check if they feel they are fitting into the team, and if they are feeling happy
Look out for potential issues that may be causing conflict in the team.

Having the very best talent in your team is central to achieving your goals for the business. So, making sure you hire the right people is actually a business-critical decision to make.

Are loans to directors and employees tax free?

Tue, 14 May 2024 15:07:16 GMT

If you’re a director then taking out a director's loan against the cash in your limited company might seem like a sensible thing to do. But the reality is that overdrawn loans to directors can lead to unintended tax consequences if they’re not properly managed.

There are three main impacts:

The loan may result in a taxable benefit-in-kind, if it’s interest-free and greater than £10k – affecting your personal tax payable.
The company may suffer a Section 455 charge if the loan isn’t cleared within 9 months and a day of the year-end.
There’s an income tax (and potentially National Insurance) liability if the loan is written off.

In addition to this, if a company goes into liquidation with a director’s loan due to the company, the liquidators can take action against the director to get the loan repaid.

This can include taking bankruptcy proceedings against the director concerned.

So, how do you ensure you’re on safe, tax-effective ground when taking out a director’s loan?

The lowdown on director’s loans

What do we mean by a director’s loan account (DLA)? In essence, this loan can be seen as any payment made to you as a director other than payments in respect of:

Business expenses
Salary
Dividends
Repayment of amounts owed by the company to the director.

It also includes similar payments to close family members.

If you owe the company more than £10,000 at any time during the year, even if it’s only for one day, then a taxable benefit potentially arises. However, if you’ve paid interest on all amounts owed at any time, regardless of amount, and have done so at at least the HMRC minimum rate (currently 2.25% p.a.) then this taxable benefit won’t arise. It’s normally better for the company to charge interest of at least that minimum rate to prevent the benefit-in-kind charge arising.

The DLA ideally should not be overdrawn by any amount on the last day of the company’s accounting period. If it is overdrawn, unless it’s cleared within 9 months and 1 day a Section 455 charge of 33.75% of the uncleared amount is payable. If the amount is cleared at a later date, the Section 455 charge is repayable by HMRC 9 months and 1 day after the end of the accounting period in which it’s cleared.

Paying back the loan

As you can see, this all gets relatively complex to manage. So, why not pay the loan back just before the period-end and then take out a fresh advance from the company just after?

Two rules restrict that:A. The £5,000 rule – if a repayment of £5k or more is made AND within 30 days of this further advances are taken, the repayment is then offset against the later advance, not the original loan.B. The £15,000 rule – where the amount outstanding is £15,000 or more, and at the time of repayment there was an intention to draw down further sums, the repayment is applied against the subsequent drawdown – this applies even if this takes place more than 30 days ahead.

Exception to A and B: If the repayment is from a source that’s subject to tax (generally a dividend or bonus) then it can be offset against the older debt. So, it’s common to declare a dividend within 9 months and a day after year-end to clear the opening DLA balance and avoid a Section 455 charge, even if other advances had been made.

There are other considerations to think about too:

If instead of being repaid, the loan is written off, that will be taxed in the recipient’s hands as dividend income. And it may also be subject to employee and employer National Insurance as if it was payrolled.
Writing off the loan will only be sensible when there aren’t profits available to pay a dividend, or not all shareholders have loans being written off.
In some limited circumstances National Insurance may not apply.
Where a loan exceeds £10,000 it requires prior shareholder approval.

Talk to us about managing your director’s loans

Managing your director’s loans in the most tax effective way is a challenge. As your adviser, we can advise you on the timing of dividend payments to help you eliminate or reduce Section 455 charges. We’ll also help make sure that your record-keeping for advances to directors is comprehensive enough to withstand HMRC scrutiny – always good practice when entering into a loan of any kind.

If you withdraw money from your company other than for salaries or declared dividends, please do come and talk to us.

HMRC is cracking down on additional income sources

Tue, 14 May 2024 15:04:05 GMT

HM Revenue & Customs (HMRC) has an obligation to ensure we all pay the correct amount of tax. But with many UK taxpayers now earning money from various ‘side hustles’, like eBay, Etsy or Airbnb etc, there’s a growing need to widen the net and review all sources of income.

HMRC’s new initiative aims to weed out taxpayers who aren’t fully declaring their income sources , with detailed investigations to prosecute any wrongdoing.

So, what does HMRC see as a ‘source of additional income’, and what could the impact be on your tax bill if you fall within the scope of HMRC’s new initiative?

How does HMRC know what you’re earning?

If you’re making a bit of extra cash on the side, HMRC needs to do a bit of detective work to ascertain how much additional income you’re bringing in.

HMRC gathers information from a variety of sources to check whether or not taxpayers are declaring all their income. Although some enquiries and investigations are purely random, over 90% are triggered by an HMRC system called Connect .

Connect is a major part of HMRC’s crackdown on undeclared income. Over 3,000 people are employed on Connect, which is a data-matching and risk-analysis platform that enables the cross-referencing of masses of data from HMRC and external sources.

What does HMRC now see as an ‘undeclared source of income’?

From 2024, HMRC has made it a requirement for digital platforms to report how much income individuals are making through their site.

These platforms include eBay, Airbnb and Vinted. Although trading income from these sources has always been taxable, HMRC believes that significant profits are not being declared by some individuals.

So, will you be affected by HMRC’s new initiative?

If you earn £1,000 p.a. or less in additional income, you won’t be affected – if you sell through eBay and similar platforms, HMRC are now much more likely to become aware of this income. If your total sales are below £1,000 per annum then that’s covered by the annual trading allowance , so it can be ignored and HMRC won’t bother you.

If you earn more than £1,000 in additional income, you should register as self-employed – if your income is more than £1,000, it’s sensible to register as self-employed.

This will mean ensuring that you keep adequate records, so you’re able to report the results of your trading activities to HMRC in a tax return, if required.

Where does Connect draw its information on taxpayers?

Although HMRC has never revealed all the sources that Connect draws information from, it taps into over 30 databases, including tax returns, bank accounts, social media and even data from sites like Amazon, Google Street View, Zoopla and Rightmove.

It’s been quoted that Connect now holds 55 billion items of taxpayer data, so the chances of any undeclared income being tracked down are relatively high.

The information from external sources is compared against tax returns and other information. HMRC operatives look for discrepancies across various taxes such as income tax, VAT, and even areas like child benefit claims and can trigger investigations accordingly.

HMRC intends to integrate further artificial intelligence (AI) tools into Connect, further enhancing its ability to help close the estimated £30 billion plus tax gap.

How can you reduce the chances of a tax investigation?

If you want to minimise your chances of being subjected to a lengthy and costly investigation by HMRC, consider the following:

Maintain comprehensive records – Good record-keeping is essential, not just for tax purposes but for the health of your business.
Voluntary disclosures – if you have undeclared income, consider making a voluntary disclosure to minimise penalties. This will be looked on favourably by HMRC.

Talk to us about your income sources and tax planning

HMRC is in the process of opening more ‘intelligence led’ enquiries. Working closely with your accountant can help you ensure your records are in order and can even assist if you are selected for an investigation.

If you believe you have undeclared income sources, please do get in touch so we can talk through your specific circumstances and how to make a voluntary disclosure.

Get in touch to discuss your income sources

The seventh cause of poor cashflow - Sales levels are too low

Fri, 19 Apr 2024 14:13:03 GMT

It might sound obvious, but it isn’t to many businesses. If current sales levels don’t support the overheads and other cash demands on the business, then your overdraft will keep increasing.

This means that your business in its current state is not viable (unless you have ongoing access to new funds from investors or financiers).

There are five ways to improve your sales levels. These are:

1 . Increase customer retention .
Stop your customers from defecting to the competition.

2 . Generate more leads .
Gain more enquiries from people who are not yet customers.

3. Increase your sales conversion rate.
Get more of your prospects to buy from you.

4. Increase transaction frequency.
Engage your customers to buy from you more often.

5. Increase transaction value.
Help your customers to buy more products or services from you.

There are literally hundreds of individual strategies that you can implement within these categories to increase sales. Sending you a list would be pretty silly of us and overwhelming for you. Some strategies don’t apply to your industry, and some just won’t work in your business for whatever reason.

What we have found through experiencing a wide range of client situations over the years, is that certain things do work in each type of business. There’s a pattern that we see in clients - both good and bad! How does a business grow its sales without its owners becoming overwhelmed by a mountain of change?

The best and most supportive way to grow and improve a business is to have someone looking over your shoulder from time to time, helping you build a plan and a forecast, and keeping you accountable to making the changes that will make the most important differences.

Without that support, we all end up in our business and never working on it. Talk to us about how we can provide that support.

The sixth cause of poor cashflow - Overheads are too high

Fri, 19 Apr 2024 14:09:29 GMT

Overheads isn’t typically a place where you will find a lot of wastage. Our experience is that business owners are very careful about managing their expenses, and the smaller the business, the truer that statement is.

Having said that, as a business grows, so do the layers of hierarchy. Management control can deteriorate, and the business can become a bit flabby. The trick is to trim the fat but not the muscle when evaluating your expenses.

As an absolute minimum, every business should do a thorough review of its overheads at the same time every year, so that it becomes a natural routine.

Here are some questions to ask yourself:

Do appropriate managers and key staff have individual expense budgets? If so, how are these managed?
Have you conducted a formal review of all debt service costs and related fees?
What policies and cost control processes are in place for sales staff? Include all working away allowances, vehicle reimbursement expenses, entertainment, and credit card use.
What was your total marketing and advertising spend for the last 12 months? Have you analysed each component of spend based on effectiveness and results to the business?
When was the last time you renewed your IT support contract? Have you negotiated a fixed monthly fee? If so, is your current fee and contract appropriate (consider migration of services to cloud)?
List all subscriptions you pay monthly for SaaS cloud services. Are you using all these services and on the right plan for each? Conduct a cost-benefit analysis.
And finally, do you consider your accounting fees a cost or an investment? If they’re a cost, you need to reduce them. If you’re getting value from your annual spend with us, maybe you should invest more to get better business outcomes!

Best practice for keeping control over spending is to set budgets and monitor them monthly. Talk to us about the best way to do that. We can show you the impact reducing your overheads can have on your cashflow.

The fifth cause of poor cashflow - Gross profit margins are too low

Fri, 19 Apr 2024 14:06:53 GMT

Your gross profit margin is what is left from your total sales after variable costs are deducted.

For example, if you're a retailer and your sales in a given period are £1,000,000, and the cost of the goods you sell in that period is £650,000, then your gross profit margin is £350,000, or 35%.

In the above example, if you implement some strategies to improve the margin from 35% to 39%, your gross profit will improve from £350,000 to £390,000. That’s an increase in profit of £40,000. You may need to increase your overheads a little to get that increase, however, if you get the results, it will be well worth your investment and energy.

There are many ways to lift gross profit. Some will be appropriate for your business, and some won’t.

For example, if you’re a retailer, you could focus on reducing stock shrinkage and theft, avoiding some discounting, and making sure you minimise obsolete stock.

If you’re a contractor, you might focus on rework and wastage, ensuring all work and materials on jobs get billed, and team member productivity.

We can help you to determine the best strategies to lift your margins. We can then run your figures through our Cashflow & Profit Improvement Calculator to show you the impact of seemingly small changes.

Don’t let poor margins destroy your cashflow and working capital. Get some help from us to make a better plan.

The fourth cause of poor cashflow - Your debt or capital structure

Fri, 19 Apr 2024 14:04:43 GMT

Often a reduction in interest charges as well as significant cashflow improvements can be achieved with a regular review of existing debt.

A good place to start is to list all bank loans, mortgages, finance company loans, hire purchases, credit card debts, and any other debts (don’t include amounts owed to suppliers in this list). Add columns to cover:

The amount of the debt owed
The interest rate being charged
Whether the interest is charged on a fixed or floating rate basis
Repayment terms (the number of years the debt is to be repaid over)

Perhaps your debt can be consolidated, financed by one lender and paid off over a longer term. This will help you retain more cash in the business which is vital for growth (or even just to cover expenses and your drawings).

Are the drawings you take from the business for personal expenses placing pressure on cashflow? If so, that might mean that we need to look at strategies to lift the profitability of the business. It might mean that your drawings are just too high for the business to support right now. The business may need an injection of capital to fund its growth.

Here’s an interesting exercise for you to do. List out your annual personal expenditure in detailed categories; everything from rent, childcare, groceries and eating out. You may need to prepare yourself for a shock. If you’re serious about this, we have a Personal Budget Template that you can use to make life easier.

Getting your debt and capital structure right makes a big difference to the cashflow in your business. This is a subject that we have a lot of experience in. The first step is to prepare an updated personal budget and a Cashflow Forecast, then measure the extra cash the business will have as a result of making some simple changes. We can help you calculate this extra cash at our Cashflow & Profit Improvement Meeting.

Doing a forecast for the first time seems scary, but once you’ve done it, you’ll realise that it’s one of the most essential business tools you’ll ever put in place. We can do the forecast with you. You’ll sleep better for it!

The third cause of poor cashflow - Your stock turn

Fri, 19 Apr 2024 14:01:41 GMT

Carrying stock for too long means full shelves but an empty bank account. Similarly, if you’re a service provider and are taking a long time to bill for your services, then you’re carrying too much stock in the form of work in progress. Consider that work in progress a form of virtual stock.

You can calculate your ‘stock turn’ by taking your cost of sales from your annual financial statements and dividing it by your average inventory (or work in process). Most clients need some help from us to work this out, so don’t worry if you don’t understand straight away; we’ll show you. Expected stock turn rates vary from industry to industry, so it’s important you don’t compare your stock turn to other types of businesses.

The key is to convert stock to cash faster. Ask yourself these questions, just for starters:

Do you have a stocking strategy? Do you determine safety stock, desired stock levels, and re-order points for each stock category?
What software do you use to measure how much stock you have on hand at any given point in time?
What clear policies do you have to ensure you have no slow moving stock items?
How much is stock shrinkage (theft, damage) costing your business?
Do you have a formal stock ordering system so that stock levels don’t blow out?

These are just some of the ways to improve your stock turn. If you think your stock levels might be stifling cashflow in your business, make a time to see us.

At our Cashflow & Profit Improvement Meeting, we’ll use our calculator to show you how much cash you can unlock in your business by reducing stock turn with a simple action plan.

The second cause of poor cashflow - Your accounts payable process

Fri, 19 Apr 2024 13:59:17 GMT

The second cause of poor cashflow relates to when and how money is spent in your business, and includes your Terms of Trade with suppliers.

Do you have spending budgets in place?

It’s best practice to prepare an overall business budget every year, usually before the beginning of the new financial year. It’s also best practice to make sure that team members with the authority to order products and services are doing so within the parameters of an agreed budget, and that controls are in place to ensure that department spending budgets are not exceeded.

Now is a good time to review (and document) your Accounts Payable process, from ordering right through to making payment.

When was the last time you reviewed your suppliers’ Terms of Trade and prices?

Terms such as payment expectations, discounts for early payment, late payment implications, insurance, and warranties are all worth a closer look. What controls are in place to ensure supplier payments are made on time and discounts for prompt payment are maximised? If you’re not paying suppliers on time, you need to look at freeing up cash in other areas to ensure you’re meeting your payment terms.

Have you recently evaluated the pricing of your current suppliers and compared this with competitors’ prices? Your evaluation should include delivery charges, payment terms, and discounts.

There are many more strategies you can employ to minimise the risk of fraud and human error, maximise prompt payment discounts, and build strong relationships with your suppliers.

Talk to us about your accounts payable processes . At a Cashflow & Profit Improvement Meeting, we can show you how to improve your accounts payable processes to manage your cash outflows more effectively.

The first cause of poor cashflow - Your cash lockup

Fri, 19 Apr 2024 13:56:03 GMT

There’s a massive difference between profit and cashflow. Profit increases when you create an invoice for work you’ve done or goods you’ve sold; cash increases when you bank the money.

Your lockup equals the cash that isn’t in your bank account because it’s either in work in progress (you’ve done some work but you haven’t yet billed for it) or you have billed your customer but are waiting to be paid.

There are two key processes that need to be improved to reduce the cash that's stuck in your lockup. Within each of these two processes, there are countless strategies that can be put in place to put more cash in your bank account.

Billing
The earlier you invoice a customer, the faster you’ll get paid. How quickly after delivery of a product or service do you bill? Do you carry significant work in progress because your service spans several weeks or even months? If so, should you consider progress billing on a regular basis?

Collections
You’ve done the work, you’ve billed your customer, now it’s time to get paid.

Do your customers sign off clear Terms of Trade before they do business with you for the first time and are there clear expectations as to when an account is due for payment? Is that 14 days after invoice? 7 days? Shorten up that timeframe and your cash lockup will go down significantly.

How easy do you make it for customers to pay? Your invoices and statements should contain a link to pay immediately online or at least state your bank account details and due date.

Do you provide multiple payment methods to customers? For example, direct debit and credit, credit card, Eftpos, debtor finance (where appropriate). Do you offer a small discount for prompt payment? Customers love discounts.

These are just some of the process changes you can consider to reduce cash lockup. There are dozens more. Talk to us about our Cashflow & Profit Improvement Meeting. We’ll show you what’s possible - in cold hard cash of course!

Cashflow freedom - The 7 causes of poor cashflow

Fri, 19 Apr 2024 13:51:53 GMT

Cash is the lifeblood of any business. Even profitable businesses can and do fail because of poor cashflow.

What’s important is that you understand your key cashflow drivers. Improving cashflow is often all about changing your processes. Processes such as how you order stock and pay for it, how you bill for your services, and how you make sure you get paid by your customers.

Treating the symptoms of poor cashflow without fixing the underlying causes is time-consuming and frustrating.

Inadequate cashflow is a symptom of management problems in a business, NOT the cause. In order to fix these underlying causes, you need to be willing to make the necessary changes. You’ll build a much better and valuable business, as well as improving your cashflow.

While there are many causes of poor cashflow, most of these relate to one or more of the following seven categories.

1. Your cash lockup .
By lockup, we mean the cash that isn’t in your bank account because it’s work in progress (work you have done but not yet billed for) or you’ve billed your customer but are waiting for payment.

2. Your accounts payable process .
If you don’t have spending budgets in place and aren’t taking advantage of the best possible supplier terms, your cashflow will be impacted.

3. Your stock turn .
If stock is moving too slowly, it will take longer to turn the stock you have already paid for into cash.

4. The wrong debt or capital structure .
For example, if your loans are being repaid over too short a term, this will place a big strain on cash reserves.

5. Gross profit margins are too low .
Your gross profit margin is what’s left from sales value after variable costs are deducted. If it’s too low, it won’t be enough to cover fixed expenses and your drawings from the business.

6. Overheads are too high .
Every business should do a thorough review of its overheads each year.

7. Sales levels are too low .
If sales levels don’t support cash demands on the business, then sadly, the business is not currently viable.

If you need help streamlining your processes and increasing your cashflow, we can help you identify the best areas to focus on during a Cashflow & Profit Improvement Meeting.

"If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cashflow." - Jack Welch

What's your money story?

Wed, 10 Apr 2024 14:43:45 GMT

What you believe about money and how you relate and interact with it affects every aspect of your life and business. A belief is simply a story that you have told yourself so many times that you think it’s the truth.

So, for us all to live a vital, vibrant, and thriving life, the story we’re telling ourselves and choosing to believe about money needs to be uncovered, understood, and possibly re-written.

Let’s start by understanding what money means to you, what it represents, and what feelings it evokes. Of course, there can never be one right answer. For some, money can represent freedom, opportunities, or fun. For others, money can evoke feelings of stress, inadequacy, or a lack of control.

However, money doesn’t have to be any of those things.

The associations that we unconsciously attach to money are (like so many things) based on our understanding, experiences, and environment. Money is just paper, metal, coding, and digital numbers on a computer screen.

Peaks and troughs in the economy, fluctuations in money markets, and unexpected world events can affect the value of our money and our perception of it.

We should ask ourselves:

What really matters?
How does money fit in with our priorities?
How do we ensure our money story does not interfere with being the person we want to be?

Often, it’s not money that’s the challenge or problem we need to understand and change; it’s our association with it. This association involves the value we place on money and, more often than not, the value and worth we place on ourselves. We’ve allowed money to be the benchmark for the value of all things we hold dear. We assume that the more we have, spend, or save, the better we will be as people.

But should we always be in pursuit of more money, more growth, and more success? Taking a moment to understand what truly drives us is a powerful and thought-provoking reflection to have. Uncovering our own money story in the greater context of our business and personal goals could be critical to our success.

While we love to help clients manage their money and grow their business, we believe all business owners should also have time and mind freedom. This means having time for family, friends and hobbies, and reducing the stress so many business owners face.

No matter what your goals are, we’ll help align your business and personal goals to ensure you have financial, time and mind freedom. Get in touch to find out more about how we can help.

"An investment in knowledge pays the best interest." - Benjamin Franklin

Overcoming Imposter Syndrome: A Business Owner's Guide

Wed, 10 Apr 2024 14:38:20 GMT

It's a common struggle and we probably don’t talk about it. Imposter Syndrome affects individuals from all walks of life, including business owners. It's characterised by a persistent feeling of inadequacy, despite evidence of your competence and accomplishments.

A Harvard Business Review study found that nearly 70% of entrepreneurs have experienced imposter syndrome at some point in their careers. This self-doubt can be particularly debilitating for entrepreneurs, as they navigate the multiple challenges of running a businesses. Understanding and addressing this issue is crucial for personal and professional growth.

Many business owners, despite their achievements, constantly question their abilities and attribute their success to luck or external factors. This mindset can hinder their progress, hinder decision-making, and lead to burnout. So how do you overcome it?

Overcoming Imposter Syndrome

While conquering imposter syndrome is a personal journey, there are practical steps that business owners can take to manage it effectively:

Acknowledge and Normalise - Understand that imposter syndrome is common and experienced by many, if not most, successful individuals. Normalise these feelings as a part of the entrepreneurial journey.
Track Achievements - Maintain a record of your accomplishments, no matter how small they seem. Regularly reviewing these achievements can help boost confidence and counteract self-doubt.
Seek Support and Talk to Others - Talk to your business advisor, a mentor, and others in similar roles. Sharing your thoughts and feelings with someone you trust can provide valuable insights and strategies for overcoming imposter syndrome.
Set Realistic Goals - Break your long-term goals into smaller, achievable milestones. This can help you see your progress more clearly and reduce the feeling of being overwhelmed. One step forward can make a huge difference.
Embrace Failure - Understand that failure is a part of entrepreneurship. Instead of seeing it as a reflection of your worth, view it as a valuable learning experience. We are all on a path of continuous learning.
Practice Self-Compassion - Be kind to yourself. Focus on your strengths and abilities. You may not have all the answers today but that’s entirely normal.

Imposter syndrome is a common challenge faced by many business owners. It can hinder personal growth, decision-making, and overall well-being.

Remember, you are not alone in this struggle, and your achievements are a testament to your capabilities and hard work. We can help you create a plan for your business that removes the uncertainty and builds on your strengths.

How does an accountant save you money?

Wed, 10 Apr 2024 14:34:48 GMT

Turning a profit will be high on your list of goals as a business owner. And if you want to generate the best margins, that means keeping an eye on the money that’s going out of the business, as well as what’s coming in.

So, how can your accountant help with this?

The days where your accountant just did the bookkeeping, compiled your accounts and filed your tax return are well and truly over. Modern accounting firms are far more interested in helping you with your financial performance, your business strategy and offering flexible value-add services that put you in better control of your finances.

If you partner with the right accountant, we can actually save you money – in both the short, medium and long-term. And that’s good news for the growth of your business.

Key ways your accountant can enhance your financial health

The less expenditure you have as a company, the bigger your profit margin. It sounds incredibly simple, doesn’t it? - The smaller your costs, the larger your profit. But if you’re not fully in control of your financial management, it’s very difficult to know WHERE you’re spending money, and WHY you’re not achieving your profit targets.

This is where working with a finance professional adds a huge amount of value. Your accountant helps put you back in the driving seat of your finances – and that’s never been more needed than in the current economic climate.

So, what specific things can your accountant do and what will the impact be on the future of your business?

Tax advice and planning – tax costs can be one of your biggest outgoings as a business, so we’ll focus on getting your tax planning under control, applying for all the relevant tax incentives and ensuring you minimise the taxes on your profits. By paying only what you’re legally required to pay – and making use of any reliefs – we can significantly cut your tax spend in the business.
Cashflow management and advice – ‘Cash is King’ may be a cliche, but it’s true. Unless you can balance the cash inflows and outflows from your business, you’ll never have the liquid cash to pay your bills, cover your payroll costs or cover your operational expenses. We’ll show you where money is going out, and coming in, so you achieve the ideal positive cashflow position.
Cost control and spend management – to improve your cashflow, you need to reduce your cash outflows. An important way to do this is to focus on cost control and spend management, reducing your expenditure, removing unnecessary costs and negotiating better deals with your suppliers. The more you cut costs back, the better your cashflow will be and the easier it will be to thrive, grow and become more profitable.
Forecasting and financial modelling – when we understand the key financial drivers in your business, we can build you a full financial model. This allows us to change the variables, run different scenarios and forecast the various future paths of your business. Being able to project these numbers forward gives you a clearer view of the path ahead – and that’s invaluable in the challenging economic times that we all face at present.
Better management reporting and information – your decision-making stands or falls on the information you have available to you. We provide detailed management accounts, breakdowns of key metrics and forecasts of your cashflow, spending, aged debt and revenue – all of which helps you to save money, make sound decisions and keep the revenues flowing into your business.

Talk to us about cutting costs and boosting profit

Rather than running your business on a wing and prayer, by working with an accountant you get a clear picture on your business financials. We’ll help you cut unnecessary costs, optimise the most profitable parts of the business and increase your overall return on investment.

Let’s talk about how we can work together to support your ongoing business profitability.

Charging interest on a Directors' Loan Account

Tue, 19 Mar 2024 18:59:30 GMT

When you’re the director of a business, it’s likely that there will be occasions where you borrow money directly from your company, or inject your own capital into the business.

A Directors' Loan Account (DLA) keeps track of this money owed between the company and its directors. In many companies, the account is in credit – i.e. the company owes money to the director. This can be due to directors injecting startup capital into the company, not drawing dividends they are owed, or other expenses that have been subsidised by the director.

In these situations, it’s worth considering charging interest on the balance that’s due. But how do you do this? And what impact does charging interest have for the director and company?

Understanding interest on Directors' Loan Accounts

Let’s take a look at some of the rules around applying interest on DLAs, and the potential benefits this can bring to your company and tax planning.

Any interest paid re these DLAs will be deductible when calculating your company’s taxable profits. Because of this, it’s possible to achieve tax savings of up to 25%.
For the individual, a basic-rate taxpayer has a Personal Savings Allowance (PSA) of £1,000 and will pay 20% on the excess. So, paying interest is more tax-effective than declaring dividends. The PSA for a higher-rate taxpayer is £500.
The interest rate needs to be a commercial rate. In other words, the interest rate used must not exceed the rate you’d expect to see from a third-party lender.
Where interest is paid to an individual, basic rate tax needs to be deducted at source from any payment made to the director.
This tax is reportable to HM Revenue & Customs (HMRC) on a calendar-quarterly basis, with the amount deducted offset against tax due on the individual’s personal tax return. Where the company accounts are not drawn up to a calendar-quarter end, a fifth return is required up to the balance sheet date.
The company can take into account any interest due, but not paid, until up to twelve months later when calculating its own profits. However, the individual will only include as income any interest that’s actually been paid. Note though that 'paid' can include crediting to a DLA!. This can give a timing advantage.

Talk to us about maximising the tax benefits of your DLA

Any interest you receive is not subject to National Insurance Contributions (NICs) and is particularly tax effective when shielded by the Personal Savings Allowance (PSA) .

The reporting requirements for interest on DLAs are no walk in the park. Because of this, it’s a good idea to talk to us first, so we can make sure you have a workable system in place prior to making any payments. We can also give an opinion of the acceptability of the proposed rate of interest to pay, and how it measures up against current market rates.

Get in touch to talk about interest on your DLA.

Small business bookkeeping – Here's how

Tue, 19 Mar 2024 18:55:22 GMT

While software has replaced the leather-bound ledgers of the past, bookkeeping is still an essential task for modern business owners.

Here’s how it works – and why it’s so important.

Bookkeeping benefits

Accurate, up-to-date financial records are vital for running a small business. They let you keep tabs on spending, help you plan and budget, avoid cash-flow issues and identify payment issues that could be costing you money.

Even more important, well-kept books are a must when it comes to completing accurate tax returns and working with lenders.

Bookkeeping basics

Recording means keeping a record of every incoming and outgoing transaction.
Reconciling involves checking transaction data against bank statements to make sure everything matches up. This helps you identify errors or late payments – or in some cases, fraudulent activity.

Bookkeeping in a small business also includes accounts receivable, accounts payable and payroll – that is, sending outgoing invoices, paying incoming bills and paying staff.

Simplifying bookkeeping with software

In the past, business owners recorded sales in a ledger, kept paper receipts for business purchases, and cross-referenced bank statements by hand.

Now, accounting software can take on many of those tasks.

Recording sales : information flows straight from a point-of-sale or invoicing system into accounting software.
Tracking purchases : business purchase data can be automatically recorded.
Reconciliation : is quicker and more accurate.
Invoicing and bill payments : can be automated.

Need help getting your books under control? Get expert bookkeeping support from our accounting team, now.

Book a tax planning conversation with us today

Tue, 19 Mar 2024 18:41:49 GMT

The days of deciding on a tax strategy at the start of the year and then forgetting about it are gone. As taxpayers and tax advisers, we both have to be nimble, flexible and aware of changes. That’s why regular tax-planning sessions are so important.

Is your business meeting the right tax compliance goals?
Are there tax changes to be aware of?
And is your tax planning delivering the very best results for you and for your company?

The need for regular tax-planning conversations

As your accountant and tax adviser, we want to help you get the best outcomes from your tax planning. In the current environment, that’s difficult to achieve if we only speak to you about tax on an annual basis.

The frequency of these tax planning chats will depend on the size of your business, and the complexity of your structure and shareholder set-up. But we should be talking to you at least once every quarter about the tweaks and changes that are needed in your plan.

In these tax planning sessions, we can:

Update you on the latest tax measures – We’ll tell which personal and business taxes you need to be aware of.
Tell you how these measures affect you – We’ll run you through the implications of any changes to things like corporation tax, income tax and available business reliefs. We can show you the impact on your tax returns for the coming periods, and what this means for your tax costs and your cashflow at large.
Listen to your evolving plans for the business – We’ll also ask you about your future business plans and what you want to achieve in the coming quarter. When we know what your aims are, we’ll do our best to help you come up with a business strategy that’s closely aligned with your tax-planning strategy.
Suggest planning measures to benefit you and your business – When we know your business goals, we can help you plan your tax more effectively. For example, if you’re planning on investing in research and development (R&D), we can talk to you about reliefs like the R&D Tax Credits, Innovation Grants or the Patent Box.
Update your tax plan for the year – With the outputs from a productive tax-planning session, we’ll come up with a refreshed and updated tax plan for the coming period (and beyond). It’s the best way to stay on top of an unpredictable tax landscape while delivering the best in tax compliance and tax efficiency.

Talk to us about booking in a tax-planning session

We’ll always do our utmost to help you plan out your tax liabilities and keep the business in a positive cashflow position.

Book a tax-planning conversation with us and let’s start improving your strategy.

Tax E-News – Budget 2024

Thu, 07 Mar 2024 17:08:23 GMT

On 6 March 2024, Chancellor Jeremy Hunt presented his Spring Budget to Parliament. In the knowledge that the government must hold a general election before 28 January 2025, this was a Budget designed to restore confidence and win voters. But on the heels of Britain entering a recession and downgraded Office for Budget Responsibility (OBR) forecasts, the Chancellor had his work cut out.

Headlines included further cuts in National Insurance Contributions for workers and the self-employed, a slight increase in the VAT registration threshold and an increase in thresholds to reduce the number of people affected by the high-income child benefit charge. There has also been a cut in capital gains tax for higher earners disposing of residential property. However, income tax rates and thresholds remained static and inheritance tax continues to apply to the largest estates.

Below, we talk more about the Budget and what it means for you.

INCOME TAX

Please note that ‘tax years’ run to 5 April each year and that, for example, 2024/25 signifies the year to 5 April 2025.

Your personal allowance

Your tax-free personal allowance will remain at £12,570 in 2024/25. The personal allowance is partially withdrawn if your income is over £100,000 and then fully withdrawn if your income is over £125,140.

Income tax rates and allowances

For 2024/25, income tax rates and thresholds remain frozen at their 2023/24 levels.

After your tax-free ‘personal allowance’ has been deducted, your remaining income is taxed in bands in 2024/25 as follows.

‘Other income’ means income other than from savings or dividends. This includes salaries, bonuses, profits made by a sole trader or partner in a business, rental income, pension income and anything else that is not exempt.

So what ? Without inflationary increases to the income tax bands, the Chancellor is effectively imposing an income tax increase; as wages and earnings rise and a larger proportion falls into higher tax bands. This is known as ‘fiscal drag’.

Scottish taxpayers

If your main residence is in Scotland or you are otherwise classed as a ‘Scottish taxpayer’, the application of income tax rates and bands applies differently where ‘other income’ is concerned. After the ‘personal allowance’ has been deducted, your ‘other income’ is taxed in bands as follows:

The Scottish Budget was held on 19 December 2023 and made changes including the introduction of the new ‘advanced rate’ of income tax for 2024/25.

Your Business Plan

Fri, 01 Mar 2024 15:38:51 GMT

An ever-changing business landscape can present unforeseen challenges for any business at any time. Identifying risks and opportunities in your business model and creating a Business Plan will help you prepare for difficulties or adversities and provide clarity in the event of a crisis in the future.

Now is an ideal time to document a clear Business Plan:

Defining what you, as business owners, want from the business; this includes cash drawings, your role, hours of work and holidays.
Establishing your budget to ensure you’re generating enough cash to cover all expenses including tax, personal expenses, loans and asset purchases.
Determining your critical KPIs; the most important things you need to measure to track your progress towards achieving your targets.
Identifying your opportunities and vulnerabilities; the factors that will most impact your business recovery.
Determining how to manage your most critical challenges.
Establishing your 12-month and 90-day goals to ensure you’re clear on your priorities.
Clarifying your actions to achieve those goals.

If you haven’t created a Business Plan, we can facilitate this. You’ve got the smarts on your business, what’s working and what might need to change. Our expertise lies in stress testing the numbers and pulling everything into one concise plan of attack – so if the unexpected happens, you’re prepared. Contact us today.

Getting your bookkeeping ready for a digital future

Fri, 01 Mar 2024 15:34:47 GMT

Keeping up-to-date records of your business transactions isn't the most glamorous part of being an entrepreneur, that’s for sure. But, in reality, having accurate and up-to-date bookkeeping is actually one of the core ways to keep your finances (and your business) under control.

Digital bookkeeping is the future of your finance

The digital age has revolutionised the way many business owners carry out their bookkeeping. From digital accounting to real-time data, the modern bookkeeper is now equipped with the tools and resources to make the job easier, more efficient and (crucially) less time-consuming.

When your bookkeeping goes digital, that means:

Your data entry process gets automated – receipts, invoices and other supporting documents can all be scanned using OCR software. This gives you a digital copy of the paperwork, but also digitises the data and pulls it into your online ledgers. There’s no need for tedious manual data entry, and you also reduce the chances of human error.
Your digital records are available 24/7 in the cloud – instead of searching through messy hard drives or dusty filing cabinets, all your financial documentation is available at the press of a button. You can pull up the documents you need at any time of day, from any location with internet access. And everything is safely encrypted and backed up.
Your tax returns can be filed digitally – with all your bookkeeping data saved and accessed via your cloud bookkeeping/accounting software, your tax returns become a lot more straightforward. Whether it’s quarterly GST/VAT returns or annual corporation tax returns, you have all the data the tax office needs, ready to send in a digital format.
Your finance data goes real-time – scanning and digitising your receipts at the time you make the transaction doesn’t just keep your records up to date. It also gives you real-time data on all your income, expenditure and operational costs. Instead of working with management information that’s months out of date, you have informative real-time data on which to base all your big business decisions.
You’re 100% in control of your finances – by embracing the benefits of digital bookkeeping, you kick your finances into shape. You and your finance team have accurate real-time records of all income and outgoings, and can stay in complete control of the financial management of the business. Your accounts are in tip-top shape and you're ready to file your tax returns at every significant period throughout the year.

Talk to us about switching to digital bookkeeping

If you want to transform your bookkeeping, now’s the ideal time to go digital.

Talk to our team and find out what bookkeeping or accounting software is right for your business.

Once you see the efficiency, accuracy and long-term benefits of digital bookkeeping, you’ll understand why going digital is a no-brainer, whatever type of business you run.

Tax planning helps you do more with your money

Fri, 01 Mar 2024 15:31:08 GMT

Tax planning is a strategic approach to managing your business’ financial affairs, with the aim of legally minimising your tax liability. In other words, you plan ahead to make sure you pay the taxes you should be paying, but not a penny more.

Working with your tax adviser, you can look for deductions, credits, exemptions and tax-saving strategies that will help to optimise your company’s overall tax position.

How does tax planning affect your business?

The primary goal of tax planning is to reduce the amount of taxes your business owes. But it’s also about making sure you stay compliant with all the tax laws and regulations applicable to your business.

But what are the main advantages? Let’s take a look at five of the big benefits of careful, strategic tax planning.

By planning your tax across the year, you can:

Maximise your profits – strategic tax planning helps your company find the best available tax incentives, deductions and credits. This reduces your overall tax liability, cuts your annual tax costs and increases your overall profitability as a business.
Boost your cashflow – tax planning is a great way to open up more liquid cash and achieve a better cashflow position for the business. When you cut down the company’s tax payments, that frees up cash and helps you achieve a positive cashflow position.
Stay compliant and mitigate your risk – being proactive with your tax planning keeps the company compliant with the relevant tax laws and regulations. It’s a sensible way to tick the compliance boxes and reduce the risk of costly penalties and legal issues.
Drive your strategic growth – smart use of tax planning helps you reduce your tax costs and reassign those funds to your strategic business goals. It’s a golden opportunity to invest in areas that promote long-term growth and competitiveness.
Give your business a competitive edge – if managed well, efficient tax planning leads to lower operational costs for the business. This gives you a competitive edge when it comes to pricing, innovation, sales and revenue generation.

How can our firm help you with tax planning?

Getting strategic with your tax planning has many advantages for your financial stability as a business. But to maximise your planning, it’s important to work with an experienced adviser.

As your tax adviser, we’ll help you look ahead across the whole financial year, looking for the opportunities to reduce your tax liability and find the best tax deductions and incentives.

If you’d like to know more about the impact of tax planning, we’ll be happy to explain.

Get in touch to talk about tax planning.

8 ways to save time (and money) in your business

Fri, 01 Mar 2024 15:28:14 GMT

Like everyone, business owners are always looking for ways to save time.

Every minute spent on admin or fixing mistakes is a minute that could be spent on business-building work

When time really is money, it’s worth finding ways to reduce those tedious and repetitive tasks – and technology is the answer.

Better billing - Billing can be a huge time-waster. Using a digital accounting system to extract data from supplier emails and auto-populate invoices can save hours each week.
Streamline expense claims - Use a digital solution to automate the expense claims process, and your team saves time submitting receipts, approving expenses and dealing with mistakes.
Reduce human error - Manual data entry is fraught with errors. Eliminate the issues by automating key admin tasks, and spend more time on data analysis, not data entry.
Automate approvals - Streamline bank reconciliation with an automated tool, so you don’t waste time manually approving individual transactions.
Quicker invoicing - Invoices and late payments take up a huge amount of time. With an automated invoicing platform, that time is reduced significantly – and manual follow-ups for late payment are eliminated.
Payroll perfection - Use your accounting software to upload staff details and calculate tax contributions. You’ll not only save significant chunks of time, but you’ll avoid mistakes.
Quick, accurate taxes - Digitising the tax process can make a real difference. Instead of Excel spreadsheets, receipts and physical documents, everything is accessible through your software.
Better access to business data - With smart software, you get accurate business data wherever you are. No more going back to the office to check a number, getting back to clients with final details, or reworking quotes because the numbers were wrong.

Want to save time in your business? We’ll set you up with the software to make it simple.

Tax Tips for February 2024

Fri, 16 Feb 2024 10:37:47 GMT

YEAR END TAX PLANNING
It’s not too late to undertake some end of year tax planning. If you have some spare cash, an obvious tax planning point would be to maximise your ISA allowances for the 2023/24 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2024.

USE A LIFETIME ISA (LISA) TO SAVE FOR YOUR FIRST HOME

Those aged between 18 and 40 can set up a Lifetime ISA (Individual Savings Account) to buy their first home or save for later life. You can put in up to £4,000 each year until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. Note that the Lifetime ISA limit of £4,000 counts towards your £20,000 annual ISA limit.

You can withdraw money from your ISA if you’re:

buying your first home, aged 60 or over, or terminally ill, with less than 12 months to live.

However, you’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason (an unauthorised withdrawal). This recovers the government bonus you received on your original savings.

PENSION PLANNING

Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000.

Additional pension contributions can be even more effective if your income is between £100,000 and £125,140 as the gross pension contribution reduces net income for the purposes of the reduction in the personal allowance. Note that for every £2 of income in excess of £100,000, the £12,570 personal allowance is reduced by £1, with reduction to nil where net income is £125,140 or more. This is effectively a 60% tax saving.

CAPITAL GAINS TAX PLANNING

You might wish to consider bringing forward capital gains to before 6 April 2024 where you haven’t used your £6,000 CGT annual exemption. This exempt amount reduces to just £3,000 for gains made in 2024/25.

CAPITAL EXPENDITURE PLANNING

Unless the business year end is 31 March or 5 April, the end of the tax year is not a significant date as far as capital allowances are concerned. In order for new equipment to attract capital allowances, the expenditure must be incurred on or before the end of the accounting period. Limited companies buying new (not second hand) equipment are entitled to fully expense the cost of most acquisitions against business profits. There is no financial limit on expenditure qualifying for this “full expensing” relief.

Unincorporated businesses are entitled to 100% write off for the first £1 million spent on new and used equipment in a 12 month period. This “annual investment allowance” (AIA) is also available to limited companies buying second hand equipment. The AIA does not apply to motor cars but there is a special 100% tax relief if you buy a new zero-emissions motor car.

Where equipment is bought under a hire purchase contract, the capital allowances outlined above are available on the full cost of the asset provided it has been brought into use by the end of the accounting period. This is despite the fact that the payments may be spread over a number of months.

GET READY FOR MORE R&D CHANGES

On top of the major changes to research and development (R&D) tax relief that took effect from 1 April 2023, there are yet more changes that take effect from 1 April 2024.

The main change from 1 April 2024 is that most companies carrying out qualifying R&D will be entitled to a 20% expenditure credit. The 20% is calculated on the amount of qualifying expenditure. Qualifying expenditure is extended to include subsidised expenditure from 1 April 2024, although R&D carried out overseas will no longer qualify unless the work cannot be undertaken in the UK.

“R&D intensive” companies that make trading losses will continue to be entitled to a tax refund instead of the expenditure credit. The definition of “R&D intensive” is reduced from 40% to 30% from 1 April 2024, which means a company that spends at least 30% of total expenditure on qualifying R&D.

R&D tax relief continues to be a complex area and we can work with you to help you prepare a valid claim.

ADVISORY FUEL RATE FOR COMPANY CARS

The table below sets out the HMRC advisory fuel rates from 1 March 2024. These are the suggested reimbursement rates for employees' private mileage using their company car.

Where the employer does not pay for any fuel for the company car, these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee. Where there has been a change the previous rate is shown in brackets. You can also continue to use the previous rates for up to 1 month from the date the new rates apply.

Note that for hybrid cars you must use the petrol or diesel rate.

For fully electric vehicles the rate is 9p per mile.

DON’T BE LATE IN PAYING YOUR PERSONAL TAX BILL

2022/23 income tax, CGT, class 2 and 4 NIC liabilities should have been paid by 31 January 2024 unless you have agreed a payment plan with HMRC. Note that if the balance is still unpaid at the end of February 2024, a 5% surcharge penalty is added in addition to the normal interest charge unless a payment plan has been agreed.

DIARY OF MAIN TAX EVENTS FEB/MAR 2024

What’s better for my tax position: cohabiting, marriage or civil partnership?

Wed, 07 Feb 2024 18:22:53 GMT

Are you cohabiting, married or in a civil partnership? The nature of your personal relationship can have a significant impact on the way your income is treated for tax purposes.

Although ‘common law’ relationships are becoming increasingly common, UK tax law currently discriminates against these sorts of arrangements. Married couples and people in civil partnerships are treated the same as each other but cohabiting couples are not.

This is in contrast to the rules around state benefits, where working tax credits, child credits and universal credits are calculated on your joint income, regardless of your marital status.

3 ways that tax law discriminates against cohabiting couples

There are three main areas of tax that discriminate against couples with a long-standing relationship who cohabit, but who aren’t married or in a civil partnership.

Marriage Allowance – under the Marriage Allowance rules , one individual is allowed to transfer 10% of their personal allowance (currently 10% of £12,570) to their spouse or civil partner. The ‘receiving’ individual can save up to £252 in tax annually. This transfer of allowances is not available for couples who are ‘just’ cohabiting.
Capital Gains Tax – when it comes to Capital Gains Tax (CGT) , assets such as shares can be transferred between spouses/civil partners on a ‘no loss, no gain’ basis. Effectively, the receiving partner is deemed to have acquired the asset at the same cost as the donating partner. This means that transfers of this kind won’t give rise to an immediate capital gain. When these assets are eventually sold, because any gains are split, both individuals can use their tax-free allowance.
Inheritance Tax – the Inheritance Tax (IHT) rules allow an individual to bequeath unlimited assets on death to their spouse or civil partner without any Inheritance Tax being due. But this doesn’t apply for couples that are cohabiting.

The potential benefits of cohabiting

As you can see, being in a married couple or civil partnership does have its tax perks. But are there any tax benefits for cohabiting couples to be aware of?

Here are two key benefits:

If property is owned jointly by a married couple, any income is generally deemed to be earned 50/50 by each individual – although they can have it taxed in proportion to actual ownership, if that’s in a different ratio, by each of them completing a Form 17 document . Unmarried couples can split this property income in whatever ratio they wish, regardless of the actual ownership percentage.
Married couples can only elect a single property to be their main residence for CGT purposes. However, it’s possible for unmarried couples to nominate different properties as their main residence.

Get in touch to arrange a finance health check

If you’re planning any significant acquisitions or disposals of assets, please do come and talk to us first. Even something innocuous, like gifts between spouses, may be caught out by things like settlements legislation, so it’s important to factor in your marital status.

An annual financial health check can be a useful opportunity to review the way you structure the ownership of joint assets between partners.

Turning washouts into wins

Wed, 07 Feb 2024 18:19:44 GMT

Some of us love a good failure story. While victories are inspiring, true tales of messing up are often more relatable, but most importantly, indispensable learning opportunities.

If we can shift our perspective to see our flops as valuable progress, each washout can become a win.

Eight ways to help failure breed success:

1. Change your mindset.
See failure as a pathway to success rather than a roadblock. The road to success is paved with deviations. We can reframe the old adage, 'try, try again', as 'fail, fail again', because that’s what it takes to achieve continuous improvement.

2. Fail more.
Everyone sets ‘Win’ goals but how about ‘Fail goals”. If failed attempts improve our outcomes shouldn’t we seek to increase our failure rate? If you only set Win goals, and you’re not successful then you can quickly become disengaged. Whereas setting goals where attempting, trialling, exploring and testing is the desired outcome, fail or flop - you’ve achieved, and no doubt gained invaluable learnings.

3. Watch the self-talk.
Being self-critical or dwelling on a mistake can be damaging following a failure. No one needs a metaphorical whipping from their inner critic. Feel the initial sting, then review your task list, priorities and goals, and get back on track.

4. Relish your failures.
Often, we try to forget the times we miss the mark. This is very glass half-empty thinking. Failure is better than inaction! Everyone has setbacks, so rather than shirking from failure, celebrate the fact you tried and consider (briefly!) why the failure occurred, and if any aspects could be adapted for future success.

5. Recognise mistakes don’t have to define you.
We’re often too embarrassed to talk about past mistakes for fear of judgement. We’re all human. Bottling, and to an extent denying our mistakes ever happened, doesn’t help us learn from them. But if we flip this on its head, we can empathise and learn from each other’s stuff-ups.

6. Act consistently.
Practising failure is like going to the gym. You can’t go once and expect results. Consistency is key to forming new habits. So, pick up that heavier-than-normal weight (i.e. project), let it drop, then inhale and try again. Daily action helps create success. Use and develop your 'courage muscle' by feeling fear and taking action anyway. Use it or lose it.

7. The enemy is fear.
Fear of failure can hinder our success. All that’s required for failure to triumph is for us to do nothing. It may take time and repeated daily exposure, but eventually, overcoming the fear of failure sets us on the path to success.

8. Don’t go it alone.
Sometimes, we turn failure’s molehills into mountains and seek to climb them without support. Don’t make the mistake of being the lone wolf. Think of someone you admire – a friend or mentor who has overcome obstacles – chances are, they’d be happy to help provide the nudge you need to reach your goals.

“Failure is success in progress.” - Albert Einstein

The importance of a business bank account

Wed, 07 Feb 2024 18:14:04 GMT

When you start running a business, it’s important to be able to clearly separate your own personal money from the cash that’s been generated by the business.

One of the simplest ways to do this is to create a separate business bank account. Opening a specific business account gives you a discrete account to use for all your business transactions and expenses – and that can make life a lot easier further down the line.

Why do you need a separate business bank account?

If you’re running a limited company, it’s a legal requirement to open a business bank account. As a limited company, you and your company are two distinct legal entities. Because of this, you can’t use your own personal current account to make and receive transactions that relate to your business operations.

If you’re self-employed and trading as a sole trader, you’re not legally required to have a separate account – you and your business are seen as the same legal entity. But, regardless of this, it’s still a good idea to keep your personal and business cash in separate accounts.

What are the main benefits of having a separate account?

Having to deal with both your personal current account AND a business bank account may sound like double the work. But the reality is that it’s far more efficient for you to run all your business transactions through this separate account.

Here are the main benefits:

Your business cash and personal cash are kept separate – in essence, you create two separate pots of money. One that holds your personal cash and one that holds the funds from the business. From a financial management and accounting perspective, this makes your life far easier and less confusing.
All your business expenses are made from one account – when you pay your suppliers, or buy raw materials for the company, you can make these directly from your business account. This makes the process of tracking your spending far simpler and gives you a better overview of your overall expenditure.
You can monitor all your cash inflows – your customers will pay you straight into your business account. So all your sales revenue and other income streams will come together in one place, making it easier to keep track of payments and cashflow.
It’s easier to audit your bank statements – when year-end comes around, your accountant will want to see your bank statements. If you’ve used a personal account for business, that will mean going through each line of the statement to check which transactions are personal and which relate to the business. With a business account, these transactions are already split out in their own bank statement.
It looks more professional – when you send out invoices, it will look more professional to have the business name under the payee details, rather than your own name. As a business with a separate account, you can cultivate the perception of your brand as an established and successful business with great financial processes.

Should you have a separate tax account too?

It’s good practice to have a second business bank account that’s specifically set aside for paying your business taxes. Limited companies will pay an annual corporation tax bill against their profits. And sole traders will make up to three payments against their self-assessment income tax. Similarly, VAT is generally only paid over quarterly so it can be useful to keep sufficient funds aside for that.

It’s much easier to budget for these payments if you put money aside each month into your separate tax account. This way, you gradually accrue the money over time and ring-fence these funds so they’re instantly available when it’s time to pay your tax bill.

Talk to us about choosing a business banking provider

With so many digital and challenger banks now working in the business banking space, there are plenty of business accounts to choose from. You might want to go with a high-street bank that has plenty of branches for face-to-face contact. Or you might prefer one of the challenger banks so you get the bonuses of online set-up and managing your cash through an app.

If you’re not set up with a business account yet, come and have a chat with us. We can explain the benefits in more detail and help you choose the best account for your business.

What is Making Tax Digital for Income Tax Self Assessment?

Wed, 07 Feb 2024 17:53:39 GMT

Making Tax Digital is changing how we submit tax returns. And with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) coming into force from April 2026, it’s time to start planning how you’ll meet the compliance requirements for MTD for ITSA.

We’ve highlighted the four main areas where you need to take action, to be ready for the deadline – so you maximise all the benefits of going digital.

The basic requirements of MTD for ITSA

MTD for ITSA will affect you if you’re running a self-employed business or you’re a landlord with annual business or property income initially above £50,000. To comply with the MTD for ITSA rules when they kick in from the 2026/27 tax year, you’ll need to:

Keep digital records of all business transactions
Submit quarterly updates to HMRC
Submit an annual end-of-period statement
Finalise your tax return for the year
Pay any tax due to HMRC

This switch from an annual self-assessment tax return process to quarterly and annual returns is a major change. It means increasing your interactions with HMRC, keeping extremely accurate digital records and having a highly defined process for your tax return.

Some people will already be set up to meet these digital requirements. But, if you’ve not yet jumped onto the digital bandwagon, there are a few important steps to think about.

Switching to a digital tax process – what you need to do

The aim of MTD is that, over time, the whole of the UK tax system will move to digital. But for this to work, taxpayers, bookkeepers and accountants all need to take action, so every stage in the tax process can be carried out in the digital realm.

From the point of view of a self-employed business or landlord, this will mean:

Choosing a software solution for your digital record-keeping – to be able to keep digital records, you’ll need the right software tools. An Excel spreadsheet may be fine for traditional bookkeeping, but the MTD ITSA requirements mean you’ll need a more accurate and flexible software solution. Tools like Dext Prepare or Auto Entry, paired with a cloud accounting platform like Xero, Sage, QuickBooks or FreeAgent, will help you get those bank statements, receipts and documents digitised and recorded.
Working out a process for recording your income and expenditure – one of the big aims of going digital is to achieve real-time data for your business. But to be able to see real-time numbers, it’s vital that you enter your transactions on a regular basis. Think about how you’ll scan receipts and invoices, and how much time you need to set aside for bookkeeping and record-keeping. Yes, it will eat into your admin time, but the end benefits of this streamlined digital process make it a worthwhile investment.
Agreeing who will carry out your quarterly and annual updates – ultimately, it’s your responsibility to meet HMRC’s rules around MTD for ITSA. But you don’t have to do all the work yourself. Your tax adviser can help you collate and submit both the quarterly and annual digital updates. You can opt to do the updates yourself, but you’ll get a higher level of accuracy, review and analysis by partnering with your tax agent.
Partnering with your accountant to submit your return – despite what HMRC might tell you, tax can be complicated. Calculating your taxable profits, accounting for secondary income streams and making adjustments to your submitted numbers are tasks an accountant should be carrying out. MTD for ITSA will mean working much more closely (and more frequently) with your accountant, so make the most of their professional knowledge and expertise when it comes to finalising your tax return.

Talk to us about preparing for MTD for ITSA

Switching over to MTD for ITSA isn’t just a compliance requirement. Going digital also helps you run a more effective and flexible accounting and record-keeping system into the bargain.

You’ll have:

Better visibility of your income and expenditure
Improved control over your business numbers
A clearer idea of your tax liabilities for the year.

If you’d like advice on getting ready for the April 2026 MTD for ITSA deadline, feel free to contact us. We’ll help you understand what’s required, what the best software solutions will be for your business and the key changes you’ll need to action.

Get in touch to get set up for MTD for ITSA.

What are your business goals for the year ahead?

Thu, 25 Jan 2024 17:39:15 GMT

The beginning of a new calendar year is an excellent time to review the year just finished and reflect on what worked, what didn’t, what you’d like to change and new things you’d like to implement.

Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business efforts.

Your Yearly Business Review

What were the most significant impacts on your business in the last 12 months? How well did you meet the challenges?
What worked well last year? What systems, technology, products or services were successful?
What accomplishments can you celebrate?
What situation, event or experience provided the biggest learning opportunity?
What is the biggest challenge or frustration you face as you prepare for the year ahead?
What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it!
Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable?

Get Ready for a Great Year

While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for a positive start to the year.

If you’d like to chat about what you can do differently this year to enable your business to thrive, book a time with us today.

Outstanding invoices? Here’s how to get paid

Thu, 25 Jan 2024 17:36:51 GMT

Outstanding invoices are a frustrating fact of life for business owners – and they’re often left at the bottom of the to-do list.

But getting paid is essential – and it’s not as difficult as it seems.

It’s all about being polite, but persistent.

Start simple

Often, an outstanding invoice can be solved with a simple payment request or by resending the invoice. Start there, and you might be surprised by how many long-neglected invoices are paid. Firmer follow-ups

If your payment requests are ignored, it’s time for firmer action. Although most people dread making a phone call to ask for payment, it’s actually one of the most effective ways to get an invoice paid. You can also charge a late fee – but this needs to be written into your terms of service before you do the work.

Last-ditch options

Of course, some clients won’t respond to polite requests. If you have spent months waiting for payment, it’s time to bring in the big guns. This could mean cutting off services until payment is made, or calling in professional debt collectors or lawyers. The bad news: these aggressive options will likely scuttle your relationship with the client. The good news? You might get paid.

One more option is doing a credit check before you do business with a client. This can help you reduce the risk of late payments and defaults, and even better, minimise the need for awkward or aggressive follow-ups.

Read Xero's 8 tips on how to collect money on outstanding invoices .

Need help clarifying your terms of service, following up on late invoices or writing off unpaid debt? Get in touch for expert support and guidance.

Is there such a thing as over-automation? The need for a human touch

Thu, 25 Jan 2024 17:34:27 GMT

Automating your key systems is the way to turn your enterprise into a 21st century, digital business. But are we getting carried away with automation? And could we be systemising areas which could benefit from a more personalised, human touch?

Personalisation of the customer experience is vital. Automation can play a big part in creating targeted, data-based personalisation for each customer. But not everyone loves automation.

36% of customers in a recent survey would rather wait on hold to speak to a human agent when they have an issue, rather than interacting with an AI-powered virtual assistant to self-serve.

So, how do you get the balance right between automation and a genuine human touch?

A big part of offering a top-notch customer experience (CX) is having direct, personal human interactions with your customers. So, which tasks should you be automating?

And which should you leave for your human team to deal with?

Here are a few ways to get the automation/human balance right:

Automate your basic admin tasks – most of us hate the tedious, time-consuming admin tasks. With smart use of software tools and customised AI assistants you can quickly automate things like onboarding new customers, answering basic FAQs or sending out reminders and notifications to your customers.
Automate your key finance tasks – many of the current crop of cloud accounting platforms have automation and artificial intelligence tools built in as standard. These tools help you automate your invoicing process, the collection of customer payments and the matching of transactions for your bank reconciliation process. This makes your bookkeeping and cashflow more effective and delivers real-time financial data.
Don't automate the whole customer journey – customers want efficiency but not impersonal automation throughout their entire customer journey. 77% of customers say they’re more loyal to businesses that offer top-notch service – and being able to speak to a human agent can be a big part of personalising and humanising these interactions.
Make your people integral to your brand – the personality and experience of your people is vital to your brand identity and your CX. Have as many human interactions with customers as possible and tailor your interactions in the most personalised way.
Don't put efficiency over and above having a human face – people buy from other people. Because of this, having a human touch is vital for delivering a top-class CX to your customers. You can have a slick, automated buying experience when it adds convenience, but don't remove people entirely from your offering. Without humans, you have a software process, not a real, living, breathing business.

Talk to us about keeping the humanity in your customer experience

There’s no denying that automation and smart use of AI will be vital for creating an efficient and productive digital business. But it’s important to never discount the importance of people, human interactions and real customer relationships when building and growing your business.

A business budget will help with your financial decision making

Thu, 25 Jan 2024 17:31:03 GMT

Budgeting is about estimating your revenues, projecting your expenses and detailing the allocation of funds, so you stick to (and don’t overrun) your agreed budget ceiling.

How does budgeting affect your business?

Having a clear, agreed budget gives you a structured framework for your financial decision-making. It’s a practical way to control your costs, monitor performance and adapt your strategic and financial decisions to meet changing economic conditions.

Using budgeting helps your business in a number of ways:

Better control over your finances – budgeting gives you a clear roadmap for managing your company’s finances. Sticking to that budget helps you maintain control over expenses, reduce wastage and make the very best of your resources.
Achieving your financial and strategic goals – your budget helps you to set and track financial goals, making it easier to align your business strategies with your desired goals and outcomes. It’s a great way to boost growth, profitability and debt reduction.
Improved control over your cashflow – effective budgeting helps you anticipate any cashflow fluctuations. That’s a bonus that helps you plan for both lean and prosperous periods, making sure you have the funds to cover expenses and seize opportunities.
Allocating your resources – budgets are useful for guiding how and where you allocate your resources. From your one pot of cash, you can decide whether to prioritize investments, marketing efforts, operational improvements or business growth.
Keep track of your performance – comparing your actual financial results to your budgeted results helps you quickly assess your performance as a business. You can look for variances, make timely adjustments to stay on track toward your goals.

How can our firm help you with budgeting?

Being in control of your expenses, spending and predicted revenues sits at the heart of your financial management, giving you a framework and set budgetary goals to aim for, track against and (hopefully) achieve.

As your adviser, we’ll help you set up budgets for your strategic business plans, with clear tracking and reporting to keep you on the ball and meeting those targets.

Get in touch to chat about budgeting.

Take care of yourself, not just your business

Thu, 18 Jan 2024 20:12:56 GMT

Being a business owner can be stressful. When the buck stops with you, it can be easy to let the pressure mount up and to discount your own wellbeing.

But taking care of your own mental health is equally as important as taking care of the business – research from MYOB showed that 53% of business owners suffer from stress and anxiety relating to the running of their business So, what can you do to take care of your own mental health and work mindfullness into your usual life routines?

Ways to nurture your wellbeing as an entrepreneur

Looking after your mental health is as important as looking after your balance sheet. That’s the reality. So, having an improved focus on rest, wellbeing and talking about your struggles is a big part of moving towards becoming a better business leader.

For example:

Don't overwork yourself – it's tempting to work every hour that's available, in an attempt to meet your goals. But working yourself into the ground is, ultimately, a destructive thing to do. If you're tired and burnt out then you're in no position to lead the company. Try to stick to set working hours, and avoid working 60-hour weeks wherever possible. Sleep, rest and downtime are vital.
Schedule time for non-work-related activities – make sure you have time blocked out for things that aren't work. That might be a walk in the countryside, time with your kids, or a game of tennis. The aim is to take yourself away from the stresses of the business and to give yourself a broader life outside the company. It's a chance to have fun, to relax or to be someone who isn't just 'the boss'
Take up an activity that promotes wellbeing – there are plenty of pastimes that can help you bring down your anxiety levels and bring you to a calmer place. Yoga is a good way to stay fit, but also an excellent form of relaxation. Equally, finding time for meditation helps you to empty your mind of business concerns and allow yourself to become more grounded and calm. Even something as traditional as a fishing trip could help you to chill out and relax, away from a screen.
Talk about your worries, concerns and anxiety – if business-related stress is building up, the worst thing you can do is keep it all bottled up. It's beneficial to open up and talk about this anxiety. This could be with a partner, a fellow entrepreneur, your accountant or even a professional counselor. Be transparent about your state of mind and you’ll find people are more than willing to listen, understand and offer some support.

Talk to us about your business worries

As your accountant and adviser, we’re in the perfect position to help you open up about your business worries. We know your business and your sector inside out, and we know the common threats, challenges and goals that will be on your mind.

Come and talk to us about your business worries and let us take some of the weight off your shoulders. A chat can be the start of a whole new way of thinking about your own wellbeing.

How the increased minimum wage will affect your business costs

Thu, 18 Jan 2024 20:09:03 GMT

Although inflation is now on a downward trend, the sharp cost rises over the last 18 months are baked in. Energy prices are increasing again and the overall economic outlook isn’t very encouraging.

The good news is that by acting now to manage these increases you can stay on top of these costs. And with a proper financial plan, you can keep your business turning a profit.

A rise in the National Living Wage and Minimum Wage

The rise in the National Living Wage and the National Minimum Wage (NMW) recommended by the Low Pay Commission was accepted by the Governmentk in November 2023. This increase means that the NLW rises by 9.8% to £11.44 from 1 April 2024.

The size of your overall wage increase will depend on the age of your employees and whether they’re currently working as part of an apprenticeship scheme. However, the increase in your payroll costs is definitely something to factor into your financial planning for the year.

The new NLW and NMW rates from 1 April 2023 are:

Time to review your pricing?

Is it time to put your prices up? Ideally, your business should increase costs by a tiny amount each year, rather than by a big jump every five years, for instance. Small increases help prevent price shocks for customers, and keep your business in line with the rest of the market.

Can you also cut costs?

If you don’t think increasing your prices is an option, or you still need to make more of a change, you may need to cut back your spending. We look at your business line by line, so we can help you identify areas where you might be able to trim the fat.

Talk to us about managing your business costs

Keeping on top of rising business costs in 2024 will be a challenge. But with the right mindset, planning and forecasting, you can stay one step ahead of the curve.

Talk to us about helping you prepare a financial forecast for the next year or two to help you take control in the current economic headwinds.

Get in touch to talk about your financial future.

Spreading your January self-assessment payment

Thu, 18 Jan 2024 20:04:04 GMT

With a combination of low growth and high inflation, the 2022/23 tax year has been a tough time, financially speaking, for many of us.

So it’s no surprise that many owners, directors and self-employed individuals are concerned about having enough funds to pay their self-assessment income tax bill.

The good news is that HM Revenue & Customs (HMRC) does have a facility for spreading out your income tax payments. HMRC’s ‘time-to-pay’ arrangement allows you to pay your tax bill in pre-agreed installments, with a small amount of interest added on for the use of this service.

Where the amount due doesn’t exceed £30,000, you can apply online; otherwise you will need to contact them to discuss what arrangements can be put in place.

How does the time-to-pay scheme work?

The time-to-pay scheme relates to HMRC’s online payment plan service, allowing you to come to an agreement about deferring your tax bill and spreading the costs over several months.

For your 2022/23 tax return, you can spread the balance of your 2022/23 liability as well as the first payment on account towards the 2023/24 tax bill.

Some other considerations of the facility include:

Interest will be charged from 1 Feb 2024, at base rate plus 2.5% p.a.
You need to choose how much to pay initially and how much you will then pay monthly.
If a payment is missed, the whole amount can be demanded by HMRC.
If an arrangement is set up, this avoids any enforcement action to collect your due taxes, ie. calling in debt collectors etc.

How to check if you’re eligible for online payments

So, how do you know if you’re eligible to set up a time-to-pay agreement with HMRC? There are five criteria that must be met for HMRC to consider an online payment arrangement.

The five criteria are:

The amount due must be between £32 and £30,000.
There must be NO outstanding tax returns to submit
There must be NO other tax debts
There must be NO other active HMRC payment plans
The length of the payment plan must not exceed 12 months

The deadline to set up online payments is within 60 days of the due date – in this case, 1 April 2024 for the last tax year and the first payment on account for the current tax year.

If you don’t qualify based on the five rules mentioned above, you can still apply for normal (not online) time-to-pay arrangements. It’s worth noting that time-to-pay arrangements don’t show up in credit searches – but if you default and it ends up with an Individual Voluntary Agreement (IVA) or County Court Judgement (CCJ) being made, that will obviously show up.

Talk to us about agreeing a time-to-pay arrangement

If you’re concerned about not being able to pay your January self-assessment income tax bill, please do come and talk to us. We’ll review your financial situation, your liquid funds and will work out how much you can realistically afford to pay.

Get in touch to talk about an online payment plan.

The VAT domestic reverse charge: what your construction business needs to know

Thu, 04 Jan 2024 17:39:57 GMT

The VAT domestic reverse charge came into operation in March 2021, introducing significant changes around how VAT is collected and paid within the construction industry.

So, how does the domestic reverse charge work? :

The domestic reverse charge applies to construction services in the UK, together with related materials, but not to materials supplied separately from any construction services.
It applies only to transactions that already fall under the Contruction Industry Scheme (CIS), and only those where both the contractor and subcontractor are VAT-registered. Effectively, the VAT changes have extended the scope of the CIS scheme.
Accordingly, for services they supply to VAT-registered contractors, subcontractors require the contractor to handle and pay VAT over directly. This applies to both standard and reduced-rate supplies but not to zero-rated supplies.
The subcontractor will receive payment for the work and materials, less any CIS, but no VAT will be paid over. Contractors and subcontractors must be familiar with the new rules, and ensure that their accounting systems can handle this specific VAT process.
Subcontractors need their customers to disclose whether or not they are end users, as the domestic reverse charge will not then apply.

Effect on VAT Returns for contractors: Contractors need to enter the calculated output tax (sales times either the standard or reduced VAT percentage) in box 1 of the VAT Return but must not enter the value of these purchases in box 6. They may reclaim the input tax on their domestic reverse charge purchases in box 4 of the VAT Return and include the value of the purchases in box 7, in the normal way.

Effect on VAT Returns for sub-contractors: Sub-contractors must not enter any output tax (VAT on sales) in box 1 of the VAT Return in respect of sales to which the domestic reverse charge applies, but must enter the value of the net sales in box 6.

The HMRC has created flowcharts that give you a good overview of how the VAT domestic reverse charges system works, depending on whether you’re a buyer or a supplier in the chain. You can view these here

Talk to us about the VAT reverse charge

As a subcontractor, you’re likely to experience cashflow pressures from the domestic reverse charge system, and that’s bad news for the financial health of your business.

You can no longer put the VAT you’ve collected into your business account and use that to aid your cashflow until it’s paid over as part of the normal VAT cycle. At the same time, affected contractors will no longer need to fund the VAT paid to subcontractors and then reclaim this through their VAT returns later.

As you can see, this is significantly different from the way most businesses deal with VAT, and your bookkeeping and invoicing systems will need to handle this new system. If you need assistance with this, please do contact us and we’ll walk you through the VAT reverse charge requirements.

Get in touch in you are unsure about any aspects of the VAT reverse charge.

Your Q1 2024 deadlines for the diary

Thu, 04 Jan 2024 17:37:14 GMT

We always aim to keep you up to date with the most pressing dates and deadlines for your business diary. To help you get prepared and on the ball, we’ve highlighted some of the forthcoming deadlines for Q1 of 2024.

NOTE: If your company’s accounting period is longer than 12 months, the first tax payment deadline is normally 21 months and 1 day after your accounting period started, and the second one is 9 months and 1 day after your accounting period ends.

For example, a company with an accounting period running from 01/06/2022 to 30/09/2023 will pay the first tranche of corporation tax by 01/03/2024 and the balance by 01/07/2024

If your profits are more than £1.5 million, then tax is payable quarterly with two payments before the end of your accounting period and two after. The first payment is normally six months and 13 days after the start of the period, with the others three-monthly from that point.

Some general deadlines to plan for:

End of personal/payroll tax year: 5th April 2024, but practically speaking, for monthly payrolls the last one processed in the tax year is to 31 March 2024
Enterprise Management Incentives Scheme notice of options granted: within 92 days of grant
Final date to submit self-assessment tax return online for personal tax: 31 January 2024.
Make Capital Gains Tax payment for 2022/23 tax year: 31st January 2024 (60 days after completion for gains re residential property)
Make first payment on account for 2023/24 personal tax and balancing payment for 2022/23: 31st January 2024
PAYE and National Insurance Payments due: 19th calendar day of the month after end of month or quarter as applicable (22nd for electronic payments)

Talk to us about hitting your deadlines

Where we carry out the related activities (e.g. payroll processing), we’ll be monitoring your deadlines automatically – but don’t forget that you remain legally responsible.

Monitor your deadlines and check the upcoming dates for all relevant activities. Pay particular attention to those where we don't carry out the task for you. Failing to meet a compliance deadline can result in fines and penalties, so it’s good practice to keep everything on time.

Get in touch to discuss your deadlines.

Seasons Greetings

Thu, 14 Dec 2023 13:50:13 GMT

Seasons greetings!

Merry Christmas and Happy New Year to you all.

Christmas opening times;

Fri 22nd Dec 2023 - open

23rd Dec - 1st Jan 2024 - office closed

Tue 2nd Jan 2024 onwards open

Thanks to all our clients for your support in 2023, and to our friends and colleagues, and brilliant team members - we really appreciate your energy and contribution!

From our team to yours (including Hank, the office dog!) wishing you a relaxing Christmas break!

Steve, Martin, Anna and team Chartwell.

Looking forwards

As the year draws to a close and we look forward to what's next, now is a good time to take a step back and decide what success looks like.

For you- it might be number of hours worked, your drawings, and taking time away from the business.

For your business - it might be sales, cashflow, and a business plan to give direction.

For your team - it might be flexibility, progression, and culture.

We are offering a free meeting to all of our business clients to help you to plan for your future and to work with you to help you achieve your business and personal goals.

Follow our link to get in touch and make a plan for 2024.
Book your meeting HERE

Your business guide to cloud accounting

Thu, 14 Dec 2023 13:42:56 GMT

Cloud accounting is the simple, online way to manage your business finances.

Instead of working from a local accounting application that’s installed on your computer, cloud accounting software lets you log in from your usual web browser, on your laptop or mobile device. It’s fast, efficient and safely backs up all your financial accounts and data in the cloud.

Cloud accounting software like Xero, QuickBooks, FreshBooks and Sage transform the way you work on your numbers (and brings some real digital efficiency to your finances)

You have one online hub for all your financial management, with cloud-based tools for the main bookkeeping, accounting and reporting tasks. Plus your accountant, advisers and finance director can all access your accounts online, making it far easier to collaborate.

How does cloud accounting affect your business?

Switching to cloud accounting is essential if you want to run a successful Most popular accounting platforms are designed to be the centre of your whole business system, with accounting, performance tracking, reporting and other app integrations a big part of the mix.

With a cloud accounting platform at the heart of your business, you can:

Easily automate your bookkeeping, record-keeping and bank reconciliation processes
Send out electronic invoices to your customers, and get paid faster
Track your operational spending and employee expenses
Run detailed financial reports and track your key performance indicators (KPIs)
Access your important financial information anytime, anywhere
Integrate with hundreds of other business tools and apps
Bring your tax returns into the digital age, ready for Making Tax Digital

How can our firm help you with cloud accounting?

If switching to the cloud sounds like the right move for your business, we’d love to lend a hand.

We’ll help you review the current marketplace for cloud accounting software, decide on the best platform for your business and port your finance data over to the new software. We can also highlight all the most useful app integrations to include in your tech stack.

If you’d like to know more about the benefits of cloud accounting, we’ll be happy to explain.

Get in touch to chat about cloud accounting.

Writing a business plan? Read our guide

Thu, 14 Dec 2023 13:38:13 GMT

Your business plan is the sat-nav that keeps the company moving in the right direction.

Having that guidance can be a massive benefit to your success as a business. But what elements should you include, and what are the main considerations to think about?

A detailed business plan will generally include

A clear direction for the business – a well-crafted business plan gives you a defined path to follow, outlining the company’s purpose, goals and strategies. This helps everyone understand the business's mission, so you’re pulling in the same direction.
An overview of your financial strategy – your plan will include revenue projections, expense forecasts and funding requirements. This financial guidance gives you the foundations for mapping out your budgeting, cashflow and securing investments.
An overview of threats and opportunities – a robust plan will identify the potential challenges and risks faced by the business. This helps you develop contingency plans for overcoming these challenges, reducing your risk and keeping the company on track.
A summary of your sales and marketing strategy – outlining your sales and marketing strategy helps you target the right audience and differentiate your business in the market. This is vital for winning customers and driving your sales revenue.
Attract the right investors and lenders – a solid business plan enhances your credibility when you’re approaching investors or lenders. A good plan will demonstrate your commitment to the business, your understanding of the market and your ability to achieve long-term success. This is essential for securing investment and funding.

7 steps to creating a plan for your business

There’s no ‘one size fits all’ business plan. Your business plan should clearly outline your goals and how you intend to reach them. As a starting point, this should include how you intend to set up, finance, manage and run your business.

Use the following seven headings to kick-start your planning process. We can help you work through the numbers and strategic thinking to support your goals:

Describe your business idea – what’s the idea and how does it work? Try to have an ‘elevator pitch’ that quickly and simply describes the potential of your idea.
Set out your business goals – what are your objectives for the business? Set out your vision for the business and what your core mission will be.
Outline your ideal customer – do the research to provide an overview of your target market (the people or organisations you’ll sell to).
Do some competitive analysis – who are your competitors? Consider all the possibilities. They may not be in your precise sector but still compete for the same consumer dollar. What is your competitive advantage (the reason they pick you over your competition)?
Perform a business financial analysis – How will you fund your business and can you demonstrate the financial viability of the business idea?
Sketch out your sales and marketing plans – show how you’ll win customers and generate revenue. Consider the 4 Ps of marketing (Product, Price, Place, Promotion). Plan your budget and work out what your return on investment (ROI) will be.
Outline your business structure – give an overview of your organisational structure and your strategic and operational roles as directors.

A well-structured business plan is an essential document, whether you’re a new founder that’s just starting out, or a seasoned business owner looking to grow and diversify.

Your business plan is never written in stone. It’s a dynamic and evolving document that changes as the business progresses. Revising your business plan on a regular basis helps you improve your goals, refine your strategy and adapt to meet changing circumstances and markets.

How can our firm help you with your business plan?

Having a solid business plan is what gives your company direction, structure and meaningful objectives as an enterprise. As your adviser, we’ll help you understand your business goals and vision, and will help you translate this into a watertight business plan. We’ll also help you track your performance against this plan, and will work with you to update the strategy as the business evolves.

If you’d like to know more about business planning, we’ll be happy to explain. Get in touch to discuss your business plan.

The Autumn Statement 2023 - Key Points

Thu, 23 Nov 2023 15:12:34 GMT

The 2023 Autumn Statement was presented against a background of inflation falling from recent peaks. Annual inflation for the last quarter of 2023 is now expected to be 4.8%, against a previously anticipated 2.9%. With recent large price increases now baked in, the government’s 2% target is now forecast to be hit in the first half of 2025, a year later than previously thought.

GDP growth is now forecast to be 0.6% for 2023, compared with the projection last March of a negative 0.2%. For the next four years, it is expected to average 1.6%, so about 0.5% less than previously thought. Cumulative real growth from 2023 to 2027 is now 2.4% lower than predicted in the March forecast.

The OBR expects living standards, as measured by real household disposable income, to be 3.5% lower than pre-pandemic in 2024/25.

Higher inflation, particularly in an environment of fixed tax thresholds, has resulted in a sharp increase in forecast tax receipts. Because departmental and other spending has been largely unchanged in cash terms despite the higher inflation, by 2027/28 that results in real spending cuts of over £19 billion.

The following tax-cutting measures were announced:

National Insurance - The Chancellor announced a reduction in national insurance rates for employed and self-employed people. Although the thresholds are unchanged, Class 1 primary (Employee) national insurance will be reduced from 12% to 10% from January 2024. That is charged on monthly income between £1,048 and £4,189. From April 2024, Class 4 (profit-related) national insurance for self-employed people has been cut from 9% to 8% on profits between £12,570 and £50,270 and the flat-rate weekly contribution of £3.45 is being scrapped in order to remove the complexity for these workers.
Full expensing for Businesses - For companies, the main tax change will only be of real benefit to larger companies. The temporary ‘full expensing’ of capital expenditure was scheduled to end in March 2026. That has now become permanent and allows companies to claim a 100% deduction against taxable profits for the cost of ‘main rate’ fixed asset purchases.
Tax Benefits for Freeports and Investment Zones - Three new investment zones were announced to focus on advanced manufacturing in West Midlands, East Midlands and Greater Manchester. These are expected to unlock £3 billion of private sector investment and create 65,000 new jobs. The tax benefits for investment zones and freeports will be extended for a further five years. A further new investment zone was announced in Wales.
Tax cut for Hospitality, Retail and Leisure businesses - The 75% discount on business rates for businesses in the hospitality, leisure and retail sectors has been extended for another year.
Research and Development - The R&D expenditure credit (RDEC) and the small and medium-sized enterprise (SME) intensive schemes are being merged into one.

Other measures announced included:

The main National Living Wage rate will be increased by 9.8% to £11.44 per hour from 1 April 2024 and the age threshold will be reduced by two years to 21.
Alcohol duty will be frozen for a further year, up to August 2024.
The state pension triple lock will be implemented in full, resulting in an increase in State Pensions of 8.5% from April, and despite rumours to the contrary, Universal Credit and other working-age benefits will rise by 6.7% in line with the September inflation rate. The local housing allowance cap will also be raised to the 30th percentile of local rent levels.
The Chancellor announced a set of pension reforms intended to enhance the benefits for those saving for retirement, encourage a more integrated pensions market, and allow pension funds greater flexibility to diversify their investment portfolios. Employees will be able to have contributions paid into a scheme of their own choice, rather than one selected by the employer.
Although there are plans to reduce the overall size of the civil service to below pre-pandemic levels, HMRC will be provided with resources to tackle the tax gap, expected to yield an additional £5 billion over the forecast period.
The processing of planning applications will be sped up, with local authority fees being refunded where deadlines are not met.
£50m in funding was announced for apprenticeship schemes, to boost skills in engineering and other key sectors.
Welfare reforms will come into force in the latter part of next year. Individuals who have been unable to secure employment for more than 18 months, but are deemed fit to work, will be required to engage in work experience placements. Benefit claimants who either turn down employment opportunities or fail to collaborate with job centre staff will be required to re-register for benefits, resulting in a temporary suspension of their benefit access. Furthermore, there will be significant changes to the existing guidelines for recipients of benefits based on health conditions that prevent them from working.
Other measures were announced to boost housebuilding, including funding for local schemes in Leeds, Coventry and London, and a scheme to mitigate pollution risks intended to unblock the building of 40,000 homes via funding to the Local Nutrient Mitigation Fund.

The Chancellor of the Exchequer labeled the Autumn statement “110 measures to help grow the British economy”. For the full detail on the economic and fiscal policies aimed at addressing the UK's current challenges click here .

We’ll be happy to help you start planning a 2024 strategy to look at your biggest business challenges.

Can directors and employees receive gifts from the company tax free?

Mon, 20 Nov 2023 19:43:24 GMT

Giving gifts to your employees can be a great way to increase engagement and raise the overall morale of your team. But how much can you give before there are tax implications? And how do the rules differ if you’re giving gifts to your directors?

The good news is that you can give gifts that don’t exceed £50 in value to your employees without any tax or National Insurance (NI) charges arising – as long as you follow HMRC’s rules. The cost of this is also tax-deductible by the company.

Making use of the Trivial Benefits scheme

As part of HM Revenue & Customs’ (HMRC’s) Trivial Benefits scheme , you can give gifts to your employees to mark birthdays, weddings or just ‘because’, all without attracting any tax charges. Owners can also benefit from the same Trivial Benefits scheme.

Trivial benefits can be provided to employees without any adverse tax or NI implications, and with no need to report them on a P11D form – the HMRC form used to report any ‘benefits in kind’ that you’ve provided to an employee.
To qualify, gifts can’t be a reward for services, can’t be cash or a cash voucher, can’t be contractual, and the cost mustn’t exceed £50 per gift.
For directors of close companies, the total can’t exceed £300 in any year. Although not limited for other employees, if it was a regular gift then it’s likely to be treated as a reward for services – which would then have tax implications.
If over the course of a year, a director awarded themselves 6 x £50 gift cards (maxing out the £300 cap) as a higher-rate taxpayer they could save around £126 in tax and NI compared with a £300 salary. The company would also save about £41 in NI.
Gift cards are fine as long as they aren’t pre-loaded debit cards that can be used to withdraw cash – remember you can’t give cash as a gift.

Let’s look at an example of these rules in practice:

If an employee is given a bottle of wine for hitting a sales target, that would be taxable. If they were given the wine because it’s their birthday, as long as it was below £50 it would be within the exemption. It could also be given just because you’re in a good mood and feeling generous – it just can’t be anything related to company or individual performance.

Talk to us about meeting the rules around employee gifts

It’s important that you stick to HMRC’s rules around employee gifts and don’t end up unintentionally creating a negative tax impact for people on your team, or for the business.

As your adviser, we’ll help you draw up clear, well-explained internal guidance to make sure any gifts don’t unintentionally fall outside of the rules.

10 questions to ask yourself as a business owner

Mon, 20 Nov 2023 19:39:54 GMT

Running a busy and successful business means you often don’t have the time to step back and work ON the business. This can be a challenge if your aim is to grow and scale the company.

As experienced professional business advisers, we know the value of taking the time to ask yourself some pertinent questions. Holding yourself and the business to account is something we can help with. And there's never a bad time to pose a few questions and gauge where you're at with your planning, strategy, financial management and personal goals as an entrepreneur.

We've pulled together 10 hot questions to ask yourself as a business owner.

1. Can you explain why a customer should choose your brand over another?

Knowing your value to a customer is vital if you’re going to market your offering in the most effective way. Think about why your brand stands out in the marketplace, and what opportunities and threats exist. This is the fastest way to tailor your brand to meet customer expectations.

We can help you by running a SWOT-based analysis of your business.

2. How happy is your workforce?

Your people are such a vital asset, but they won’t work well if they’re dissatisfied and disengaged from your business values. Ask yourself, are your employees motivated and engaged by your mission? Is there anything you can do to boost this engagement?

We can review your people strategy and the staff benefits you offer to your employees.

3. Are you meeting your cashflow goals?

Are there specific costs or inefficiencies that are holding you back from achieving a positive cashflow position? Ask yourself if your financial management is up to scratch. Identify your failings and tighten up your cash process.

We can review your cash management and look for efficiencies and cost-saving opportunities.

4. What keeps you awake at night?

It’s a stressful role being the boss, and there’s likely to be a lot playing on your mind. Consider whether there are any recurring business issues that are holding you back, or unexpected pitfalls that have appeared along the course of the business journey.

We can offer you seasoned advice whatever the issue, with resolutions to ease your worries.

5. Are you embracing everything that tech and AI has to offer?

Technology is moving fast with AI solutions and digital systems now an integral part of many business models. But are you doing enough to bring your business into the digital age? Are there tasks could you automate, or processes you could streamline?

We can suggest a suite of apps, software tools and digital solutions to boost your business.

6. Is growth part of your business strategy?

Not all businesses are focused on growth, but outlining your key goals around growth is an essential part of your business strategy. Ask yourself whether you want to scale at speed, or grow organically. Or whether you’re happy to be a boutique business that keeps things small.

We’ll help you define your growth goals and build a strategy that aims for success.

7. Do you have the numbers you need at your fingertips?

So much of what you do as a business is driven by data. But are you getting the overview you need of your important business metrics and key financial numbers? Think about where you need detailed data and metrics, and how this could put you in better control of the company.

We can help you expand your reporting and management information, so you have a better eye on performance, spending, cashflow and sales targets etc.

8. Have you identified your ideal customer?

Identifying your ideal customer is something every startup and new business should do. But when was the last time you updated your ideal customer outline? Think about who you’re selling to, how this audience has evolved and whether they are still the right customer to target.

We can run detailed customer profiles to help you pinpoint the best customers to target.

9. Have you thought about where your business will be in five years?

When the business is busy, the temptation is to focus on the now and to put your energy into fighting the most pressing fires. But without a forward-looking focus, you can lack direction. Ask yourself where you want to be in five years and how you plan to achieve these goals.

We'll help you create a detailed five-year plan, to give your journey more impetus and direction.

10. Are you planning for your own financial future?

You obviously spend a lot of your time thinking about your business – but how much time have you spent considering your personal financial future? Think about your life goals and how you plan to fund them, and where this money is likely to come from.

We can advise you on wealth planning, tax planning and the advantages of good all-year-round financial management.

Talk to us about running a health check for your business

If these questions have got you thinking about your business efficiency and growth plans, that’s a good thing. If you’d like to take this process further, we’d advise running a detailed health check for your business and your personal finances.

Book a meeting with us to talk through your goals, aspirations, challenges and strategy, so we can help you take the next step in your journey to entrepreneurial success.

Get in touch to book a health check

Efficiency through automation

Mon, 20 Nov 2023 19:33:03 GMT

The past few years have forced us to rethink the way we operate our business. The barrier of procrastination has been removed and we’ve had to adopt new technology and automate our processes.

Technology exists to increase efficiency, but it can be a double-edged sword. When you apply automation to an efficient operation, it will magnify the efficiency. However, automating an inefficient operation will magnify the inefficiency. In other words, we must first ensure our systems and processes are efficient before introducing automation.

Start by reviewing all of your existing technology, processes, and systems to determine any that are obsolete. For example, texting for business is now the norm; instead of calling customers to remind them of an appointment, first, send an automated text message asking them to reply ‘yes’ to confirm attendance. This will reduce time spent on follow-ups and no-shows.

There are many benefits of improved systemisation and technology adoption:

1. Leverage . Getting more done with less effort (e.g. automated monthly management reporting systems).
2. Consistency . Guaranteeing output quality (e.g. a templated proposal or pricing tool).
3. Efficiency . Automating manual tasks using technology (e.g. auto-coding of transactions using Xero).
4. Risk management . Removing the risk of human error (e.g. an automated bank reconciliation).
5. Scalability . Systemising processes to enable growth without increasing your workload (e.g. a point of sale cashbook system).
6. Saleability . Increasing the value of your business by automating as much as possible.
7. Induction and training . Minimising hands-on training by having robust systems for new team members to follow.

The cost (and disruption) of any new technology or automation must be clearly outweighed by the benefit or time saving. Don’t adopt shiny new technology for the sake of it.

In order to achieve these benefits and avoid systems or processes which serve no useful purpose, it’s important to complete a full technology review. We can help you review your current ‘app stack’ and identify areas where you can utilise automation and apps to increase efficiency.

“Be not afraid of growing slowly, be afraid only of standing still.” - Chinese Proverb

The importance of business development

Mon, 20 Nov 2023 19:30:28 GMT

Business development is one of the most important areas of focus for any ambitious business.

If you want your business to grow, that’s going to mean having a razor-sharp focus on new opportunities and strategies. That could mean exploring new markets, or nurturing new partnerships. It might mean diversifying to create new revenue streams, or coming up with new ideas to boost your profitability. But, ultimately, good business development comes down to having good ideas – ideas that broaden your reach, sales, revenues and external relationships.

As the founder or CEO, it's important to put business development at the top of your to-do list.

Put time aside for business development

Business opportunities don’t just appear out of thin air (sadly). To come up with an opportunity for a business partnership, or to bring in a big new client, you’re going to have to do some serious work. So, it’s a good idea to put business development (BD) time aside in your diary.

By blocking out time to devote to BD, you can step away from the everyday operational tasks and get into a more creative and objective mindset. Where do you want the business to be in 6 months? What do you need to do to achieve this goal? Are there relationships you could build to bring this plan to life? Asking these questions and getting a more concrete idea of the answers will form the basis for your BD plan – and that’s the route map you can then follow.

Work on your BD plan and strategy

Once you have some positive BD ideas to work with, it’s important to get your goals and your strategy down into some form of plan. As with any kind of growth initiative, your BD activity needs to be well planned, so you have a clear idea of what you want to achieve.

Give each new strategic idea a clear timeline and assign jobs, activities and roles to the relevant people in the team. Cost out each project too, and assign a budget so you can be sure that you’re getting the best return on your investment (both financially and from a time perspective).

Most importantly, though, track your progress against your BD goals. Agree on a target, set a date and measure your progress and performance against that timeline.

Build relationships with potential partners and customers

Relationships lie at the heart of your BD activity. You might be getting to know the executive team at a possible new partner’s company. Or you may be reaching out to a new customer audience with a brand-new product. Getting to understand what makes these people tick is so important to warming them up as a potential partner, customer or supplier.

Trust is the real key here. People are more likely to engage with your business when they trust you as people and as a brand. So, spending time nurturing relationships and networking with other businesspeople and targets is time well spent.

Record, track and analyse your BD performance

With your goals, targets and timelines locked in, you’re ready to start putting this BD plan into action. But to know if you’re making headway, it’s a good idea to track your performance.

If you’re using project management software or a client relationship management (CRM) app, it’s easy to add notes, record your progress and tick off the key actions in the project. You can put the financial reporting tools in your accounting software to good use. Track cashflow for the project, increases in revenue and monitor your sales and marketing expenses etc.

Get ambitious with your BD ideas

No business stands still. Your aims and goals as the owner will change. Your market will evolve and new competitors will appear. Economic conditions and business opportunities will change. To keep your business at the cutting edge, it’s vital to keep your BD focus alive and well.

Remember to:

Define your goals and make it clear what you want the business to achieve
Align your BD activity with the company’s main growth plan
Log your ideas and potential opportunities and add them to your BD plan
Warm up your targets and potential partners and keep notes on your progress
Track your BD performance against your targets, budgets, revenues and timelines
Keep revisiting your plan and flexing your BD activity to the current market.

If you want to expand your business development activity, get in touch with us. We’ll help you highlight the opportunities and draw up the best possible plan for your BD activities.

Plain English guide to depreciation

Mon, 20 Nov 2023 19:26:12 GMT

Getting to grips with the basics of accounting, financial management and business strategy can be a challenge. To make things easier, we've created a plan-english guide to depreciation and the impact this accounting term can have on your assets, tax, cashflow and company accounts.

What is depreciation?

Depreciation is an accounting term that you’ll hear us talking about when we run your accounts.

In basic terms, depreciation is about allocating the cost of a tangible asset over the course of its useful life. These ‘tangible assets’ could be buildings, machinery, vehicles or equipment. Your profit & loss (P&L) account won’t be hit immediately for the whole cost of these assets. Instead the cost is spread out over their expected useful life. This is because the benefits of the asset are consumed over time, and its value decreases as it gets older or becomes obsolete.

For example: you might buy a delivery van for your coffee business, and drive it for the next five years. Each year, the value of the van will depreciate (and we’ll show that in your accounts).

How does depreciation affect your business?

As a business owner, it's important for you to understand depreciation and the effects it can have on your financial statements and the company’s tax planning.

Here are some the most important impacts of depreciation:

Taxable income – depreciation is considered an operating expense. Unlike other expenses, though, depreciation isn't generally allowable for tax. Instead, there’s a system of capital allowances which cover tax deductions for fixed asset purchases.
Cashflow – depreciation appears as an expense in your P&L account. But unlike most expenses, it’s a non-cash item. The cash leaves the business in a lump sum when you buy the fixed asset. Or the cash can leave over a longer period of time in the form of hire purchase or loan repayments. Depending on how/if the acquisition is financed, your cashflow can be better, worse or the same as the depreciation charge.
Planning the replacement of assets – depreciation helps you understand which assets will soon need replacing, giving you time to put funds aside and plan for this expense.
Better financial reporting – depreciation affects your balance sheet by reducing the value of assets over time, and your P&L statement by smoothing out the cost of fixed assets over time.

How can our firm help you with depreciation?

As your adviser, we’ll make sure that you’re always properly accounting for depreciation in your financial statement. This helps you maintain accurate financial records and makes decision-making easier when it comes to managing assets and forecasting future expenses.

We’ll also ensure you're following the appropriate accounting principles and UK tax regulations related to the purchase and depreciation of your assets.

If you’d like to know more about the impact of depreciation, we’ll be happy to explain.

How much should you pay yourself?

Mon, 20 Nov 2023 19:22:44 GMT

Being the boss means you get to make all the big decisions about your business – including how much to pay yourself in wages, salary or drawings.

As the owner, you might need to underpay yourself in the early stages of building your business, so you can reinvest the profits. But your time is valuable – and you need enough money to pay the bills. So how can you find the right level of pay? It has to be enough to keep the mortgage paid, while also building a thriving business.

If you’re trying to decide how much to pay yourself, here are a few questions to ask yourself:

What can the business afford? - You need to leave enough cash in the business to keep it ticking along, pay your basic costs, and meet your tax obligations. Once you’ve considered all those outgoings, how much does that leave you as a potential salary? We can help you work out what that number is, so you can establish a sustainable rate of pay.
What’s the market rate for your role ? - What would you have to pay someone to do the work you’re undertaking in this business? Maybe you wouldn’t actually be able to find anyone to work the same long hours, but if you were hiring someone with your experience, to do the same sort of work for 40 hours a week, what would they expect to be paid? That number is a good starting point for thinking about your own salary or drawings. If you’re being underpaid, it’s time to think about ways to grow your profits. If you’re being overpaid, congratulations on building a highly profitable business!
Could reinvesting profits grow your income faster ? - You can take all the profits out of your business, which should give you a strong and sustainable income. Or, could you reinvest your profits and grow the business faster, leading to a higher income in the long-term? You might choose to spend some of your profits on advertising, a better website, or developing a new offering, for example. Or you could pay for assistance in some area of the business. If the investment leads to higher growth, it might be well worthwhile.

We’ll help you run the numbers

We can help you figure out how much your business can afford to pay you, analyse the potential gains of a business investment, or weigh up the pros and cons of hiring someone to help you.

Get in touch, we’d love to hear from you.

Proving your ongoing business viability through 5 financial reports

Wed, 01 Nov 2023 17:05:36 GMT

Whether you’re applying for government subsidies, taking out a business loan or seeking investor support, you need to be able to demonstrate your ongoing viability as a business.

To prove this viability, it’s important to have the right financial information at your fingertips. This information is also just as important for your own internal planning and decision-making.

So, where do you start and what are the reports that you’ll need?

The numbers that prove you’re a business with a future

Any lender or government body wants to know that your business has a future.

As the owner, you may believe in the destiny of your company, but you also need the numbers to reinforce this argument. Banks, lenders and investors are taking a risk in backing you. Because of this, they want to know that you’re capable of making the agreed repayments, and that the business is in a financial position to deliver profits and payouts for investors.

Before investing in your business, organisations will want to see:

Evidence of a healthy sales pipeline and sales revenue
Manageable debt that’s not eating into your capital
A positive cashflow position that covers your main costs
Forecasts that show stability or growth in your revenues
A meaningful business strategy for the next two to five years of growth

The data you need to plan your future

You can’t run a business on a wing and a prayer. With so many different ways to track and record your business data, there’s no excuse for not being up to speed with your performance, your targets and your forecasted sales, cashflow, debt and profits.

This information isn’t just useful when approaching investors and lenders. It’s also vital for your own strategic thinking, your business planning and your internal decision-making

Crucial management information to know will include:

Your targets and budgets for the upcoming period
Your sales and financial performance against these targets
Your basic financial position and health
Your forecasts for future sales, cashflow and end profits

The 5 key reports that define your company’s growth

Today’s cloud accounting software makes it a breeze to produce detailed and informative financial statements. These are the main statements and reports to focus on:

Business plan – your business plan is a written document that outlines the company's goals, strategies and financial projections for future success. It’s your route map for the business journey that lies ahead, and a crucial document when approaching investors.
Sales reports and forecasts – sales reports give a historic summary of your past sales data, so you can track how you’re performing. Sales forecasts project this data forward in time to show future sales trends and potential sales growth you may achieve.
Revenue forecasts – a revenue forecast is a projection of your expected income or revenue for a specific period. Being able to track and forecast your revenue position is vital information when carrying out financial planning and decision-making.
Cashflow forecast – a cashflow forecast is an estimate of your expected inflows and outflows of cash over a specific period. By forecasting these cash inflows/outflows you can aim to keep the business in a ‘positive cashflow position (more cash coming in than cash going out).
Financial statements – the main financial statements to keep your eye on will be your:

Cashflow statement – shows your current cashflow position, so you can make the most informed decisions about spending and cost management.
Balance sheet – shows your present assets, liabilities, and equity. It’s a snapshot that reflects the company’s financial position at a specific point in time
Profit and loss statement (P&L) – a breakdown of the income coming into the business, and the expenditure going out. Crucial for managing your profitability.
Aged debts – categorises and analyses your outstanding customer invoices, based on when they should have been paid. Keeping on top of this helps to speed up payment and improve your cashflow position.

Talk to us about proving your business viability

Having the data and evidence to prove you’re a viable and stable enterprise is crucial. It’s these numbers that will help you plan your growth and access the investment you need to scale.

We’ll help you create a detailed business plan, revise your strategy and produce all the financial and non-financial statements you’ll need to make informed business decisions.

As your adviser, we’re in the best possible position to provide your management information.

Get in touch to talk about your financial reporting.

Driving your business with reporting

Wed, 01 Nov 2023 16:59:51 GMT

Do you wait for your Annual Accounts to arrive before you look at your numbers for the year?

By the time your accounts have been finalised, the data is historical. Any changes you make, as a result of reading these, may not necessarily be helpful for your future.

Would you drive your car forward by looking in your rear-view mirror? Talk about dangerous!

If you want to take control of your business’s future, it’s essential that you set targets to achieve and regularly monitor your actual results against them. By producing a monthly Management Report, you’ll have access to up-to-date data that will enable you to quickly identify areas of concern, allowing you to implement strategies for improvement to ensure you remain on track to achieve your goals.

Monthly Management Reports enable you to make better decisions in your business, based on current data. Your report dashboard provides a snapshot of your numbers and means you can quickly interpret your results each month and identify important trends in your business.

However, receiving reports each month is only useful if you set aside time to review them and understand what the reports are showing you. It’s not enough to see that your gross profit has dropped this month compared to last month; you need to be able to understand the reasons why it has dropped so you know the actions you can take to improve.

Because we want you to develop the discipline to set aside time to review and truly understand your reports, our Management Reporting service involves a 15-minute phone call with a senior accountant each month to discuss your results.

This will ensure you receive the maximum value from your reports and can make the necessary changes to your business to ensure its success.

“The future depends on what we do in the present.” - Mahatma Gandhi

5 ways to get in control of your business finances

Wed, 01 Nov 2023 16:55:14 GMT

Having proper control of your business finances is a big advantage. It helps you make well-informed business decisions and keeps your organisation profitable.

With so many digital tools for managing your bookkeeping, accounting and management reporting, it's never been easier to manage, track and forecast your financial position.

But what are the main tools you need? And how do you set up your financial systems, apps, processes and reporting to put yourself back in the finance driving seat?

1. Bring your bookkeeping into the digital age

Optical character recognition (OCR) software, like Dext Prepare or Auto Entry, scans the receipt, converts it into a digital format and stores it in the cloud.

2. Do your accounting in the cloud

Cloud accounting is a software-as-a-service (SaaS) solution that helps you carry out all your main accounting and financial management online, without having to install any software.

3. Use the latest in expense management tools

4. Make it easy to accept digital payments

5. Embrace the latest in digital reporting and forecasting

With digital accounting changing so rapidly in recent years, there's never been a better time to embrace the benefits of the latest in digital reporting and forecasting.

Having this information at your fingertips helps you make informed decisions faster than ever before – and that translates that into more sales, increased business growth and bigger profits.

Talk to us about updating your financial systems

If you’re looking to give your finances a touch of digital magic, please do come and talk to us.

We can walk you through the best cloud platforms, fintech apps and business tools to add to your app stack – so you’re ready to make the most of a digital approach to your finances.

Get in touch to supercharge your finances.

Understanding Your Profit and Loss Statement

Wed, 01 Nov 2023 16:38:25 GMT

Your profit and loss statement (P&L) helps you understand your business performance and profitability over time. It’s sometimes called an Income statement and its main purpose is to list income and expenditure.

Whereas a balance sheet is a snapshot in time, the P&L shows transactions over a specific period of time. This can be a month, quarter, financial year or any other period, and it can be a stand-alone report or a comparative period report.

Together with the balance sheet, these two reports provide a comprehensive understanding of the financial position and performance of a business.

The profit and loss statement has two main sections: income and expenses

These may be further subdivided depending on the complexity of the business and reporting requirements.

Income or Revenue

Income primarily includes main business activities such as sale of goods or services. Other income such as interest received, capital gains or income from secondary business activities is also reported.

Expenses

Expenses are usually divided into two sections: direct costs, or cost of goods sold, and expenses. Cost of goods are those that are directly linked to the provision of services or sale of goods. For example, if you buy widgets from a wholesaler and sell them at a marked-up value, the cost of the widgets is a direct cost, not an overhead expense.

Other types of direct costs might be importing and freight costs, contractor costs or certain equipment. Some direct costs are fixed, that is, they are the same from month to month, or they could be a fixed percentage of sales; others vary in value but are still related to the income producing activities.

Overhead expenses are all the other expenses required to run the business, regardless of the level of income: for example, rent, utilities, bank fees, bookkeeping fees, professional development costs, vehicle costs and staff costs. Many of these costs form the basis of working out your break-even point, or how much it costs just to open the doors for business.

There are some expenses which may be reported as a direct cost in one business but an indirect cost in another type of business, for example, merchant fees or contractor costs.

The Bottom Line

Total income minus total expenses results in the net profit (or loss), is often called ‘the bottom line’. Often business owners are just interested in looking at the bottom line, but a true financial picture requires an understanding of several reports and an ability to see the big picture that the reports are illustrating.

The P&L is a vital tool to analyse for trends over time

What does your P&L tell you about relationships and ratios between sales and expenses, seasonal changes and annual trends?
Have all your direct costs been allocated correctly?
Have you recouped all billable expenses from customers?

Financial statements help you understand the big picture for your business. With deeper understanding of your business operations and performance you can make informed decisions about your business finances.

Book a session today to examine your financial reports with our experienced business advisors.

What makes you a good entrepreneur?

Wed, 01 Nov 2023 16:24:48 GMT

Do you dream about starting our own business? And, can anyone become an entrepreneur?

When you look at the research, there are certain aptitudes, personality traits and business skills that tend to make you a more successful entrepreneur. But can you learn these skills? Or are these innate abilities that some entrepreneurial people are just born with?

Let's take a look at what makes a good entrepreneur.

What drives someone to become an entrepreneur?

There are upwards of 582 million entrepreneurs in the world. But what drives these people to start their own business? And why do so many reject the traditional path of a career as an employee in someone else’s company or organisation? On the whole, it comes down to three core drivers: freedom, passion and opportunity.

Respondents in recent research from Search Logistics gave their top three motivations on becoming an entrepreneur as follows:

Being their own boss – 55% of entrepreneurs were motivated by the freedom of being the boss and stepping away from being an employee in the usual corporate structure.
Pursuing their passion – 39% of entrepreneurs wanted to pursue a passion in a specific industry or niche, allowing them to follow an interest that’s close to their heart.
Taking advantage of an opportunity – 25% of entrepreneurs made the leap to starting a business because the opportunity presented itself, and they took the risk.

The particular motivations which drive someone to found their own company are different for each person. But a desire for freedom and opportunity very often sit at the heart of the decision.

What are the key traits of a successful entrepreneur?

Entrepreneurs crave freedom and have a passion for grasping opportunities and turning them into workable and profitable business models. But are there specific character traits that make you more likely to take this entrepreneurial leap?

Every entrepreneur is unique, but there are some general characteristics that are likely to be found within a group of motivated entrepreneurs and business founders.

Many entrepreneurs will have:

Visionary mindset – entrepreneurs possess the ability to envision future opportunities, set ambitious goals and develop a clear direction for their ventures.
Resilience – successful entrepreneurs are good at bouncing back from failures, persevering through challenges and maintaining a positive mindset.
Adaptability – entrepreneurs are usually highly flexible and open to change, helping them to adjust their strategies and business models to changes in the market.
Risk-taking propensity – willingness to take calculated risks is crucial for entrepreneurs, allowing them to seize opportunities and drive innovation.
Strong leadership skills – entrepreneurs inspire and motivate their teams, effectively communicate their vision and make sound decisions in dynamic business environments.

Talk to us about boosting your entrepreneurial skills

Does this sound like a description of you? Perhaps you relish the possibility of taking a calculated risk as an owner but feel your leadership skills are somewhat lacking. Or maybe you have immense vision for your business but find it difficult to deal with the highs and lows.

Whatever your current entrepreneurial skill set, we can work with you to refine and boost your abilities as a business leader. Working with a business mentor not only helps you push yourself to do better, but also lightens the load of being the sole captain of the ship.

Get in touch to talk about business mentoring.

Our Cashflow & Profit Improvement Meeting

Mon, 16 Oct 2023 14:54:29 GMT

In business, it’s not enough just to have a healthy profit; profitable businesses can fail due to poor cashflow. We want to help our clients better manage their cashflow.

The first step is to determine your business’s Cash Conversion Cycle. This tells you how long your cash is tied up in your inventory, debtors, and payables. The longer your Cash Conversion Cycle, the less money you have available in your bank account. We’ll then help you identify 1-2 strategies you can implement to shorten your cycle so you have more cash in your bank.

Of course, profit matters too, and increasing your profit can increase your cashflow. By implementing strategies to improve both your cashflow and your profit, you can set your business up for success.

If you’re unsure of the difference between cashflow and profit and often wonder why there’s not as much money in your bank account as you expected, this meeting should be a priority.

During the Cashflow & Profit Improvement Meeting, we’ll:

Calculate your Cash Conversion Cycle
Determine strategies you can implement to improve your cashflow and profit
Use our calculators to demonstrate the impact these strategies can have on your cash position and profit
Identify actions you should take to implement these strategies and achieve your improvement targets

The sooner you attend a Cashflow & Profit Improvement Meeting, the sooner you can start increasing your profit and cashflow and increase the money in your bank account.

By attending a Cashflow & Profit Improvement Meeting, you’ll:

Understand the difference between cashflow and profit
Identify the key cashflow drivers and the Cash Conversion Cycle in your business
Learn how to improve your debtor days, inventory days, and payable days
Discover the impact small changes can have on your profit and cashflow

We look forward to meeting with you to identify the cashflow and profit improvement opportunities in your business.

5 ways to get in control of your business finances

Mon, 16 Oct 2023 14:50:57 GMT

Having proper control of your business finances is a big advantage. It helps you make well-informed business decisions and keeps your organisation profitable.

With so many digital tools for managing your bookkeeping, accounting and management reporting, it's never been easier to manage, track and forecast your financial position.

But what are the main tools you need? And how do you set up your financial systems, apps, processes and reporting to put yourself back in the finance driving seat?

1. Bring your bookkeeping into the digital age

Optical character recognition (OCR) software, like Dext Prepare or Auto Entry, scans the receipt, converts it into a digital format and stores it in the cloud.

2. Do your accounting in the cloud

Cloud accounting is a software-as-a-service (SaaS) solution that helps you carry out all your main accounting and financial management online, without having to install any software.

3. Use the latest in expense management tools

4. Make it easy to accept digital payments

5. Embrace the latest in digital reporting and forecasting

With digital accounting changing so rapidly in recent years, there's never been a better time to embrace the benefits of the latest in digital reporting and forecasting.

Having this information at your fingertips helps you make informed decisions faster than ever before – and that translates that into more sales, increased business growth and bigger profits.

Talk to us about updating your financial systems

If you’re looking to give your finances a touch of digital magic, please do come and talk to us.

We can walk you through the best cloud platforms, fintech apps and business tools to add to your app stack – so you’re ready to make the most of a digital approach to your finances.

Get in touch to supercharge your finances.

FoMO or JoMO? Give your business decisions (and yourself) a chance to breathe

Mon, 16 Oct 2023 14:45:58 GMT

In reviews of buyer trends and marketing reports, the term FoMO often pops up. It stands for the fear of missing out. It’s the feeling that, whatever you’re doing, you’re missing out on something happening somewhere else, a product or experience you just must have.

In your marketing campaigns, it’s your friend. Let customers and prospects know they’re in danger of missing out if they ignore this wonderful opportunity, service, product, discount, or promotion.

But don’t let it drive your day. FoMO leads people to want to be connected at all times in case they let an opportunity slip. It can prompt snap decisions when you might be better off thinking it through. You can end up feeling like your day is at the mercy of whatever notification pings next.

To reset to your own goals and priorities, JoMO - the joy of missing out - may help.

Take a breath. Are you really missing out if you’re not connected every minute every day? Do you need to fence off some time just for your business and/or just for you and your family?

Start by turning your phone off or to silent. In the office, give yourself a couple of precious hours to work things through, devote some true thinking time to your business. At home, practice saying no to a few invitations. Try that new recipe. Plant those herbs. Or take to the hills, get some air, and really breathe.

Introducing our Value Gap Analysis Report

Mon, 16 Oct 2023 14:32:15 GMT

Can you see the potential that lies in your financial data?
Your financial statements give us insights as to the opportunities that exist for you and your business. This external perspective can help you run a more effective business - whether you’re seeking growth or efficiency.

Introducing: The Value Gap Analysis Report.
Our new report documents the gap between where your key numbers are currently and where they could be with clear direction to make material improvements.

Your bespoke report provides an analysis of the strategies you can adopt to increase your business's profitability, cashflow, and value, including an overview of the impact our suggested changes could have.

We want all our business clients to benefit from this cost-effective service.

We’ve priced this report at a level to make it as accessible as possible for all clients. We hope this is as much of a no-brainer for you as it is for us.

After creating your initial report, each year we will assess the new opportunities that exist in your business and identify new strategies for you to work toward. This ensures consistent improvement for your business, with a flow on improvement for you personally.

The Value Gap Analysis Report will help you:

Recognise areas of your business that are performing well
Determine areas where you can improve discipline and operate smarter
Identify potential improvements to your cashflow, profit, and overall business value
Get clear direction for decision-making and planning
Establish how we can work together to help you achieve your goals
Drive your business to provide you with more mind, time, and financial freedom
Every business should spend time unpacking the opportunities that exist for them to operate smarter. With our broad financial knowledge and visibility across your finances, we’re well-positioned to help you improve your numbers.

We’re looking forward to working with you to create your Value Gap Report and ensure your financial position is improving year on year.

Ready to get started with your Value Gap Analysis Report?

Enquire with our team now.

Back to Tax Basics: How capital allowances reduce your tax bill

Tue, 10 Oct 2023 12:10:26 GMT

Generally speaking, the business expenses you incur are allowable against your profits. But when it comes to fixed asset purchases (things like machinery, equipment or vehicles), these purchases are treated slightly differently.

To reduce your tax bill when purchasing fixed assets, it’s important to know what capital allowances are available and how you can use them to enhance your tax planning.

In the next part of our Back to Tax Basics series, we outline which capital allowances are available and which assets they relate to.

What are capital allowances?

Fixed assets are classed as items of equipment that will be used in the business for more than a year – so, things like office furniture, machinery and company vehicles. For accounting purposes, the cost of these fixed assets is spread over the expected life by calculating a depreciation charge each year – in other words, the value the item will lose over this time.

For tax purposes, the depreciation is added back (disallowed) and ‘writing down allowances’ are claimed instead.
There is an Annual Investment Allowance (AIA) , fixed at £1 million per annum for the forseeable future. Most asset purchases up to that total can be claimed in full in the year of purchase. The main exceptions are cars and items you owned for another reason before putting them into the business.
For some assets, 100% First Year Allowances (FYA) are available. These include:
New and unused vehicles with Nil CO2 emissions
New electric vehicle charging points
Plant and machinery for use in a Freeport
For everything else you might purchase as a fixed asset, the costs are allocated into various pools depending on the type of asset, and Writing Down Allowances (WDA) calculated on the pool value on a reducing balance basis. These include:
Special Rate Pool 6% rate – Cars (new or used) with CO2 emissions > 50 g/km, Integral fittings incorporated into commercial buildings (lifts, electrical and water reticulation, air conditioning, heating equipment), long-life (>25 years when new) items over £100K annual spend. Long-life excludes structures and buildings.
Main Rate Pool 18% rate – everything else. Note as specifics this includes cars with CO2 emissions >0 <50 g/km.
Structures and Buildings Allowance (SBA) – the SBA offers a 3% flat rate for 33.33 years on non-residential buildings, but not on land.

Talk to us making use of capital allowances

If you’re thinking of purchasing capital equipment, it’s worth knowing that, in many cases, the tax benefit can be claimed in a lump sum, even though the equipment may be in use for several years. This will have a positive short-term impact on both your tax charges and your cashflow.

As your accountant, we can advise you on the tax treatment of different types of assets and, if external funding is required, can help you prepare business plans and finance applications.

Your Q4 2023 deadlines for the diary

Tue, 10 Oct 2023 12:07:38 GMT

Staying on the ball with the latest accounting, tax and compliance deadlines helps you stay organised with your returns. Here are the deadlines and cut-off points for Q4 of 2023 to add to your diary.

NOTE : If your company’s accounting period is longer than 12 months, the first tax payment deadline is normally 21 months and 1 day after your accounting period started, and the second one is 9 months and 1 day after your accounting period ends.

For example, a company with an accounting period running from 01/12/2021 to 31/03/2023 will pay the first tranche of corporation tax by 01/09/2023 and the balance by 01/01/2024.

Some general deadlines to plan for:

Enterprise Management Incentives (EMI) schemes ‘notice of options granted’ to be submitted: within 92 days of grant
Submit your self-assessment tax return (if filing a paper copy): 31 October 2023
Make Capital Gains Tax payment for gains on residential property: 60 days after completion
PAYE and National Insurance payments due: 19th calendar day of the month after end of month or quarter as applicable (22nd for electronic payments).

Talk to us about hitting your deadlines

If we’re looking after your payroll and tax returns, we’ll be monitoring these dates and deadlines automatically – but don’t forget that you remain legally responsible for meeting all deadlines.

Keep an eye on all the upcoming deadlines and check the upcoming dates for all relevant activities. Pay particular attention to those where we don't carry out the task for you. Missing a compliance deadline can result in fines and penalties, so it’s good practice to keep everything well-organised and on time.

Five steps to better cash flow

Mon, 11 Sep 2023 17:06:20 GMT

That said, there are a few other simple rules you can apply to manage your cash flow and get your invoices paid even faster:

Keep your books accurate and up to date - so you can see your financial state at a glance.
Don’t be too lenient with your customers - you can be direct and still polite. Keep a close watch on your accounts receivable turnover at all times and act sooner rather than later.
Keep your accounting simple - so you have a good handle on these business metrics. We can help with this.
Keep your business and your professional finances separate - this is essential to understanding your true cash flow position. Mixing your business and personal finances can leave you uncertain about business performance.
Build a cash reserve - so you are prepared for unexpected events and can take advantage of opportunities when they pop up.

First you want to get your invoicing right. Get into a habit of sending invoices quickly. Then follow the steps above to collect revenue and keep your finances organised.

Get in touch for guidance on your invoicing and business cash flow.

Are you pursuing a trade, or following a hobby?

Mon, 11 Sep 2023 17:02:32 GMT

Many of us have hobbies that are dear to our heart, whether it’s playing guitar, building a giant model train system or knitting copious numbers of jumpers for our family.

In many cases, it’s pretty clear whether these activities are being carried out in the course of a trade, or are nothing more than a personal hobby. But disputes with HM Revenue & Customs (HMRC) do arise. Are the profitable activities you carry out as part of your niche interest no more than a hobby? Or are the loss-making activities you carry out considered to be a trade, with the losses used to reduce your overall tax bill?

Let’s look at how you prove if this is simply a hobby, or a profit-making trade?

The nine ‘badges of trade’ and what they tell you

There’s not much meaningful guidance in the UK legal statute on what does and what does not constitute a trade or hobby. So, how do you make the differentiation?

One approach has been to consider the ‘ badges of trade ’. These badges can show the presence or absence of certain aspects that indicate whether a trade does or does not exist.

These nine badges are:

Profit-seeking motive : An intention to make a profit supports trading, but by itself is not conclusive.
Number of transactions : Systematic and repeated transactions will support ‘trade’.
The nature of any asset acquired : Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possession’, for example, a picture for personal enjoyment?
Existence of similar transactions : Transactions that are similar to those of an existing trade may themselves be trading.
Changes to the asset : Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit?
The way the sale was carried out: Was the asset sold in a way that was typical of trading organisations? Alternatively, did it have to be sold to raise cash for an emergency?
The source of finance : Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset?
Interval of time between purchase and sale : Assets that are the subject of trade will normally, but not always, be sold quickly. Therefore, an intention to resell an asset shortly after purchase will support trading. However, an asset which is to be held indefinitely, is much less likely to be a subject of trade.
Method of acquisition : An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade.

These badges are not an ‘all or nothing’ indicator. But when considered in the round, they may lead to an overall impression of whether or not a trade is being carried out.

Even if it is agreed that a trade exists, HMRC may argue that it’s not being carried out on a commercial basis. If so, this would deny any sideways loss relief (offsetting the losses of one activity against the profits of another for tax purposes).

Talk to us about checking the status of your hobby or trade

With the new trading allowance of £1,000 per annum , any activities you carry out which generate income below £1,000 won’t be required to be reported on your tax return. Because of this, there’s no danger of minor income from hobbies being targeted as trading activities.

The emerging problem is in areas such as crypto assets and day-trading of shares. Depending on the specific circumstances, these can be considered as trading, or generating capital gains and losses, or being outside of taxation altogether.

Where you carry out any activities outside of your mainstream business, talk to us so that we can advise you of any potential tax traps and tax benefits that may arise.

Get in touch to talk through your non-business activities.

Keeping on top of small business cash flow

Mon, 11 Sep 2023 16:58:06 GMT

Money in, money out. Cash flow is one of the most important measures of your business's health. But how do you monitor it?

It sounds simple to track sales on the one hand and expenses on the other – then compare the two. But a massive 65 percent of failed businesses say they closed down because of financial mismanagement, including issues such as lack of cash flow visibility. In other words, they didn’t know if they were making more than they were spending.

Why are people losing sight of cash flow?

Everyone knows a business needs to stay in the black. It’s not a new idea. So it can be hard to imagine why a business would lose sight of cash flow. Until you’re in business yourself and you realise tracking small business cash flow isn’t as easy as it seems.

For small businesses, this can involve:

Keeping track of all your expense receipts - which gets really tricky if there are multiple people making purchases
Recording all your sales revenue - making sure to account for discounts you might have given
Entering everything into your cash flow Excel spreadsheet or Google Sheet- including double and triple checks to make sure everything is entered correctly.

You may have to rely on employees or business partners to supply a lot of this information. Their paperwork will sometimes have scribbled notes in the margins, requiring a follow-up phone call. It takes a lot of time, patience and energy before you’re even ready to punch the numbers into a spreadsheet.

But even if you're vigilant, there’s a lag between when a sale or expenditure happens and when it’s entered into your spreadsheet. You’re taking a series of snapshots of your cash flow, and there can be big blind spots in between.

As business picks up, with more sales and more expenditure happening all the time, those blind spots become more significant. More things happen in between each cashflow snapshot. And cash flow snapshots get further apart because you’re too busy to update spreadsheets.

Consider using cloud accounting software

Because money in and money out is the ultimate measure of business health and sustainability, you know you must watch it carefully. Cloud accounting software can automate the process for you. In fact, 98% of users of accounting software recommend it to others.

Here’s how it works:

Cloud accounting software is generally sold on a flat monthly subscription. You don’t need to download anything and you can run it easily off your existing laptop, desktop or smartphone.

It can link to your business bank account (and point-of-sale system) to track sales and expenses as they happen, with no data entry from you. Because the data comes straight from the bank, it’s clean and accurate. Smart accounting software will also send out your invoices, so it shows what you’re owed. Next, the system pools all the data to create a dashboard of your financial situation, which is automatically updated every day.

Accounting software probably only needs to save you one or two hours a month to pay for itself. In reality, because it will save you time that you can spend on other areas of your business, it will do that many times over.

Talk to us about accounting software for the health of your business.

5 questions to ask when you are buying a business

Mon, 11 Sep 2023 16:45:16 GMT

Purchasing an existing company is a great way to expand your business empire. You can buy out a close competitor, or dip a toe into a new industry and expand your reach as a business group. But whatever the reason for the acquisition, you need to ensure you’re not buying a lemon!

Doing your research is a crucial part of the purchase process. As is asking some probing and insightful questions to help you determine if this acquisition is a good (or bad) idea.

Questions to ask before you make an offer

Buying another company is a major business decision. It’s a large outlay of capital and a big responsibility to take on. If you’re going to take the leap, it’s important to make sure the company in question is stable, well-managed and has a good future ahead of it.

Here are five vital questions to ask before entering into a purchase:

Why is the business for sale ? There are many reasons why an owner might want to offload a company, not all of them good. Their sales may be dropping, they may have rising debts, there may be internal problems with staff or the market for their product/services may be coming to an end. Find out why, so you don't buy a clanger.
Is this a good industry to step into ? Do your research on the industry, competitors, and marketplace that the business currently trades in. It's important that you step into an industry sector that has potential for sales, growth, stable revenues and potential profits. With volatile markets post-pandemic, looking at predictions and forecasts for your chosen industry niche makes good sense and helps you make an informed decision.
Have you done your due diligence into the business ? Do your due diligence to make sure there are no financial, legal or HR skeletons in the cupboard that may jump out to surprise you. Is there an unpaid tax bill? Are there loans that are being defaulted on? Are there any legal cases being brought against the company? Has the business filed all its returns and accounts? As the new owner, any of these issues become your responsibility, so you want to check out the company’s records and history in as much detail as possible. This will prevent some major headaches further down the line.
Does it have an existing business plan ? You'll need a business plan that takes the company forwards and gives you a pathway for your next steps as the owner. Is there a business plan you can use? When was the plan last updated? How well are they tracking against the milestones in that original plan? No business plan is written in stone, so you’ll almost certainly need to review, update and refine this strategy post-acquisition.
Are your management team and staff up to scratch ? When you buy the business, you'll usually also be inheriting the team behind that company. Do you have a management team with the skills, experience and motivation that's needed? Are your employees engaged and do you have a big enough team to meet your own goals for the business? This team will be vital to your future success, so you want the best possible people and talent behind you as you steer a new course for the company.

Talk to us if you’re considering buying a company

Purchasing a company can be a complex and protracted process, even once you’ve completed all your due diligence and background checks. If you’re in the market for a business acquisition, do come and talk to us, so we can help you sort the top deals from the big risks.

We’ll help you complete the relevant checks and will work with you to create a new business plan and strategy that’s designed to turn your new purchase into a business success.

Get in touch to talk through your acquisition plans.

Cash flow forecasting puts you back in control

Mon, 11 Sep 2023 16:39:30 GMT

We all know that positive cashflow is the beating heart of any successful business. And with so many external pressures on your cash right now, it’s important to have one eye on the future.

Cashflow forecasting is an increasingly important tool for any finance team. With a better view of your future cashflow position, you can make well-informed decisions about your finances.

But how does cashflow forecasting work? And how does it help you maintain a positive cashflow position throughout the year?

What does a cashflow forecast tell you?

Forecasting apps, like Float, Fathom and Futrli, use historic cash data to project your cash position forward in time. This helps you see where your cash may be in future periods.

Running detailed cashflow forecasts means you can:

Understand your future operational cashflow – helping you spot any cashflow holes, seasonal dips or predicted months of high expenditure before they become an issue.
Plan your costs and expenditure effectively – allowing you to stick to your planned budgets, manage your costs and plan for any steep price increases.
Avoid the cashflow issues before they happen – using your forecasts to look ahead, plan and get tighter control over your cashflow management.

Talk to us about setting up cash flow forecasts

Staying in a positive cashflow position is a challenge in the current economic situation.

When supplier prices and operational costs are fluctuating and revenues are hard to predict, it is difficult to juggle your inflows against your outflows.

We’ll help you get a tighter grip on your cashflow. Setting up detailed forecasts helps you understand your financial story and puts you back in full control of your cashflow.

Get in touch. We are here to help.

Back to Tax Basics: What taxes will I need to pay as a director?

Mon, 11 Sep 2023 16:32:17 GMT

When you set up a new company, there are certain business taxes you’ll be liable for as a business. But have you also planned for the personal taxes you must pay as a director?

As a company director, it’s not just the company’s corporation tax that you have to pay. You also need to pay the requisite taxes on your own income. This might be dividends payments from the company’s year-end profits, or even the income you receive from any property, shares or investments you own.

Knowing which personal taxes to plan for

A fundamental distinction to understand is the difference between company assets/profits and your own personal money.

Money that’s been generated by your company will sit in your business bank account and can be seen as the cash assets of your business. But, as a director, this is not your money. It’s the company’s money. This cash only becomes yours once it’s been paid to you, either as a dividend, a loan or via a salary paid through the company’s payroll.

HM Revenue & Customs (HMRC) will charge the company corporation tax on the company’s earnings. But HMRC will also need to charge you income tax on the cash you’ve been paid as a director – and this means planning for these tax costs as part of your wealth management strategy.

As a director, you’ll need to plan for:

Self-assessment income tax – self-assessment is the way that directors and self-employed people pay their income tax and National Insurance contributions (NICs). In addition to any tax and NIC collected monthly via PAYE as part of your normal payroll, with self-assessment, you must complete an annual personal tax return and submit this to HMRC. You then have to pay two ‘on account’ payments of tax and NICs.
Paying your self-assessment tax – paying your self-assessment tax bill is generally done by making two payments on account – one by the 31 January in the relevant tax year and one by the 31 July following the end of the tax year. If needed, a final 'top up' payment may be required at the end of January, following the end of the tax year. Through this system, not only does the company pay tax on its profits, but you also pay income tax when you take any of the remaining after-tax profits out of the business as dividends.
PAYE income tax – if you pay yourself a salary through the company’s payroll, this income will be taxed at source via the pay-as-you-earn (PAYE) system . The PAYE system will deduct your income tax and National Insurance (NI) contributions via your in-house payroll and this will then be paid directly to HMRC. This income will need to be accounted for in your self-assessment tax return, but you’ve already paid the income tax that is due on this salaried income.
Capital gains tax – capital gains tax (CGT) is a tax you pay on ‘gains’ you’ve made during the tax year. CGT is paid on the profit you make when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. So, for example, if you sold your business at a profit, you’d be liable for any gain (increase in value) that you’d made on selling the company. The rate of CGT that you pay will depend on your own income tax band and the nature of the gain that you’ve made. Reliefs are available, including the Business Asset Disposal Relief .

Learn more about the basics of directors’ personal tax

If you’d like to have a chat about your self-assessment or capital gains liabilities, please do contact us. The earlier you plan for these taxes, the more you can mitigate their impact.

Get in touch if you have any questions about tax.

Knowing the tax impact of using a company car

Mon, 11 Sep 2023 16:28:43 GMT

Having the use of a company car is a great perk. But are you aware of the tax impact of a company car and how having this vehicle may affect your company benefits?

Two of the key tax considerations related to company cars are the benefits in kind (BIK) tax charges incurred by the driver, and the tax deductions which benefit the company. At present, it’s also worth understanding the benefits of running an electric or low-emission vehicle.

Understanding the BIK charges on your company car

The BIK amount you’re taxed on as the driver of a company car is calculated as a percentage of the list price of the vehicle when new. The list price includes delivery charges, optional extras and VAT but not the registration fee or the first year’s vehicle excise duty.

Because it’s based on the original ‘list price when new’ value, any discounts are ignored, and even for used cars, the original value is retained.

The percentage applied depends on CO2 emissions, and for hybrid vehicles the on-electric range, as you can see in the table below:

It’s worth noting that:

Diesel vehicles registered before January 2021 that aren't RDE2-compliant attract a 4% surcharge on their published BIK rate, up to a maximum total of 37%
Where fuel is provided by the company for private mileage, the same percentage is applied to a value of £27,800.

Claiming company benefits against the cost of a company car

Although the driver is taxed on the perk of driving a company car, the company can benefit by claiming deductions for the costs involved in running this vehicle.

All expenses in connection with the operation and maintenance of the car are deductible as trading expenses, including things such as insurance, fuel and maintenance.

Capital allowances are also available in respect of the purchase price of the vehicle.

Depending on the vehicle, the capital allowances available are:

100% First Year Allowance – this is only for new zero-emission cars.
18% annual allowance on written-down value – this is for second-hand electric vehicles and all vehicles with emissions between 1 and 50 g/km
6% annual allowance on written-down value for all other new and used vehicles.

Talk to us about the tax implications of company cars

If you’re thinking about investing in a company car, it’s worth considering that there are tax advantages for both the company and the driver in selecting an all-electric vehicle. There are also advantages, to a lesser extent, in opting for a low-emission vehicle.

We can calculate the likely personal BIK tax charge on any vehicle you’re considering buying through your business, as well as advising on the tax and other implications for the company.

Talk to us before purchasing a company car for personal use. The tax charges can be higher than you may expect, so it’s worth considering the BIK impact before you buy.

Get in touch for a chat about your company car plans.

Step 10 of Building a Better Business

Wed, 02 Aug 2023 18:40:45 GMT

Keep your ‘well of happiness’

This should be something you focus on all the time. Just as the flight attendants tell you to put the oxygen mask on yourself before helping others, it’s the same in business - you need to look after yourself at all times.

What are the things that fill your ‘well of happiness’?

These are activities that restore your energy and resilience levels and help you face challenges in your business. It could be dancing, yoga, mountain biking, reading, weightlifting, cooking, or meeting friends for coffee. Most likely, they’re the things you just don’t feel you have enough time for right now.

Of course, you do have the time; you have the same number of hours in your day as Einstein or Helen Keller had. You’re just choosing not to spend your time on these activities.

Make a list of the pastimes that make you happy. These are things you keep putting off doing because you think you don’t have time or feel guilty about taking time out of your business to enjoy.

Now, make a commitment to yourself to spend at least 1 hour per day doing these things. Share that commitment with your business mentor or someone who’ll hold you accountable to spending your time in this way.

Lastly, set aside time in your diary to do these activities until they become an ingrained habit.

Keeping your well of happiness full reduces stress and restores your energy, both crucial to life and business success. So, make it a priority.

“Life is short. Smile while you still have teeth.” - Mallory Hopkins

Step 9 of Building a Better Business

Wed, 02 Aug 2023 18:34:37 GMT

Monitor your progress to reach your targets

When you’re driving, there are certain things on your dashboard that you keep an eye on - your speed, your fuel level, and the engine’s temperature.

It should be the same in your business. You should have a business dashboard with 3-5 key things you’re monitoring regularly.

Use this four-step process to create your own dashboard:

1. Determine which Key Performance Indicators (KPIs) should be on your dashboard.
These KPIs should have the greatest influence on you achieving your goals. For example, it could be the average hourly rate invoiced, your gross margin for any job, or the average transaction value for a certain period of time.

Which of your KPIs, when increased or decreased, will have the biggest impact on your future results? Choose no more than five to measure and have on your dashboard.

2. Work out how to measure your chosen KPIs.
The measurement process should be automated wherever possible. Most accounting software will measure your financial KPIs.

3. Produce a simple one-page report.
Produce this either weekly, fortnightly or monthly to track your results and progress. Set aside time to go through this report every time it’s produced and share the results with your team.

4. Repeat these steps with your team.
Identify the KPIs each team member should be monitoring. These will be different from the KPIs for your overall business. KPIs help your team understand the definition of a great day’s work for them. Monitoring and reporting the KPIs regularly will help your team know if they’re on track.

“Successful businesses measure and count things… unsuccessful businesses either measure nothing, the wrong things, too many things, or finally, they measure the right things, but they don’t communicate the measurements efficiently.” - Dick Costolo

Step 8 of Building a Better Business

Wed, 02 Aug 2023 18:28:55 GMT

Build strong networks to generate referrals

Referrals are the easiest way to generate new business, and building strong networks is a great way to generate referrals. Networking and referrals are cost-effective ways to grow your business, as the return on investment can be huge. Think about the types of networking you can undertake and encourage your team to do the same.

Five ways to maximise referrals from your networks:

1. Consider the lifetime value of a new customer.
Calculate the revenue you’re likely to generate from a new customer, then consider ways you could reward them to show appreciation for their repeat business. For example, you could send them a bottle of wine, a voucher towards their next purchase, or cash back. They’re likely to spread the word.

To calculate the lifetime value of a customer, use the below formula:
Average transaction value x average number of transactions x gross profit margin x customer lifespan

2. Identify businesses that complement your services.
What businesses have a mutual interest in your customers but aren’t your competitors? For example, a surveyor may work with lawyers, bankers, accountants, and tradies, and they can all refer business to each other.

Create an informal group and commit to meeting regularly. At each meeting, be sociable and have fun but also discuss how you can work together more effectively!

3. Focus on referring more to your networks than you’re seeking in return.
Giving work to others will encourage referrals in return - this is called The Law of Reciprocity. When you do something nice for someone, they’ll have a deep-rooted psychological urge to do something nice also. The more you refer, the more you’ll receive in return. And, be sure to thank your referrers!

4. Find out where your target clients hang out in the greatest numbers.
There may be existing networks that you can join right away that will result in referrals, e.g. BNI, Rotary, Chamber of Commerce, etc. Find out which one is most relevant to your business and join.

5. Get involved with non-profit organisations.
Choose an organisation that you or your team are passionate about, be that a sports club or a local community organisation. Avoid ‘peddling your wares’ when working with the organisations. Simply wear branded clothing and have signage where appropriate. Prospective customers need to know you, like you and trust you before they’ll buy from you.

What can you do today to grow your network and maximise your referrals?

“The currency of real networking is not greed, but generosity.” - Keith Ferrazzi

Step 7 of Building a Better Business

Wed, 02 Aug 2023 18:23:55 GMT

Get someone independent to hold you to account

Have you ever set a New Year’s resolution and then reset the same one again the following year? It's widely recognised that approximately 80% of New Year's resolutions fail. How can we increase our chances of successfully achieving our goals? Accountability.

The most foolproof way of ensuring you complete the actions you’ve committed to is to give someone nagging rights to follow you up. This may be your personal trainer at the gym who makes sure you show up at 6am, or it could be your accountant who checks in on you every 90 days to make sure you’re on track to completing your actions and achieving your business goals.

A soft coach will encourage soft results.

If you think about the type of coach a successful sports team would benefit from, would it be a hard coach or a soft coach? It’s no different in business. We all need someone with the backbone to hold us firmly to account and follow through on consequences for failure to act (‘give me 100 burpees!’).

A soft coach, maybe a life partner or a friend, is likely to worry they’ll upset you if they nag about inaction. They’re likely to accept your excuses. Whereas a hard coach isn’t going to worry about hurting your feelings and they won’t accept excuses. That doesn’t mean they don’t have a heart. Great coaches have backbone and heart; they just care more about your results than your excuses.

If you really want to achieve your goals, seek accountability from a coach who’ll console you after you’ve done the burpees, one who discourages inaction, and enables you to achieve. We can help.

“A coach is someone who tells you what you don’t want to hear, and has you see what you don’t want to see, so you can be who you have always known you can be.” - Tom Landry

Step 6 of Building a Better Business

Wed, 02 Aug 2023 18:11:06 GMT

Be a better leader; build a strong workplace culture

Being a better leader and building a strong workplace culture is crucial to having a better business.

Have you ever considered whether your workplace is toxic? With the average person spending more than 40,000 hours of their life at work, a workplace should be an enjoyable place to be.

We all have bad days, but if the following bells ring… your workplace may be toxic.

1. A lack of trust between owners and the team.
Is there a sense of ‘us’ and ‘them’? Everyone should feel part of the team.

2. No Core Values.
Or, worse still, Core Values which aren’t being lived into.

3. After meeting meetings.
Those chats after a meeting where team members go on to discuss the meeting or criticise decisions made.

4. Highly stressful interactions.
Disagreements will happen from time to time, but these should be the exception, not the norm.

5. Team members and owners mistreating each other.
They may be working in self-serving ways rather than benefiting the team and business.

6. No team buy-in to the core purpose or the business's goals.
Or, an absence of purpose or goals completely.

To create a stronger and happier workplace culture, consider the following points:

Develop your Core Values, with help from your team.
Define your purpose; why you exist for your customers - and make it clear to your team how their roles deliver on your purpose.
Make your Core Values and purpose highly visible so your team know them and hold each other accountable to living into them.
Set annual and 90 day goals for each team member so that the sum of the individuals’ goals can deliver on your overall Business Plan.
Celebrate success and recognise team members for great performance.
Meet regularly with the team and give everyone the chance to be heard.
Avoid being held ransom by toxic employees by showing them the ‘door of opportunity’.

A toxic culture will inhibit the success of your business. Take an honest look at your culture and make changes to help build a strong workplace culture.

Need help developing your Core Values or your purpose? We can help!

“Culture eats strategy for breakfast.” - Peter Drucker

Step 5 of Building a Better Business

Wed, 02 Aug 2023 17:59:20 GMT

Get your organisation structure right

Your ideal structure will allow your business to become more efficient and achieve economies of scale. This increases your bottom line returns at a greater rate than your revenue. Your organisation structure should allow your revenue to increase without creating bottlenecks.

An organisation structure should show all ten departments in your business, who is responsible for what, and how the hierarchy works.

Each department should have only one leader. The same person can lead more than one department, but two or more people can't lead the same department.

Every organisation has 10 departments:

Shareholder.
Director.
Leadership.
Product / Service Development.
Operations.
Marketing.
Sales.
Finance.
HR.
Admin / Technology.

If you’re the owner of the business and currently lead multiple departments, ask yourself how well you're leading each department. It's likely there are some you don't enjoy as much as others and procrastinate doing the tasks within that role.

Consider outsourcing or training one of your team members to take over the leadership of those departments you've been neglecting. They’ll likely do a better job and you’ll free up some time! Remember, overloaded team members (you included) are more likely to make mistakes. Also, paving the way for your team to grow and develop improves loyalty and engagement.

It’s important that your Organisation Chart is a living and breathing document that your team understands and works in sync with. Check in regularly to ensure your team is aligned with the structure and the hierarchy is being respected. During performance reviews, discuss whether there have been any changes to each team member’s role and update the chart to reflect these.

We can help you create the best organisation structure for your business, along with job descriptions for each role. Get in touch!

“Mission defines strategy and strategy defines structure.” - Peter Drucker

Step 4 of Building a Better Business

Wed, 02 Aug 2023 17:52:50 GMT

Make A Plan

You know what you want from your business; now it’s time to plan how to get it.

Start by deciding what you want personally from your business. For example, if you need £50,000 p.a. to cover your living costs and a family holiday, and your overheads are £50,000, your gross profit needs to be £100,000. If your current gross profit margin is 50%, then your annual sales need to be £200,000.

Make sure your plan is linked directly to how you’ll achieve what you want personally from the business, e.g. £50,000 and a six-week holiday.

Follow these rules to create a solid plan and achieve your goals:

1. Keep your plan on one page.
Double-sided if you must.

2. Set a maximum of four main goals for the year.
These should be broken down into 90 day goals and actions to ensure you work towards your annual goals.

3. Identify five Key Performance Indicators (KPIs).
Any more than five and you’ll lose focus. Pick the KPIs most likely to have an impact.

4. Share the plan with your team.
Ensure their goals align with your plan. Help them define their own actions and the KPIs they need to achieve.

5. Keep the plan visible.
Track your progress against the plan and celebrate success with your team along the way.

6. Review your plan at least quarterly.
Make sure you’re completing your 90 day actions and achieving your 90 day goals. Update the plan with new goals each quarter. Having someone independent hold you to account helps.

Your Business Plan is the most fundamental document in your business. It acts as a how-to-guide to achieving what you want from your business.

Your business is there to serve you; you should not be a slave to your business.

Need help creating your plan? Get in touch for more information about our Business Planning service.

"Hope is not a strategy." - Anon

Step 3 of Building a Better Business

Wed, 02 Aug 2023 17:46:03 GMT

Define exactly where you are now - warts and all

This crucial step is so often overlooked. But without knowing your starting point, you don't know what your path to success looks like. It sounds obvious, but many business owners plan for the future without fully understanding where they are now.

Answer the following questions honestly to help define where you are now (warts and all):

1. How aligned are the owners / leaders of your business?
If asked independently, would the leaders have the same vision for the business? Conflict must be addressed and thinking aligned before we can plan the future.

2. What activities are generating your current results?
It’s not just about the sales numbers, but the activities driving your results. Consider the number of leads you’re generating, your proposal or quote conversion rate, average sales value, etc. It’s essential to know these numbers now so you can improve them.

3. How engaged is the team to deliver your vision?
Businesses with a great culture and an engaged team significantly outperform those without. Your team needs to understand how their roles contribute to the overall vision for the business. Without the team on board, you won’t achieve leverage.

4. How appropriate are your measurement and reporting systems?
If you can’t measure it, you can’t improve it. Review the systems you use to measure your results. Do they provide accurate and useful information? The decisions you make are only as good as the information they’re based on.

5. What are your five biggest vulnerabilities right now?
What keeps you awake at night? Is there industry disruption? Is there new legislation that could impact operations? Are your systems robust? Do you have high team turnover, succession to plan for, cashflow strains, or a weak Balance Sheet?

Take the time to define where your business is at now. Be honest and identify the weaknesses in your business so you can take steps to improve.

Skip this step at your peril!

Need help answering these questions? Get in touch!

"Opportunities don't happen. You create them." - Chris Grosser

Step 2 of Building a Better Business

Wed, 02 Aug 2023 14:55:59 GMT

Be open to change and new learning

It’s amazing what we, as humans, don’t even know that we don’t know. New learning opportunities are everywhere, and in this digital world, there’s simply no excuse to avoid new learning.

Consider how many new things a five-year-old learns each day. Children enthusiastically embrace the world of possibility and the desire to learn. Why is it that, the older we get, the more likely we are to close our minds to new learning?

We’re all busy, and sometimes we feel like we just don’t have the time to sit down and read a book. We need to make the time. Set yourself targets and share these with someone who will hold you accountable to achieving these.

Here are five ways to learn more, positioning yourself to run a better business:

1. Read more.
If you struggle to find time to read, set a reminder on your phone to read before bed each night. Start with reading 10 pages, then increase this each week. Mix it up with recreational books and business books. As a bonus, it will help you sleep better!

2. Resist the urge to hang out on your phone.
Unless you’re learning something new. By the way, you’re unlikely to learn on Facebook! Try an eBook, audiobook, podcast, or learning app instead!

3. Enrol in courses or workshops.
These can be online or in person. Choose topics that interest you and will help you in your business.

4. Turn off your TV.
Unless you’re viewing TED talks on YouTube or content that is useful learning.

5. Keep a journal of your learnings.
Review your journal of learnings regularly. Remember, you don’t really know something until you can teach it to someone else.

So, what areas should you be learning more about? It could be leadership, management, sales, or writing skills. Find out the best ways to develop your knowledge and set aside time to learn. Don’t forget to ask someone to hold you accountable. Maybe you could buddy up with someone and meet regularly to share your learnings? Once you begin learning, your hunger to learn will grow.

We can help you take steps to improve your business and ensure it reaches its true potential. Get in touch!

“Live as if you were to die tomorrow. Learn as if you were to live forever.” - Mahatma Gandhi

Step 1 of Building a Better Business

Wed, 02 Aug 2023 14:23:32 GMT

Define what success looks like for you

What exactly does your better business look like? Be crystal clear on what you want from your business; it's there to serve you, not the other way around.

The average person spends 40,000 hours at work over their lifetime and life is simply too short to be stuck doing things we don’t enjoy. Make the most of your time and do what you love doing.

To build the vision of where you want to be in the next 12 months, answer the following questions on a piece of paper.

1. Who do you need to be right now?
Stop having a mindset of ‘when I have this, I will do that, and I will be this’. Instead, think about who you need to be right now and start acting in a way that’s consistent with that person - doing what you need to do to get what you want to have.

2. What do you love doing outside of work and at work?
Define the things that you love doing most. We all have tasks we don’t enjoy doing and put off for as long as possible. Determine which tasks can be delegated to free up more time to do the things you love.

3. How many hours will you commit to the things you love doing?
Write down how many hours a week you’ll spend doing what you love. Commit to doing this - tell someone so they can hold you accountable and block out time in your calendar. Setting aside time to do things you love doing is a great way to start taking back control of your life.

4. What holidays do you want to have?
Write down where you want to go and when. Be specific so the image is implanted in your mind. Block out the time in your calendar now.

5. How much income do you need to deliver on this new life?
Write down a figure. Don’t worry about how you’ll achieve this right now, just write it down.

You now have your own personal plan for what you want to get out of your business. Make this visible and start working towards it now.

“The first secret of getting what you want is knowing what you want.” - Arthur D. Hlavaty

Could outsourcing help you grow your business?

Tue, 18 Jul 2023 11:14:19 GMT

When you run a small business, the amount of work can ebb and flow. Unexpectedly busy periods can create too much work and stress for a small team or one-person business. But if a surge is seasonal or unreliable, you don’t necessarily want to commit to taking on another employee.

One solution is to use outsourcing to give you some flexibility during busy periods.

What could you outsource?

There are several types of jobs that can be ideal for outsourcing:

Tasks you dread, usually procrastinate or that cause you massive stress
Tasks where you or your business have low expertise
Those tasks which don’t require the contractor or freelancer to access your systems or deal with your clients.

For example, if you aren’t managing your digital marketing, outsourcing your social media management could work well. Or it might be branding, HR or customer service. And if you need help with your payroll or accounts, we’re only a phone call away.

If you can take stressful tasks off your plate, or reduce your workload at peak times, you can increase your revenue and productivity without overcommitting to payroll.

Who could do the work for you?

We’re here to support you with your accounting and payroll requirements. For other types of work, you could consider a local or an offshore provider. There are plenty of platforms and organisations that will help you, but do shop around as the quality varies enormously.

The advantages of a local provider are that they’ll be in the same time zone, with no language barrier and operating under the same regulations. International providers, on the other hand, can be considerably cheaper.

Need help getting started?

Considering outsourcing and wondering how much to spend or where to start – or you need help with accounts and payroll? Get in touch, we’d love to help.

Do you need to improve the cash flow position for your business?

Tue, 18 Jul 2023 11:10:18 GMT

Turning a profit is at the heart of running any successful company But without an even and predictable flow of cash into the company, you can't cover your overheads, you can't pay your employees and you can't run your day-to-day operations – let alone think about expanding and growing the business.

In the end, you need both. But if you’re going to be in control of your financial destiny, it’s important to get your head around the important process of cash flow management.

Let’s look at some of the key things to understand about your finances:

Profit is a by-product of a successful business – as the owner, you want to make profits, but profitability isn’t the only goal. A business can easily be profitable, but also be highly unstable in the longer term. What you want is stability and consistent revenues.
Cashflow keeps your business alive – good revenues (income) serve to bring cash into the business. Without cash to cover your operating expenses, you have no means to keep the lights on in the business. So cash really is king!
Know your cost base and overheads – the flipside of your cash flow position is your costs. In an ideal world, you want more cash inflows than cash outflows, so it’s important to know your expenses and costs and to manage them carefully.
Be proactive about spend management and easing expenditure – if you can take action that reduces your spending, that is hugely positive for your cash flow position. Choose cheaper suppliers, negotiate better deals and bring that cost base down.
Drive more revenue, through increased sales and marketing activity – if you can increase your revenues, you also boost your cash flow. So it’s important to be proactive about running targeted sales and marketing campaigns to increase your sales.
Keep the cash flowing and the profits take care of themselves – if you achieve the ideal cash flow position, the company sits on solid financial foundations, the cash is there for investment and the business can grow. It’s that simple.

Talk to us about improving your cashflow management

Whether you’re new to running a business, or a seasoned owner who needs some financial support, we can give you the cash flow advice you need.

Understanding Your Breakeven Point

Tue, 18 Jul 2023 11:06:10 GMT

Your breakeven point is the income, or sales, needed to cover all of your business costs. Any earnings above this point generate profit. So, in a nutshell, your breakeven point tells you the minimum sales needed to keep your business profitable and viable.

Combining your understanding of the breakeven point with detailed financial reporting from your accounting software is invaluable. You’ll get valuable data to analyse your fixed and variable costs. You can also set meaningful sales targets for the business or individual team members.

What are fixed and variable costs?

Let’s take a quick look at the difference between fixed and variable costs:

Fixed costs remain the same, regardless of how many sales you make. Expenses like rent, equipment lease repayments or full-time staff have to be paid whether you sell any goods or services or not. Fixed costs are often called overheads.
Variable expenses (sometimes called production costs) fluctuate based on sales. For example, cost of goods sold, production labour and commissions paid to salespeople will vary according to the number of goods or services sold.

It's helpful to work out an amount, or percentage, of variable costs compared to the sale price of your products or service. This may not be exact initially, but even if you get a rough figure to work with, this will help calculate your breakeven point.

Over time as you analyse your financial reports, you’ll be able to refine the calculation and adjust your selling price accordingly.

How do you calculate your breakeven point?

To accurately calculate your breakeven point, you’ll need to know your fixed costs (overheads), selling price and production costs.

One common method of calculating breakeven is as follows:

Overheads / (selling price – production cost)

For example, let’s say overheads per month (rent, vehicle lease, administration staff) are £10,000, and you sell a coaching program for £1,500 with variable costs (coach fees, handout materials for participants, advertising) of £750 per program.

£10,000 / (£1,500 - £750) = 13.33

You would need to sell over 13 programs per month to break even, which equates to £20,000 worth of sales.

If the same program had variable costs of £900, you would need to sell 17 programs per month to generate £25,000 worth of monthly sales just to cover costs. Variable costs of £500 per program would mean you only need to sell 10 per month to break even etc.

What are the benefits of understanding your breakeven point?

As you can see from these examples, it’s important to understand your fixed and variable costs. With a good handle on these expenses, you'll know exactly how much you need to make to remain in business – and the resulting impact on your financial position.

Once you have a reasonably accurate breakeven figure, you can quickly calculate your profit before tax for sales above the breakeven point.

In the example where variable costs are £750 per program, let’s say you sell 20 programs each month. This would result in an extra £5,000 in profit (before tax) after paying for overheads and variable costs.

Can breakeven help with your pricing?

Understanding your breakeven point can give you some deep insights into your selling prices, helping you understand if they’re realistic..

For example, if your variable costs are high, how much more income will you need to reach breakeven. Is there a fair price for consumers that covers your expenses in a reasonable time frame? Do you need to raise prices to account for fixed and variable costs accurately?

Talk to us about calculating your breakeven point

There are different ways of calculating your breakeven point to confirm the viability of your business, and the ideal pricing point for driving both sales and profitability.

We'd love to help you understand your business financials in more depth, so you can plan for long-term sustainability, enjoyment and profitability.

Get in touch to about your breakeven point.

5 challenges for small business - and how to beat them!

Tue, 18 Jul 2023 10:59:25 GMT

Founding, building and growing your own small business is a hugely rewarding experience for many entrepreneurs. But the road ahead isn't always smooth.

There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.

So, what can you do to beat these challenges and make the journey as frictionless as possible?

5 proactive ways to overcome your business challenges

Uncertainty: No-one has a crystal ball to know exactly what's coming around the corner. But there are ways to be prepared for some unknown circumstances. You can't fully predict the main external threats like government policy, economic conditions or freak weather conditions. But you CAN use forecasting and scenario-planning tools to build up contingency plans so you have a Plan A, Plan B and even a Plan C. With forecasts of your business data, finances and industry trends, you can be ready to react, pivot and take positive action.
Competition: Small businesses often face stiff competition from larger, more established companies. To stay ahead of the curve, it's important to be nimble and agile. It's also vital to find your niche and to know precisely why your customers value your offering. By ploughing a unique furrow and keeping your customers happy, you can give yourself an edge over larger, slower-moving corporate-size competitors.
Access to capital: It can be a struggle to secure funding as a startup, particularly if you have limited financial resources or a poor credit history. Having a detailed funding strategy is a crucial way to overcome this problem. Keep your finances in order and make sure you have in-depth financial reports to show banks, lenders and investors. It's also helpful to focus on paying suppliers on time, keeping debt levels under control and ensuring your cashflow is in a positive position. These are all excellent ways to improve your business credit rating and show you're a stable, risk-free prospect for lenders.
Hiring and retaining employees: Attracting and retaining talented employees is difficult, especially during the ongoing talent shortage. Offering competitive salaries or benefits packages can be one way to attract people. But it's also important to think about your brand reputation, your sustainability credentials and your CSR policy – all things that Millenial and Gen Z workers value alongside decent pay and benefits packages. Employees want to be proud of where they work, so make your company a progressive, satisfying and rewarding place to work.
Keeping up with technology: Business technology is evolving at a rapid pace. It can be daunting keeping up with all the available apps, tools and software solutions that are aimed at your business. The trick is to be informed but selective about the apps you use. Start with the operational and financial needs of the business and look for apps that can automate, improve efficiency or provide improved data and management information. Talk to other business owners and your profressional network to find out what the essential apps are in your industry. And do your research and homework before you choose any software solution to add to your app stack.

Talk to us about being an agile small business

We’re also on hand to discuss your ongoing strategy, how to react to upcoming risks and the best ways to access capital and manage your company’s finances.

Arrange a meeting and let’s see what the future may bring for your business.

Business tips: Selling up and moving on – what happens next?

Tue, 18 Jul 2023 10:49:13 GMT

Once you've sold your business and have received the funds from the sale, you're then faced with a big question: what happens next?

After guiding the helm of your company, it will be tough to let go. But if the circumstances are right, there’s no reason why exiting the business should be a sad occasion. You’ve built a stable business and personal legacy. You’ve employed a team of talented people and helped them drive their careers. And you’ve brought your products and/or services to a satisfied and loyal customer base.

So, how will you now focus your time and effort?

Let’s look at your options…

Retire and live out the entrepreneur’s dream

After many years of hard work, worries and stress, the thought of a business-free lifestyle may well be appealing. But retirement isn’t for everyone. If you have thrived on the pressure, challenges and excitement of being the captain of your business ship, retiring may seem like a step away from the action.

On the flipside, the allure of a more relaxed lifestyle may be strong. With the proceeds from your sale, you should be in a position to make you, your family and those around you very comfortable. It may be that the entrepreneur’s dream of building a business, selling up and retiring to a hot climate is your idea of perfection.

Stay involved in the business

Even though you don’t own the business anymore, it doesn’t mean you have to step away completely from the company. You could remain involved in the business in some capacity, allowing you to ‘keep your hand in’ and support the future course of the business.

For example, you could become:

A joint partner in the business – you could sell a part share in the business and work as a joint partner with your new investor. This allows you to free up some capital, while maintaining an element of control and influence.
An external adviser or consultant – you could advise the new owner and their board as an outside adviser. After all, who knows this business better than you? Becoming a consultant could well be an astute move and keeps you in the loop with the future path of the business – while charging out a consultancy fee as an added benefit.
A non-executive director (NED) – you could join the board as a NED and use your personal experience to help guide and support the new owner and their board. If that’s the route you choose, it’s a good idea to retain some shares in the business, so you have a vested interest in the company’s performance and your own share value.
An informal adviser to your family – if you’re handing the business down to the next generation of your family, they will almost certainly want your advice. You’ve been through the ups and downs of setting up the business, so you’re in the best position to give your family the guidance and tips they need to run a smooth operation.

Set up a new business

With so much experience behind you, it could be that you’re itching to start the whole business cycle again. If you’ve got the ideas, the capital and the motivation to start another new business, this can be a new and rewarding challenge to get your teeth into.

First time around, you’ll have been a little green and less aware of the many pitfalls of founding a new business. You’re now better prepared and more knowledgeable about what’s required from a founder and business leader. We learn plenty from our mistakes, so you’re in a great position to return to the business cycle again with a new idea.

As with any new businesses venture:

Make sure you have a detailed breakdown of your business idea
Write an in-depth business plan that maps out your journey
Ensure you have the funding to get this idea off the ground
Be prepared for a period of hard work and lower income before the company takes off.

Do your bit for charity and your community

We all have interests and causes that are close to our heart, so supporting charities and community projects in these areas is a great way to use your money for long-term good.

Donating money to your chosen charity or social enterprise is also a triple whammy:

You get to provide funding to causes that are close to your heart
You can be philanthropic and help people who are in challenging situations
You get the positive impact of tax breaks for donating to charity.

You also have the option of putting your own time into working with these charitable causes. You can use your expertise and experience to guide them, help with fundraising or provide hands-on support at events, community projects or lobbying the Government for greater support.

The end of the road, or a new chapter?

Once the business is sold and you close your office door for the last time, you take a step into the unknown. But with so many varied and valuable options to choose from, your life post-exit need never be boring or predictable.

The potential is there for an exciting new venture, or the pleasure of relaxing in the sunshine by the pool. It’s up to you to define the next chapter in your life and your business career.

If you’re thinking about exiting your business, please do get in touch. We’ll help you plan your exit strategy, add value pre-sale and choose the best options for your personal future.

Talk to us about your next step.

Should you move your rental properties into a limited company?

Thu, 06 Jul 2023 11:17:56 GMT

When you first start out building a property portfolio, you may decide to purchase each property in your own name. While this keeps things simple, there are some distinct advantages to creating a limited company to own and manage your properties.

We’ve highlighted five reasons why you should consider setting up a limited company.

5 reasons to run your properties through a limited company

Creating a limited company and becoming a company director may sound like a big move. But, in reality, running a limited company can make managing your property portfolio a whole lot easier, as well as reducing liability and improving your tax position.

A limited company structure offers:

Limited liability – by moving your rental properties into a limited company, you can limit your personal liability if something goes wrong with the property. This means that if the company runs into financial difficulties, your personal assets will not be at risk.
Tax efficiency – using a limited company can be more tax-efficient than owning rental properties personally. Individual landlords are taxed on their rental income at their own personal rate of income tax, which could be up to 45%. Companies are taxed on their profits via corporation tax, at a lower rate of between 19-25%. On top of this, there may be additional tax benefits from being able to claim expenses and allowances against your company's profits.
Better access to finance – a limited company can have better access to finance and borrowing than an individual landlord. Lenders may view a company as a more stable and professional entity, which makes it easier to secure loans for additional properties, expansions or renovations. This can be helpful when growing your portfolio.
Improved management – managing multiple rental properties can be a complex and time-consuming task. By moving your properties into a limited company, you can streamline the management and could even potentially hire a professional property manager to oversee the day-to-day running of your portfolio.
Estate planning – transferring rental properties to a limited company can be a useful estate planning tool. When your properties are held within a limited company, this can allow for easier transfer of ownership to heirs or beneficiaries in the event of your death. It can also provide greater flexibility for structuring your estate and managing any inheritance tax liabilities.

Talk to us about creating a limited company structure

If you’re planning to expand your rental property portfolio, or want to maximise the efficiency of your existing portfolio, moving ownership to a limited company makes a lot of sense.

As your adviser, we can run you through the process of getting incorporated as a limited company and can connect you with experienced legal advisers, if necessary. We can also help with your tax planning to deliver the most tax-efficient outcome from your rental income.

Get in touch to talk about setting up a limited company.

Our Succession Planning service

Thu, 06 Jul 2023 11:14:51 GMT

All business owners should have a Succession Plan in place, no matter when they plan to exit. An effective Succession Plan will help you define the steps required to turn your future vision into a reality, while taking into consideration business, personal, and family expectations.

Our Succession Planning service gives you the chance to:

Determine what you want out of your business
Clarify your succession options
Create a timeline with key milestones for your Succession Plan
Identify the actions and strategies you need to make your objectives achievable

If you wish to take a more passive role or sell your business within the next three years, then we recommend you start the ongoing Succession Planning process right away. The longer the planning phase, the more time you have to groom your business for sale and attract the right successor.

By attending a Succession Planning session, you’ll:

Define and understand what you want from your business
Determine a common vision for owners, team members, and successors
Clarify your succession process, defining tasks and actions to maximise your outcome
Identify and prioritise key goals and milestones
Increase your ability to make strategic decisions

We look forward to helping you plan for the future.

Achieving your goals with the rocks, pebbles and sand mindset

Thu, 06 Jul 2023 11:10:03 GMT

Have you ever found yourself struggling to achieve your goals because you just don’t have enough time to commit to them? Chances are, you’re doing things back to front.

Rocks, Pebbles and Sand is a simple, yet crucial, planning concept depicting that we’ll achieve more if we set our annual goals (or ‘rocks’) first, then our 90-day goals (‘pebbles’) and actions (‘sand’).

If we had a jar and first put in some sand, then added pebbles, then tried to put the rocks on top, not many rocks would fit. If you start with the rocks, we can fit the pebbles in, then the sand will filter through the gaps and we can fit more in.

For a lot of business owners, the day-to-day tasks fill up most of their day. In other words, their jar is filled up with sand, not leaving much room for the rocks and pebbles.

If they were to start with their annual goals and break these into 90-day goals, their daily actions will be driven by their goals. That means their daily tasks are helping to achieve their goals.

For example, if your annual goal was to increase sales by 10%, your 90-day goal might be to have completed training for the sales team. The sand might be designing a sales training programme, finding someone to deliver the sales training, and training each salesperson.

If you didn’t have the ‘rock’ of increasing your sales by 10%, it’s likely that your sales team would be too busy in their day-to-day tasks to stop and spend time undertaking training. If you didn’t have the ‘pebble’ of completing the training within 90 days, the training would be pushed to the bottom of the list for your sales team.

By structuring our planning and goals in the right order, we can more easily keep our focus on the things that matter the most. We can be very clear about the things that we are doing on a day-to-day basis, since they will be driven by those annual goals that we have set. Following the Rocks, Pebbles, and Sand mindset will help us achieve our goals more effectively.

Need help with achieving your goals? We can help!

Why all businesses need to plan for succession

Thu, 06 Jul 2023 11:06:18 GMT

Hypothetically speaking, if you were hit by a bus tomorrow, how seamless and pain free would the transition be - both for your business and those who rely on it?

Succession Planning isn’t just about retirement. In an unforeseen event would the operation, management and value of your business be compromised?

It isn’t just about securing your future.

Succession Planning is still an extremely valuable exercise if you’re planning to retire in 20 years, or if you’ve already lined up your successor. Should something unforeseen happen to you, this planning will downgrade a major crisis to a significant, but manageable, event.

By having the conversations now and documenting clear intentions, you could save yourself (and your stakeholders and family) a lot of pain should an unexpected event occur.

It’s also about efficiency.

Planning for unexpected scenarios forces you to assess who does what, why, and how they do it best:

Is the right person performing the task?
Is their process the best way of doing the job?
If multiple people perform the task are they doing so consistently?
Have we defined and documented the best process?
Should this task be the responsibility of a single team member?

It’s about providing a safety net for your team. Documenting the key business processes in your company enables you to devise the most efficient system for each task. Having a clear procedure to follow is helpful when a team member is absent, but most importantly when it comes time to transfer this knowledge to a new team member, manager or owner.

A robust and effective Succession Plan takes three to five years from initial planning to implementation.

Having said that, any plan is better than no plan. Generally, the longer you have to execute your plan, the bigger the opportunity you have to maximise the value of your business and therefore the capital you extract on exiting.

A Succession Plan is not something you write and leave to rot in a dusty drawer. Succession Planning is an important part of your business strategy that requires regular attention and ongoing development!

Involving key team members in aspects of planning will engage and empower them as the journey begins.

Want help your developing your Succession Plan? Get in touch!

Your Q3 2023 deadlines for the diary

Thu, 06 Jul 2023 10:59:40 GMT

We’re always here to keep you up to date with the latest accounting, tax and compliance deadlines. Here are the forthcoming deadlines and cut-off points for Q3 of 2023 to add to your diary.

NOTE : If your company’s accounting period is longer than 12 months, the first tax payment deadline is normally 21 months and 1 day after your accounting period started, and the second one is 9 months and 1 day after your accounting period ends.

For example, a company with an accounting period running from 01/09/2021 to 31/12/2022 will pay the first tranche of corporation tax by 01/06/2023 and the balance by 01/10/2023.

Some general deadlines to plan for:

Employment related securities (ERS) schemes need to be registered (for the previous tax year): 6 July 2023
ERS Annual Return (for previous tax year) must be submitted: 6 July 2023
Enterprise Management Incentives (EMI) schemes ‘notice of options granted’ to be submitted: within 92 days of grant.
Submit your P11D, P11D(b) and P9D returns (for 2022/23 tax year): 6 July 2023
Pay Class 1A National Insurance contributions to HMRC (for 2022/23 tax year): 19 July 2023
Make your second payment on account for 2022/23 personal tax: 31 July 2023
Make Capital Gains Tax payment for gains on residential property: 60 days after completion
PAYE and National Insurance payments due: 19th calendar day of the month after end of month or quarter as applicable (22nd for electronic payments)

Talk to us about hitting your deadlines

Get in touch to discuss your deadlines.

How to get the most out of your pension strategy

Wed, 21 Jun 2023 19:31:58 GMT

How much thought have you put into planning out your retirement years?

Your employees will automatically be enrolled into a workplace pension scheme. But for directors, partners and sole traders, there’s no mandatory requirement for you to set up your own pension scheme. When it comes to planning your pension, the buck stops with you.

Let’s take a look at some of the main questions you’re likely to have about your retirement planning, with some straightforward answers to get you moving in the right direction.

Why do you need a good personal pension strategy?

In the current economic climate, it’s important to make sure that you have a good pension scheme in place. With a pension behind you, you’ll be able to retire and live out your plans for later life, without having any unnecessary worries about your finances.

So, how should your pension work?

You’ll make regular monthly contributions into your plan. This money will then be invested over time to (hopefully) create a bigger pot of money for retirement.
When you reach retirement age, you’ll have a lump sum of money in your pension. It’s your decision what you then do with this money. You can:
Take all or some of it as cash. The first 25% is tax-free.
Buy a product that gives you a guaranteed income (sometimes known as an ‘annuity’) for the rest of your life
Invest the money in a fund to get a regular, adjustable income (sometimes known as ‘flexi-access drawdown’).

Should you choose a workplace pension or a personal pension plan?

If you don’t have any automatic pension provision, you have two main choices:

Workplace pension – with a workplace pension, you don't have to worry about choosing the right investment plan or making regular contributions. You just enrol in the company scheme and that side is all taken care of for you.
Personal pension – with a personal pension plan, you can choose the type of investments that best suit your needs and goals. You also have the option of withdrawing from the scheme at any time without incurring any penalties.

What should you consider when choosing a pension plan?

Choosing the personal pension scheme route does give you more options. But there are a few key questions you need to think about before making any decisions on a provider.

For example:

How big will your contributions need to be? Your pension pot needs to supply enough money to help you maintain your desired lifestyle in retirement. That means making monthly contributions that are big enough to generate a suitable lump sum – a sum that will then provide you with the income you need for the rest of your life.
What are the rules about withdrawing your money? Most pension schemes won’t let you draw on your funds until you’ve reached a certain age – usually 55 years old. Make sure you’ve read the small print and know when you can (and can’t) access your money.
How are your investments managed? Pension providers will usually provide regular updates on your investment performance. But make sure you know how your funds are being managed, and what areas your money is being invested in. You may want to avoid certain investment areas that don’t align with your own personal values.

Could your pension be part of your tax planning?

Putting cash into your pension plan makes good financial sense at any point. But pension contributions are also a useful tool when it comes to your tax planning too.

Any money you pay into your personal pension scheme will be liable for tax relief. Because of this, you get the double whammy of saving for your future, while also cutting your overall tax liability for personal income tax.

Do you need an independent financial adviser?

If you need advice to help you choose the right pension scheme, provider and investments, you should speak to an independent financial adviser (IFA).

An accountant can help with your tax planning questions, but only an IFA or a certified pensions specialist can give you professional advice on your pension choice.

Talk to us about finding the best pensions advice

As your accountant, we can help you look at the tax implications of contributing to a pensions scheme.

We can also introduce you to the best IFAs and pensions advisers, so you have solid independent advice on which to base your decisions.

Knowing your team's learning styles is good for business

Wed, 21 Jun 2023 19:19:24 GMT

Why is it important to be aware of your own, and your team’s, learning styles? Knowing how each of your staff members best learn can enhance communication skills, improve performance and make your new-hire processes better. It can also reduce conflict and increase the range of communication strategies used in your business.

Everyone learns differently and while we’ve known this for centuries, the VARK modalities, developed by New Zealander Neil Fleming in 1987, were the first to offer a quiz with help sheets so people could use it to learn and teach better. VARK stands for Visual, Aural, Read/Write, and Kinaesthetic. The idea is that we use one (or a mixture) of these modalities when learning information.

Whether it’s rules, guidelines, job changes, systems, and processes, or change within the business, it’s your job to ensure staff learn in the best way for them. Once you know how each of your staff learns (there is a range of online quizzes), assess your communication channels, and adapt them to ensure no one misses out on valuable information.

New ways to communicate with staff

How you best learn could influence the way you’re delivering information to your staff. To make sure you cover all your teams’ learning needs, pick a selection of these communication approaches:

Visual : Learn by seeing - Charts, graphs, flow charts, lesson outlines, picture aids, and symbolic arrows, circles, hierarchies, and other devices used instead of words.
Aural : Learn by hearing - Reading aloud, verbal instructions, discussions, repeating to a colleague, oral feedback, email, phone conversations, texting, discussion boards, oral presentations, classes, tutorials, and talking with other students and teachers.
Read/write : Learn by reading and writing - Manuals, reports, essays, assignments, PowerPoint, lists, diaries, dictionaries, quotations and words, words, words…

Kinaesthetic: Learn by doing - Demonstrations, simulations, videos, and movies of “real” things, as well as case studies, practice, and applications. If it can be grasped, held, tasted, or felt, it will resonate!

Key numbers to focus on in your business now

Wed, 21 Jun 2023 19:09:33 GMT

As a business owner, it’s never been more important to have a good grasp on your finances.

For many businesses, priorities may have changed, customer behaviours have mutated and revenue streams have had to evolve and pivot in order to create a viable business model.

To track, monitor and drive your financial performance in this new business world, it’s increasingly important to have a handle on your key financial reports and metrics.

Getting to grips with your financial reports

Whereas in the past, extra cash in the business may have been seen as a surplus that needed to be spent on something, recent years have shown us that having these reserves is vitally important for the survival and long-term health of businesses.

To truly be in control of this cash, it’s vital that you can dip into your accounts, financial reports and dashboards and ‘see the genuine story’ behind your financial position.

So, what are the key reports to focus on? Let’s take a look:

Budget – your budget is the financial plan that's tied in with your strategic plan. In essence, the budget is your approximation of the money it will take to attain your key strategic goals, and the revenue (income) and profits you hope to make during this period. It’s a benchmark you can use to measure your actuals (historic numbers) against, allowing you to see the variances, gaps and missed targets over a given period.
Cashflow Statement – a cashflow statement shows the flow of money into and out of your business. Understanding these cash inflows and outflows in detail allows you to manage this ongoing process, allowing you to aim for a ‘positive cashflow position’ – where inflows outweigh outflows. In this ideal positive scenario, you have enough liquid cash in the business to cover your costs, fund your operations and generate a profit.
Cashflow Forecast – forecasting allows you to take your historic cash numbers and project them forward in time. As such, you can see where the cashflow holes may appear weeks, or even months, in advance – and that gives you time to take action, whether it’s increasing your income stream, reducing your underlying costs, chasing up unpaid invoices (aged debt) or going to lenders for additional funding.
Balance Sheet – the balance sheet shows you the company’s assets, liabilities and equity at a given point in time. In a nutshell, it’s a snapshot of what the business owns (your assets), what you owe to other people (your liabilities) and what money and profits you currently have invested in the company (your equity). The balance sheet is useful for seeing what stock and equipment the business owns, how much debt (liabilities) you’ve worked up and what the company is actually worth – all incredibly useful information to have at your fingertips when making big business decisions.
Profit & Loss – your profit and loss report (P&L) Your P&L gives you an overview of the company’s revenues, costs and expenses over a given historic period of time. Whereas the balance sheet is a snapshot, your P&L is more like a moving video. It shows you how your finances are progressing by demonstrating how revenue is coming in and costs/expenses are going out (rather than cash coming in and going out, as you see in your cashflow statement and cashflow forecasts).

Talk to us about accounting and financial reporting for your business

We’ll run you through the key reports in your accounting software, and can help you track performance, take action and position your company for growth.

4 key areas to think about when purchasing a buy-to-let property

Wed, 21 Jun 2023 18:58:24 GMT

Purchasing a buy-to-let property is an increasingly popular way to invest in your future and to give you and your dependents some financial security. But starting a property portfolio and becoming a landlord is something that requires plenty of thought before you dive in. We’ve highlighted five important areas to consider when purchasing a buy-to-let property

1. What are the benefits of buying a rental property?

With property seen as a relatively low-risk investment, you may well have thought about dipping a toe into the buy-to-let market. There are certainly several advantages to becoming the owner of a rental property, making it an attractive investment opportunity.

For example:

Rental income – your buy-to-let property will bring in regular rental income. This provides a passive income stream to pay off the mortgage and generate some money.
Capital appreciation – property values in the UK have historically increased over time, meaning it’s possible for your property to appreciate and deliver a capital gain.
A more diverse investment portfolio – investing in property provides diversification to your investment portfolio, which can help mitigate risk and protect your overall wealth.
Inflation hedge – property is often seen as an inflation hedge as rental income and property values can increase with inflation over time, protecting your purchasing power.
Tax benefits – you can claim tax deductions for expenses related to your property and can also receive a tax-credit, based on 20% of your mortgage interest payments.

2. Should you run your property through a limited company or as an individual?

When you first start building a buy-to-let property portfolio, the chances are that you’ll own your first property as a private individual, rather than through a limited company.

Owning the property as an individual gives you more control over the property and also keeps your costs lower, by removing the need for the admin and legal responsibilities of running a limited company. However, once you start building a portfolio of multiple properties, there are some distinct advantages of setting up a limited company for your property interests.

By owning your portfolio through a limited company:

You limit your liability and reduce the risk of any legal issues associated with the property
You pay corporation tax on your profits, rather than paying income tax at your personal rate of tax. With CT being paid at between 19-25%, this can be a big tax saving.
Interest on the mortgage is fully deductible for tax purposes.

3. How will you fund the purchase of your property?

You’ll need to think about how you’ll finance the purchase of your buy-to-let property. If you're planning to take out finance, it’s worth shopping around to look for the best deal. It’s also vital to calculate whether you can afford the monthly repayments against any money you borrow.

Here are some finance options to consider:

Buy-to-let mortgages are designed specifically for purchasing rental properties. Deposits are generally higher and interest rates higher than a regular mortgage.
Personal savings can be used to buy the property, if you have sufficient funds in the bank. With no mortgage in place, you remove the cost of high interest rates.
Equity release can be used to fund the purchase of a buy-to-let property. This can be done through a remortgage, or through an equity release mortgage.
Joint venture allows you to partner with another investor, or group of investors, to purchase a buy-to-let property together. This helps share the cost and risk.
Bridging loans can be used to purchase a buy-to-let property while waiting for other forms of finance to become available – although this can be an expensive option.

4. What are the tax and accounting implications of earning income from your property?

It’s important to think about the tax implications of owning a rental property. Any rental income you make will be subject to income tax, and you may also be liable for capital gains tax when you sell the property. It's sensible to seek professional tax advice to make sure you comply with all the relevant tax regulations. A tax adviser can also help you to minimise your tax liability.

As a landlord, you'll also need to keep accurate financial records, including income and expenses related to the rental property. This will help you keep track of your cashflow and calculate your profits and losses accurately.

Talk to us about planning your rental property purchase

Owning a buy-to-let property also comes with certain responsibilities and risks. These can include managing the property, dealing with tenant issues, and dealing with fluctuations in property values and rental demand.

If you want your buy-to-let property purchase to run smoothly, it’s important to talk to a professional accountant and tax adviser. We can help you assess your finance needs, work out a budget and set up the most tax-efficient way to purchase the property.

If you’re thinking of starting a rental property portfolio, please do come and talk to us.

Get in touch to plan your rental property purchase.

Know your numbers - Your Balance Sheet

Wed, 31 May 2023 13:56:06 GMT

Knowing your numbers is vital to business success. The Balance Sheet is arguably the most important report, as it measures whether your business's worth is increasing or decreasing. It illustrates the overall financial health of your business; whether it is funded appropriately, if there’s enough cash to pay the bills, and what the owners would have left if it was wound up tomorrow.

Profitable businesses can, and do, go broke if they have a weak Balance Sheet.

Three common scenarios:

1. Growing sales without an efficient billing or collection system.
This can result in a situation where you don’t have enough cash to pay your bills.

2. Borrowing too much money to finance the business.
If there is a downturn in sales, you could have a situation where you can no longer service your interest and principal repayments (even though you’re still making a profit).

3. Taking too much out of the business.
It could be as simple as earning a profit but not leaving enough to pay for tax and asset replacements.

Some critical things to understand:

1. Do you have enough working capital?
Calculate working capital by taking your current assets (e.g. debtors, stock, and cash) less your current liabilities (creditors, taxes, and loans due within one year). If the number is negative, you’ll experience cashflow strain and weaken your business.

2. How long is it taking to collect your debtors?
Calculate this by dividing your debtors into your total sales for the year, then multiply the answer by 365. This tells you how many days it is taking you to collect your debtors. The lower the number the better. Compare your debtor days to your normal trading terms on your invoices.

3. How many times are you turning over / replacing your stock each year?
Divide total sales by closing stock. You can do the same calculation on individual stock items by taking the sales for that item divided by the stock level of the same item. The higher the number the better, as you are converting that stock into cash more efficiently.

4. Is your shareholder current account an asset or a liability to the company?
If it’s an asset, this means you owe the company money, which is bad news!

5. What return are you getting on the assets you’ve invested in?
Net profit divided by the value of total assets gives your % return. This percentage can be compared to likely returns from other investments to determine how well your business is performing.

The list goes on and will depend on your type of business. Having real time data for your reports will make your financial health diagnosis more relevant than relying on your last set of annual financial statements.

Some of the calculations above are simplified to reinforce the message (instead of getting into complex 'Accountanese').

Talk to us about how strong your Balance Sheet is and how we can work together to make it stronger.

Know your numbers - Your Trading Account

Wed, 31 May 2023 13:51:12 GMT

Your financial reports depict the general health of your business and having a good understanding of these reports enables you to pinpoint areas that require a more detailed diagnosis.

The three most important financial reports for your business are:

Your Trading Account.
Your Profit and Loss.
Your Balance Sheet.

Let’s focus on your Trading Account. In English (rather than Accountanese) your Trading Account is like a lap counter on a race-track - it measures the return you are making from each sale after you’ve deducted the direct (or variable) costs incurred to make those sales.

For example, if you’re selling computers, the Trading Account measures the margin you have made after you’ve paid for the cost of bringing those computers into stock to be sold. Or, if you’re selling labour, the Trading Account measures the margin you have made after you have paid the wage cost of that labour.

Fixed costs like rent, power, phone and loan interest are excluded as you incur these costs irrespective of whether or not you make sales.

The key thing to monitor in your Trading Account is your sales. Clearly you want sales to be going up but, more importantly, you should know which items you are selling more or less of. Breaking your sales into categories, locations or departments will give you greater visibility over the strengths and weaknesses in your sales process.

Use your sales by product or service to calculate your average dollar sales and your sales by customer. Drilling down into your sales helps you to better diagnosis your trading strengths and weaknesses.

Next, you need to monitor your gross profit (ideally as a percentage of sales). Your gross profit % is the average proportion of every sale you have left after paying the variable costs. The higher the %, the more efficiently your business is operating and the more you’ll have available to cover your fixed costs. As with your sales, if you can report on your gross profit by product or service, or by location, you’ll be able to better evaluate the health of your business.

Now, calculate your breakeven point. This is the dollar value of sales you must achieve at your current gross profit % to cover your fixed costs (including a fair wage to yourself as one of those costs!).

With cloud-based accounting systems and real time data, it’s now much easier to create a regular monthly Trading Account. From here, we can work together on strategies to boost your sales and improve your margins.

We’re keen to help you get the most value from interpreting your Trading Account… contact us for more information.

"If you don’t know your numbers, you don’t know your business." - Marcus Lemonis

The Results Mindset

Wed, 31 May 2023 13:46:18 GMT

If you struggle to achieve the results you want, it’s likely you’re disregarding one of the key components of The Results Mindset formula. This formula helps to ensure our ideas are implemented, our goals are achieved, and we obtain our desired results.

The formula for achieving results is:

Decisions x Actions x Accountability = Results

1. Decisions

What are the decisions you need to make to achieve your results? Evaluate potential risks and opportunities and distil these into a maximum of four overarching goals for the year. These are clear decisions; what you are choosing to focus on.

You’ll likely start with more than four goals, but some might become actions you take to achieve a bigger goal. Focus on the four goals/decisions that will have the biggest positive impact on your business.

When you’ve chosen your goals, it’s essential that you record them in a plan. Depending on the results you want to achieve, this could be a Business Plan, Succession Plan, or a plan to improve your cashflow.

So, step one is to document your decisions as goals in a plan.

2. Actions

The second part of making sure that we achieve our results is to break down our decisions, or goals, into actions. For each goal we record in the plan, we might have 4-5 actions that we need to take. Breaking the goals into actions clarifies the steps to take along the path to achieving our goals, making the path to success clear and less overwhelming.

3. Accountability

The final component is accountability. This is often the missing piece of the puzzle. If we don’t have someone holding us accountable for the goals and actions that we’ve set, they often won’t happen. If you know somebody will be checking in to see that you’ve completed your actions, you’re far more likely to do them.

It’s important to decide on a person who is going to take responsibility for each action as well as establishing a review process to make sure the plan is being followed properly. Accountability helps us get the most important things done - remembering that the most important might not be the most urgent!

Achieving the results

If we want to get better results, it’s important to document our decisions in a plan, make sure that goals are followed up with clear actions, and hold ourselves to a system of accountability. Part of that accountability involves meetings and discussions to help determine the changes that need to be made toward achieving those goals.

The Results Mindset is all about the power of an idea being in its implementation. Let’s use it and make sure we don’t fail to implement the things that will greatly impact our business.

“I am not a product of my circumstances. I am a product of my decisions.” - Stephen Covey

Know your numbers - Drilling down on your margins

Wed, 31 May 2023 13:40:58 GMT

Gains can always be made at the margins. These small incremental gains over a month or a year can have a significant impact on your bottom line. This could be additional profit you make from a single project, a single product or service, a particular geographic area, or a certain type of customer.

Drilling down into your sales and margins gives you great insight into which parts of your business are performing well and which ones need improvement.

Some ideas to help you measure your margins:

1. Use real time and up to date data.
Ideally, use a cloud-based accounting system with daily data feeds from your bank.

2. Determine which ways you want to ‘dissect’ your sales.
E.g. by product or service line, by groups of products, by salespeople, or by region. A region could be defined as online sales versus shop sales.

3. Capture sales by these categories at the time of sale or invoicing.
Adjust your account codes accordingly or use reference fields.

4. Capture the direct costs of these sales by using an inventory or time recording system.
If you’re selling a mixture of labour and materials, make sure you correctly capture both the labour and the material costs.

5. Compare the actual results you are getting with your month by month budget.
Do this at least on a monthly basis.

6. Compare your results with industry expectations.
Consider accessing benchmark statistics from your industry or, better still, get together regularly with similar types of businesses to compare your results. These could be identical non-competing businesses in different locations (meet online) or industry-related businesses in your own region.

7. Seek feedback from us as to how you can improve your reporting of your margins.
We come into contact with many businesses like yours and are familiar with best practice, as well as what doesn’t work!

The first step in improving your results is understanding exactly where you are right now – warts and all. Talk to us about how to drill down into your margins.

"You can't manage what you can't measure." - Peter Drucker

Know your numbers - Your Profit and Loss Report

Wed, 31 May 2023 13:35:21 GMT

Understanding your numbers is critical if you want to control your business (instead of your business controlling you). Financial reports indicate whether your business is in good or poor health and can diagnose weaknesses before something becomes terminal.

Let’s break down your Profit and Loss Report… in English (not Accountanese).

Your Profit and Loss Report measures the overall efficiency of your entire business.

The ‘top line’ of your Profit and Loss Report is your gross profit from your Trading Account (which measures the margin you’ve made minus direct or variable costs). To this top line figure, you add the other income you’ve received that doesn’t have variable costs attached to it, such as interest, rent or dividends.

From your gross profit, you deduct all the fixed costs in the business; the costs that you incur even if you achieve no sales, e.g. phone, power, rent, vehicle expenses, interest and depreciation. Deducting your total expenses from your gross profit gives you your net profit. Clearly, the greater your profit, the more efficiently your business is operating and, generally speaking, the more valuable it becomes (as many businesses are valued using a multiple of the profit achieved).

A regular review of your fixed costs in your Profit and Loss Report is a great way to improve the health of your business. When did you last review your costs and negotiate a better price from your suppliers? Are there costs that you no longer need to incur? Could your marketing spend be reduced? Are there more cost effective ways to generate more business?

Setting a budget each year is a great way to control costs in your Profit and Loss Report. If a cost has not been included in your budget, then either avoid it, or if it makes business sense, find a saving elsewhere so that the business still delivers the profit you need.

And, while we are talking about costs, let’s talk about your accounting fees. If you see us as a cost then you need to make some cuts, but if you see us as an investment, a strategic partner to help you run a better business… then you need us more than ever.

Let’s talk about how we can help you improve your return on your business.

"Efficiency is doing things right. Effectiveness is doing the right things." - Peter F Drucker

10 ways to improve business performance

Wed, 31 May 2023 13:32:17 GMT

Here are ten ways to make sure that you continue to drive through each business quarter with purpose, vision and the courage to super-charge your business.

1. Eliminate distractions: Time is the scarcest resource and biggest killer for most businesses. When we get busy we can also get distracted and focus too much time and energy on the wrong things. Be brave - slash standard meeting times, reduce unnecessary admin and delegate roles and responsibilities.

2. Say goodbye to bad customers: If possible in your business, get rid of ten time-wasters, bad payers, or customers who cause you pain. You will feel instant relief and spend your time better elsewhere.

3. Invest More: Having freed up time and headspace from deploying points one and two above, make sure you ring-fence time, key people, and money for some of the initiatives below. Redeploy with passion!

4. Get a Plan: You don't go on a journey without a map or any idea of where you're headed - so why fly blind with your business? Have a planning process, create a kick-arse plan - and execute. We can help you get started.

5. Surround yourself with positivity: Make sure the people in your business understand and share your vision. Bring them onboard, listen to them and give them ownership. Don't let people who don't get it, or don't care, be a millstone around your neck. If they're not right, do them a favour and free up their futures.

6. Use Technology: Technology can help you decrease admin, improve comms, improve reporting and accountability. Whether it's for team communication or cloud accounting, slash paper and automate where possible.

7. Keep on top of the numbers: Do you have enough information to monitor business cashflow and see emerging trends? We can help you identify the metrics to track on a regular basis, in order to run your business efficiently.

8. Be Different: Break the mould and position yourself to attract ambitious, growing and engaged clients, and employees.

9. Deploy Marketing: Create a simple marketing plan to increase reach and penetration. Set aside a budget to treat this seriously. Start by making sure you really understand your customers. Existing customers are prospects too, keeping them happy is your first step. The more you know about them, the easier it will be to attract more of the same.

10. Take a break: Don't underestimate the time you have away from your business. It can allow you to come back refreshed with new enthusiasm and inspiration for the way forward.

Using data analytics to give your business a competitive advantage

Tue, 16 May 2023 09:04:30 GMT

Data analytics is rapidly changing the way businesses are operated. By making use of your financial and non-financial data, you can quickly start to gain a deeper insight into your operations, performance and financial management.

Data-driven decisions are quickly becoming the norm, for even the smallest business. Data analytics allows helps you spot the patterns. Understand the data trends. And preview the upcoming threats and opportunities for improvement.

Taking a deep dive into your data

Data analytics has become a crucial tool for small business owners that want to stay competitive and grow their operations in the most informed way possible.

By collecting, analysing and making sense of data, you can gain valuable insights into your performance. This means you can quickly identify the areas that need improvement and the opportunities in the market – while making data-driven decisions about your future.

To deliver the best insights from your data:

Calculate which data and metrics are most important to the business - what are the key numbers and drivers of success for your particular business? By analysing your data, you can determine which data and metrics are most important to your business and track these numbers in your cloud accounting platform or forecasting app.
Track KPIs in your software stack – your cloud-accounting platform can provide a dashboard that shows all your performance indicators (KPIs) key in one place. To add to this, you can also integrate with industry specific or tailored reporting apps to create detailed management information and reports. Tracking and reporting on these key numbers helps you analyse your data, create detailed breakdowns of your business information and monitor your sales, business and financial performance in real-time.
Look for the patterns and opportunities in the data – what you’re looking for in your data is the trends, patterns and insights that will help you become a better business. Pull out the trends in your customers’ behaviour, spot opportunities for growth and optimise your operations, to help push the company towards success. Non-financial data about customer behaviour and experiences can also be invaluable. When you know your customers expectations and spending habits, that gives you the foundations to tailor your products and services to their needs. It also helps drive sales, revenues and get a better return on investment (ROI) from your operations.
Use AI to analyse your data – with the help of artificial intelligence (AI) and machine-learning applications, you add the ability to sift, filter and compare your data in superhuman ways. AI can process and analyse data at a speed and volume that would be impossible for a human being. Software can measure progress towards goals or detect variances in budget numbers, flagging up these insights as notificiations in your dashboards and management information.
Keep yourself ahead of the competition – With the right smart data-analysis tools at your fingertips, you’ll make informed decisions that help you stay ahead of your competitors and new entrants. These tools help you identify new market segments, spot opportunities for growth and optimise your operations to stay competitive in the market. In the fast-moving digital age, keeping on top of your data is the fastest way to give your business a much-needed edge.

Talk to us about employing data analytics

Data analytics is an essential tool if you want to stay competitive and grow your operations.

We’ll help you track the right data, produce the most insightful management information and deliver the insights you need. Whether your goal is improved business outcomes, cost savings, increased revenue or improved customer satisfaction, we’ll help you delve through the data and make informed decisions that will drive the future of your business.

Stepping back: Do you have an exit strategy for your business?

Tue, 16 May 2023 09:01:29 GMT

Owning a business can be brilliant, but you might not want to do it forever.Whether you’re ready to retire, want to cash up, or you just need a break, at some point you will probably want to move on from your business. Even before that time comes, you’ll need a plan for stepping back.

Options for stepping back

Think about what kind of future you would like with your business. Do you want to step away completely or stay involved?

Exiting a business can take different forms, such as:

Selling
Closing down
Passing down some, or all, of the business to a family member
Handing on some responsibilities to other team members while retaining a role
No longer working at the business but retaining some ownership

Why is an exit strategy important?

Stepping away from your business can be a complex process. You don’t want to be rushed or pressured when you start this process. You need to have an exit strategy, also known as a succession plan, so you can step back in the way that best suits you.

Having a plan in place means you can maximise your sale price, and it helps with a smooth transition to the new owner. With time to get yourself organised, you can also support a new owner to borrow, or ‘earn out’, the purchase of your business.

How to create a succession plan

The closer you are to exiting your business, the more detailed your succession strategy needs to be. Your plan will vary depending on your situation, but it should include written goals, a list of assets with their values, and a timeframe. You should also talk to other people who might be involved, like family members or senior team members.

You’ll also need solid advice – from us and from your lawyer. If you’re thinking about stepping back, we can help talk you through the options, calculate the potential value of your business, and get a succession plan in place.

Get in touch! We’d love to hear from you.

What are the main changes to R&D tax relief?

Tue, 16 May 2023 08:56:55 GMT

The tax relief scheme for research and development (R&D) is an important way to cut the costs of investing in R&D, development projects and innovation across your business.

However, the Spring Budget 2023 has brought in several changes to the R&D tax relief scheme that will affect small and medium enterprises.

These changes affect both the scope and administration of the R&D scheme.

R&D changes from 1 April 2023

The most pressing changes come into effect from 1 April 2023. If you’re preparing an R&D claim, it’s vital to consider these amendments to the scheme.

The uplift on actual expenditure will be reduced from 130% to 86%. At the same time, the payable tax credit for loss-making companies is reduced from 14.5% to 10% other than for ‘research intensive’ companies that spend more than 40% of their costs on R&D projects.
Although this change isn’t defined yet in the legislation, projects in the field of pure mathematics will be within scope from April 2023.
Allowable costs will now include the cost of accessing datasets, cloud computing and data hosting – an important update if your projects involve technology and software.
For accounting periods starting on or after 1 April 2023, there’s a new requirement to notify HMRC of the intention to submit an R&D claim. This notification must be given within six months of the end of that period, unless these claims have been submitted in respect of any of the previous three years. Failure to submit this Advance Notification Form when required will render the claim invalid.

R&D changes from 1 August 2023

More updates to the scheme come into force from summer 2023, with changes applying from 1 August. It’s worth factoring these into your plans for R&D claims later in the year.

Claims will need to be submitted digitally, and separate from the corporation tax return.
The claim must include an additional information form, which in addition to providing reference numbers and contact details, will include a breakdown of costs split over various categories and projects.
The form will need to be signed by a named senior official of the claimant company.

R&D changes from from 1 April 2024

From April 2024, projects must be physically based in the UK to be included in R&D tax relief claims. This is aimed at focusing investment in the UK rather than overseas.

There are exceptions where work can only be carried out abroad – for example, where the required geological, environmental or societal conditions may not be present in the UK.

Talk to us about the changes to R&D tax claims

There are several changes being implemented, and HM Revenue & Customs (HMRC) has already started scrutinising claims more closely than usual.

It’s worth thinking about engaging an R&D specialist to give you specific advice on potential any claims. An R&D adviser can also help you compile the various documentation required, to minimise the chance of falling foul of HMRC’s requirements.

Get in touch to run through the R&D tax relief changes.

Why your accountant is the mentor you didn’t know you needed

Tue, 16 May 2023 08:51:17 GMT

A business mentor can provide guidance and support, so you make the right decisions and stay focused on the end goal as a business owner.

They can also help you move forward in your career by providing advice and feedback on what steps to take to reach the pinnacle of success.

Why your accountant is the ideal mentor

Having someone who understands your business journey is incredibly important. You might see an accountant as someone who files your tax returns. But, in fact, we’re experienced business owners, with access to a significant network of other business professionals.

An accountant can be the mentor you didn’t know you needed. No-one knows your business better than us, so we’re perfectly placed to offer you advice, guide your business journey and help you push your skills and capabilities as a business owner.

As a mentor, an accountant will:

Expand your knowledge as an entrepreneur – as business owners, we have the knowledge and experience to help you move your business forward. And we can work with you to expand your leadership skills, business thinking and entrepreneurial ideas.
Be a shoulder to lean on – we'll offer 1-2-1 mentoring sessions where we can listen to your unique worries and concerns as a business owner. Having someone on the same page to listen and empathise is vital for your business and your own mental health.
Guide the important elements of your business – we’ll help you manage and improve your business strategy, planning and decision-making skills. We’ll also provide the management information systems you need to guide your finances and planning.
Keep your finances on track – we'll show you how to maximise profits, reduce costs, and make better financial decisions. We’ll also help you plan your own personal wealth and tax strategies, so you can achieve your own entrepreneurial goals and lifestyle.
Introduce you to a broader business network – we work with hundreds of other business owners across a range of industries. This means we can link you up with other entrepreneurs and founders, so you have a network of other like-minded individuals to connect with. This can be vital when brainstorming and benchmarking, or if you need to talk to someone who understands the specific pain points you’re experiencing.

Having someone to guide your business journey can be invaluable. A business owner must grow and evolve along with their business, and having regular mentoring catch-ups is the ideal way to progress, offload your concerns and look for new inspiration.

If you want to grow as an entrepreneur, please come and talk to us about our mentoring services and how we can guide your business future.

Back to Tax Basics: How capital allowances reduce your tax bill

Thu, 27 Apr 2023 20:36:18 GMT

To reduce your tax bill when purchasing fixed assets, it’s important to know what capital allowances are available and how you can use them to enhance your tax planning.

In the next part of our Back to Tax Basics series, we outline which capital allowances are available and which assets they relate to.

What are capital allowances?

For tax purposes, the depreciation is added back (disallowed) and ‘writing down allowances’ are claimed instead.
There is an Annual Investment Allowance (AIA) , fixed at £1 million per annum for the forseeable future. Most asset purchases up to that total can be claimed in full in the year of purchase. The main exceptions are cars and items you owned for another reason before putting them into the business.
For some assets, 100% First Year Allowances (FYA) are available. These include:
New and unused vehicles with Nil CO2 emissions
New electric vehicle charging points
Plant and machinery for use in a Freeport
For everything else you might purchase as a fixed asset, the costs are allocated into various pools depending on the type of asset, and Writing Down Allowances (WDA) calculated on the pool value on a reducing balance basis. These include:
Special Rate Pool 6% rate – Cars (new or used) with CO2 emissions > 50 g/km, Integral fittings incorporated into commercial buildings (lifts, electrical and water reticulation, air conditioning, heating equipment), long-life (>25 years when new) items over £100K annual spend. Long-life excludes structures and buildings.
Main Rate Pool 18% rate – everything else. Note as specifics this includes cars with CO2 emissions >0 <50 g/km.
Structures and Buildings Allowance (SBA) – the SBA offers a 3% flat rate for 33.33 years on non-residential buildings, but not on land.

Talk to us making use of capital allowances

If you’re thinking of purchasing capital equipment, it’s worth knowing that, in some cases, the tax benefit can be spread over a number of years. With the temporarily enhanced deductibility, this will have a positive short-term impact on both your tax charges and your cashflow.

As your accountant, we can advise you on the tax treatment of different types of assets and, if external funding is required, can help you prepare business plans and finance applications.

The top tax-effective benefits to offer employees

Thu, 27 Apr 2023 20:33:13 GMT

Offering benefits-in-kind to your staff is a great way to make your business an attractive place to work. And these benefits add even more value if they’re also either tax-effective or tax-free.

You can offer certain concessions that make benefits provided to your employees (including directors) either low-tax or no tax. To be clear, we’re talking here about general employee benefits, not higher-value items such as company cars or share options etc.

Under certain circumstances, these general benefits-in-kind (BiK) become taxable if they’re provided as part of a flexible salary sacrifice system. But let’s look at the kinds of benefits you can offer – and the avantages they have for your employees.

The top tax-effective benefits to offer your team

If you want to offer employee benefits, but don’t want these BiK to end up attracting significant tax penalties for the employee, there are several useful benefits to consider.

For example:

Gifts of £50 or under – gifts not exceeding £50 can be given to employees without any tax or National Insurance charges arising. The cost is tax-deductible by the company. The gift must not be related to any work achievements, must not be money, must not be a contractual entitlement and, for directors, the total must not exceed £300 per annum.
Annual staff functions – annual functions, such as the yearly Christmas party or team summer barbecue, can be given to employees, provided the total cost per person during the year doesn’t exceed £150 per guest, including VAT.
Work mobile phones – a single mobile telephone can be provided to each employee together with the associated line rental and call charges, with no personal tax charge for any private use.
Free staff meals – free meals can be provided on company premises or in a staff canteen, provided that it’s on a reasonable scale.
Employer pension scheme contributions – as an employer, you can contribute (sometimes, have to contribute) to employee pension funds, within certain annual and lifetime limits. Topping up your employee’s contributions helps to increase the overall benefit of the mandatory work pension scheme .
Life insurance cover - Death in Service cover can be provided for your employees, and will normally be tax free, both the insurance premiums paid and any claims paid.
Health and medical check-ups – one health-screening assessment and one medical checkup per annum can be provided to each employee. This doesn’t cover full medical insurance, and also doesn’t generally cover medical treatment.
Eye tests and glasses – eye tests and glasses/spectacles can be provided tax-free, as long as they’re required as a result of using a screen or visual display unit for work.
Welfare counselling – counselling can be provided to your employees free of tax, but this doesn’t cover medical treatment, legal, tax or financial advice. However, debt counselling is covered.
Business mileage – where your employee uses their own car for business travel, that business mileage can be reimbursed at a rate of £0.45/mile for the first 10,000 miles in a tax year and £0.25/mile thereafter.
Home-working allowance – you can pay an allowance of £6/week (£26/month) to employees who are required to work from home.
Private gyms – gym facilities can be provided to your employees and their family members, as long as the gym premises are not available to the general public.
Staff suggestions – rewards for making innovative business suggestions can be paid free of tax, as long as the amount doesn’t exceed £25. If an employee’s suggestion is implemented, a further award, linked to a proportion of the financial benefit to the company, can be made, subject to a cap of £5,000.
Long-service awards – you can offer a long-service award to a member of staff after a minimum of 20 years’ service. There must be at least ten years between awards that are made and the award has to be articles rather than cash. The overall cost can’t exceed £50 per year of service.

You can find out more details on the many available employee benefits-in-kind on the Expenses and benefits: A-Z page on the HMRC site .

If you provide a range of attractive tax-effective benefits to your employees, this goes a long way to creating a more satisfied, happy and productive workforce.

Many of the rules around employee benefits are complex and difficult to calculate, so it’s well worth talking to us about your benefits plans and where we can offer advice. We can walk you through the available options and show you the tax implications for your team.

Talk to us about reviewing your employee benefits.

Strategic business partnerships: the benefits of working together

Thu, 27 Apr 2023 20:29:24 GMT

Your business may compete head-to-head with a number of other companies, but this doesn’t mean you have to treat ALL other businesses as if they are the competition. In fact, there are real benefits in creating strategic alliances with other like-minded organisations.

When you look at the wider marketplace, you’ll see that there are businesses out there that may well compliment your offering. And by working together (rather than against each other) it’s possible to become valued strategic partners, collaborating to serve your joint customers, improve brand awareness and, ultimately, expand your target market.

If this sounds like a positive strategy, now’s the time to do your homework and start hunting down the best strategic partners for your business.

Working to serve a shared customer base

Strategic partnerships are all about finding the common ground between you and your intended partner – and this means finding the best ways to combine your efforts. If you can share the same customer audience, and create a complimentary way of meeting their needs, that creates a broader, more connected way of growing both companies.

Finding a company that’s interested in forming a strategic alliance

Find partners in complementary sectors – if you’re an accounting firm, like us, it makes sense to partner with solicitors, lawyers and other professional services providers who can help your clients. If you're a maker of shoes it makes sense to partner with a clothing manufacturer that shares your same sense of style and purpose. The key here is to find a shared audience or customer need, and to create some real synergy between your two businesses.
Take part in business networking and events – to get a wider understanding of your local, or industry specific, business network, it’s worth taking part in plenty of online and offline business events. You’ll meet new people, hear about new brands and will find it easier to find your ideal strategic partner. The wider your business network, the more choices you have for an alliance.
Look at crossover between your target audiences – once you’ve found a potential strategic partner, it’s important to take a detailed look at the crossover between your partner’s audience and your audience. Do they shop through the same channels? Do they fit a certain age group or social demographic? Are these customers local, or are they part of a national or global online customer base? How large is their database?
Cross-reference your customer databases – by sharing and comparing your client relationship management (CRM) data, you can cross-reference both sets of customer data and see where there’s overlap, or where you may already share some of the same customers. The better you understand each other’s customers, the more likely it is that you’ll find some common ground for shared marketing and promotion.
Run joint events and promotions – presenting joint webinars with your strategic partner, or running joint promotions. By finding a common theme, you bring both audiences together and reinforce the alliance between your two brands. You also reduce the expenditure by sharing the costs and reach a wider audience.

Combine your R&D efforts – to move your alliance forward, you can also try combining your research and development (R&D) activity, to find new products, new services and new ways of keeping your joint customers happy. By sharing the time, costs and effort of developing new offerings, both companies will benefit – and you keep your businesses at the cutting edge of their respective sectors or specialisms.

Stressing about your work/life balance?

Thu, 27 Apr 2023 20:25:10 GMT

Trying to get perfect the work/life balance can be a cause of stress in itself. If you are feeling the strain of building your business and maintaining your life the good news is that stress and a productive existence can go hand in hand. Be mindful and you can find the balance that’s best for you.

How much stress is good for you?

The Yerkes-Dodson law shows that an individual's performance increases with stress (arousal) until cortisol levels get too high and then decreases again just as sharply - the secret is to stop your stress levels sending you down the other side of the bell curve. How much is too much varies for everyone but by understanding and managing your stress levels you can use them for good.

How to manage your stress

Take Control - Feeling in control can decrease stress from negative levels by presenting the stress causes as surmountable challenges. Get a handle on your project, your tasks or your day by breaking them down into achievable goals and making choices about what to prioritise
Get positive - Your perception of your stress is important, rather than leading to panic and inertia recognise the first quickening of your heart rate calmly as powerful, making you more alert and capable
Connect - Social support reduces stress so good relationships within a team and the wider office environment make everyone more resilient to stress
Exercise - A good workout reduces bad stress and is good for the brain as well as the heart and lungs.
Sleep - Poor sleep is bad for stress levels and health so be disciplined about getting a good night’s rest, being exhausted will increase susceptibility to further stress and damage productivity.

If work stress is getting too much, talk to us.

We can help with managing systems, technology, payroll or other financial and administrative management. We can help with your business worries so you can get back on track.

Hiring employees who share your core values

Fri, 14 Apr 2023 12:02:45 GMT

At the beginning of your startup journey, you and your co-founders will be in charge of selecting and hiring the key members of your new team.

The people you choose will identify with your core aims for the business and will (usually) share your core values too. For example, if being green is a key value, the people you hire need to resonate with this. But as the business grows and expands, it's likely that the hiring process will move to your operations director, human resources director or people managers.

So, how do you ensure that you're still hiring people who share your core values? And why are these foundational values so important?

Why are core values so important to a new business?

Your values are the pillars on which the business is built. They’re the fundamental building blocks that will define what you believe in as a brand, how you treat your customers and employees and what your underlying mission will be for the company.

What's the advantage of having a team with shared core values? - A team that shares the same ethical foundations is a team that works well together. You know WHY you’re doing what you do, and you know the right path to take when operating the business.
How do you weave these values into your hiring process? - Make sure the initial job description clearly sets out the values you expect from an employee, and how these help to drive the company forward. You'll also attract the right talent. A Glassdoor survey found that 77% of respondents consider a company’s culture before applying for a job there. During interviews, swap outlooks and to gauge if this person is a good fit for the team.
What should you include in your onboarding for new employees? - It’s a good idea to have your company values written down in a format that can be shared with new hires. By formalising your core values, you create a solid bedrock on which to base your training and onboarding. New employees can read, digest and ask questions about your values, and can see how your existing staff apply these values in the real world.
How do you measure employee satisfaction and adherence to these values? - Having regular catch-ups with new employees is a must. Your managers should be holding 360 feedback sessions at least once every 6 months, so you can track progress, performance and employee satisfaction. Your core values should be part of these metrics, measuring how well your employees are hitting the right standard, and finding out what the business can do to make this easier.

Building a team that reflects your brand values

When a customer calls your customer support line, or a potential new client visits your offices, they expect these experiences to be consistent. This doesn’t mean getting rid of personality or the uniqueness of each employee. But it does mean having the same foundational values being lived and demonstrated throughout the company.

With a team of people who share your vision for the company, you’re ready to expand, scale and deliver the very best customer experience to your valued customers.

What is rent-a-room relief?

Fri, 14 Apr 2023 11:55:12 GMT

Renting out a spare room in your house is one way to bring in a little extra income. But did you know that you can claim rent-a-room relief rather than calculating the actual costs incurred. Claiming rent-a-room relief will generally simplify the administration burden and reduce (or even eliminate) the tax charge.

But what are the key rules to bear in mind?

What is rent-a-room relief?

Rent-a-room relief is a tax relief that’s available for people who rent furnished rooms in their home for residential purposes. It does not apply to unfurnished rooms, and does not apply where the rental is for an office or other business purposes.

Who can claim the relief?

The relief can be used by a resident landlord who takes a lodger into their place of residence – i.e. where you and your lodger live in the same property. You can also claim the relief if you’re providing guest-house or bed-and-breakfast (B&B) services.

How much relief can be claimed?

The amount of relief is capped at £7,500 (£3,750 each if split between two joint owners). If the income from the rented room (including amounts for goods and services like meals, cleaning and laundry) are below that level, no tax reporting is required and profit is treated as nil.

If the income from the room is above £7,500, taxable profit can be calculated by deducting either £7,500 or by deducting the actual costs and capital allowances that are applicable.

Talk to us about rent-a-room relief

If you’re thinking about earning some extra income from letting out part of your home, come and talk to us. We’ll explain the available reliefs, including the rent-a-room scheme, and can also outline the recordkeeping and filing that will be needed as a landlord.

If you think that the scheme may apply to you, we’ll be very happy to help.

Leading your business

Fri, 14 Apr 2023 11:51:11 GMT

Times of crisis are defining moments for great leaders. Consider the contrasting results that different countries experienced with Covid-19, based on the approach their respective leaders have taken.

Great leadership is effectively guiding or influencing your team to work towards achieving your goals. Leadership is always on; there is no place to hide in a time of crisis.

Consider the four quadrants of great leadership:
1. Vision . Clarity of what you want, what the future looks like for the business and team, and how you’ll know when you’ve got there.
2. Energy . Leading by example, with positivity, to inspire and motivate the team to be the best they can.
3. Focus . Sharing the common purpose (why your business exists for your customers), setting clear expectations and defining what a great day’s work looks like for everyone on the team.
4. Empowerment . Providing constant feedback, training and support, and delegating effectively without abdicating responsibility.

Now consider the key responsibilities of a leader:
- Implementing the plan . What is your new plan and how will you ensure that everyone knows their role in making it happen?
- Providing a framework and structure for business improvement and innovation . A crisis is a time to reinvent, re-engineer, innovate, and adapt
- Monitoring performance against the plan. How will you make sure you stick to the plan, celebrate success, and take corrective action when things start to go pear-shaped?
- Motivating and inspiring the team . What meetings and other communication forums are needed to ensure that everyone on the team remains engaged and part of the bigger picture?
- Promoting a great business culture . What are the business’s Core Values and rules of engagement that can play to the strengths of the team and foster a supportive and fun environment?

With the above in mind, what leadership skills do you need to sharpen?

Talk to us about how we can help you get the best from your team and business.

“Anyone can lead when the plan is working. The best lead when the plan falls apart.” - Robin S. Sharma

The Golden Circle

Fri, 14 Apr 2023 11:47:15 GMT

Do you understand your ‘why’? Does your team understand it? How about your customers? Your ‘why’ is why your business exists for your customers (and it’s not to make a profit!).

Your ‘why’ forms the centre of The Golden Circle - a concept developed by Simon Sinek in his book, Start With Why. The Golden Circle challenges us to examine the emotional core of what makes our team and customers buy into a company. The next layer is your ‘how’ and the outer layer is your ‘what’.

Everyone knows what they do, some know how they do it, but few actually know why. Success is more likely when we think, act and communicate from the inside out, starting with why.

Your ‘why’ is simply the most important message for marketing your business. It’s your purpose. You should be able to articulate this in seven words or less and it should be broad enough to reflect what you do but not be specific to your current product or service offering. In other words, your purpose should still apply in 100 years.

Consider Tesla’s purpose as an example: to accelerate the world’s transition to sustainable energy. This doesn’t limit them to electric vehicles and allows for growth opportunities within the whole sustainable energy industry. When you’ve defined your ‘why’, you can then move to the next layer of The Golden Circle - ‘how’.

Your ‘how’ is your unique selling proposition; what makes you different from your competitors. In other words, how you deliver on your ‘why’. Perhaps yours speaks to quality, delivery speed, cost effectiveness or other reasons why a customer should choose you. Your ‘how’ is what customers can expect every time they do business with you.

The final layer of the circle is your ‘what’. This is obvious to your team and your customers - the products or services you sell. It’s easier to articulate your ‘what’ than your ‘how’ or ‘why’, hence most businesses focus on this first.

By focusing on your ‘why’, you’ll develop an emotional connection with your customers; and they’re likely to buy based on emotion. By acting, thinking, and communicating from the inside of The Golden Circle out, you’ll attract the right fit customers who will become raving advocates.

If you need help implementing The Golden Circle in your business, get in touch .

“People don’t buy what you do, they buy why you do it.” - Simon Sinek

The difference between directing and leading

Tue, 11 Apr 2023 19:25:41 GMT

There are 10 departments in every business, no matter how small.

These are:

Shareholder.
Director.
Leadership.
Product / Service Development.
Operations.
Marketing.
Sales.
Finance.
Admin / IT.
HR.

Many business owners control multiple departments. Imagine each department has a hat - worn by the single leader of each department. Many business owners wear multiple hats. The secret to the success of your organisation structure is to understand the key differences between the departments (and their responsibilities), to understand which hats you’re wearing, and most importantly, to make sure none of your hats are being neglected.

So, what’s the difference between wearing the Director hat and the Leadership hat? In a nutshell, Director is a strategic role and Leadership is an operational role.

Eight key differences between Directors and Leaders:

Directors maximise shareholder value; the Leader maximises business efficiency.
Directors set the plan; the Leader implements the plan.
Directors have governance responsibilities; the Leader has leadership and management responsibilities.
Directors work ON the business; the Leader works IN the business.
Directors mitigate risks and set policy; the Leader implements the policy.
Directors have a strategic focus (big picture); the Leader has an operational focus (makes it happen).
Directors establish the business model and structure; the Leader implements the model and manages performance.
Directors have no accountability line to the team, except to the Leader; the Leader holds the team to account.

Getting your structure right and developing your strategy are critical foundations for achieving business success.

Understanding the difference between the Director hat and the Leadership hat is fundamental. The Directors set the plan and the Leader engages and empowers the team to deliver on that plan. After all, it’s your team who must be engaged in your plan for it to become a reality.

How well you are living into the Director hat? And, what three things could you do better as a Leader? Finally, what support do you need to lift your business performance to the next level?

We can help you build a sustainable, scalable, and ultimately, saleable business. Get in touch for more information.

"If there’s a way to do it better… find it." – Thomas A. Edison

Creating your initial Succession Plan

Mon, 03 Apr 2023 16:39:50 GMT

A Succession Plan is about maximising the value of your business so you can achieve a better outcome when it's time to exit. Many business owners don't think about a Succession Plan until they're ready to sell the business. However, it takes 3-5 years (minimum) to define and execute an effective Succession Plan.

1. Start by clarifying your business and personal goals.
Establish what you want the business to deliver to you personally. Then, set business goals that will allow you to achieve your personal goals. This will help you plan for extracting the value you require to enjoy the lifestyle you wish to lead upon succession.

2. Your vision for the business.
Succession Planning forces you to clarify and discuss your vision for the business, which will play a huge part when transferring to new ownership. Vision ultimately enables a more effective working culture, helping to align and prepare your team for succession. When your team understands the vision and how their key responsibilities and tasks contribute to the realisation of this, they become more engaged. This helps develop a more stable environment; one that's receptive to adopting new leadership and ownership.

3. Establish your business support network.
It’s important to take time out from running your business to work on developing it. Engaging your important business advisors will provide fresh and impartial perspectives at this potentially emotional time. Decision making requires a level head and independent advice to ensure you achieve your desired results.

Your solicitor may also be involved at the planning phase and will definitely be involved in drafting and signing the sale and purchase agreement, as well as when dealing with any post settlement matters.

Working with an accountant will be particularly helpful at the due diligence, valuation, and grooming stages. Our broad business knowledge and expert tax advice could help significantly increase the value of your business. Utilising a mentor or coach will help you remain accountable to your leadership role, which will ultimately have the greatest influence on your succession strategy and outcome.

We can help you with accountability coaching. In fact, we want to help you groom your business for maximum value by increasing growth and profitability, improving efficiency and capacity, and managing risks.

If you’d like to start your Success Planning journey, contact us.

How staff training expands the skill-set of your business

Mon, 03 Apr 2023 16:33:14 GMT

Spending time and money on staff training is a must. When your employees can see that you're invested in their future, they feel valued, empowered and engaged with your company vision. That's excellent news for your employee satisfaction scores and your team spirit – not to mention the overall productivity of the workforce.

Investing in the future of your team

If you want great things from your people, you’ve got to give them the very best support. A job is not a static thing. It’s a role that will evolve and change over time, with new skills, new job descriptions and new responsibilities along the way.

To offer your team the best opportunities, make staff training and development a key area on your business leader’s to-do list.

As a starting point:

Find out what training and education your people want – there’s no point second-guessing what your team wants to learn. Talk to each team member and ask them where they feel they need extra skills, or where there’s room for progression in their training. This can be an enlightening process and helps you get an angle on where these new skills could be used within the business.
Help them find the relevant courses or in-house training – you may be able to offer some key training in-house, as long as you have people available to do this, who have the skills. There are also plenty of professional bodies, industry institutes or colleges that will offer courses in the right areas. Some may qualify for Continuing Professional Development (CPD) points, a system that helps your employees rack up development points and move towards a professional qualification.
Set clear targets for their education in the business – once you’ve identified the learning and development that’s needed, make sure this is added to the employee’s development plan for the year. Your employee’s goals could be to complete an online training module, go on a residential course, or take part in mentoring sessions with a senior colleague. The important thing is to agree on the goals, set the right timelines and track each person’s progress against their plan.
Set a career path and give employees increased responsibility – a key goal for most employees will be to aim for a promotion. With their learning and development goals set, you could also think about giving your employee new responsibilities, testing out their managerial skills or giving them specific projects to manage and curate. By taking on these challenges, and testing their new skills out in the real world, you’ll help them build confidence and gain valuable hands-on experience.
Check in with your staff regularly to see how they're doing – hopefully, you’ll have a quarterly or yearly review process already set up for your staff. But don’t leave discussions about development purely for these review conversations. Check in with your people throughout the working week and use these informal, relaxed chats to see how each person (and each team) is doing.

Setting up a staff training programme

An investment in employee development is an investment in the future of your business. It’s a sign that you want to support the careers and progression of your people!

Cash flow forecasting puts you back in control

Tue, 28 Mar 2023 13:21:57 GMT

Cash flow forecasting puts you back in control

We all know that positive cashflow is the beating heart of any successful business. And with so many external pressures on your cash right now, it’s important to have one eye on the future. Cashflow forecasting is an increasingly important tool for any finance team. With a better view of your future cashflow position, you can make well-informed decisions about your finances. But how does cashflow forecasting work? And how does it help you maintain a positive cashflow position throughout the year?

What does a cashflow forecast tell you?

The cashflow process is all about balancing your income (cash inflows) against your expenditure (cash outflows). If your cash inflows are greater than your cash outflows, this is called a ‘positive cashflow position’. In other words, you have cash left over, even once you’ve covered your costs and paid your bills – cash that can then be reinvested in the business. Forecasting apps, like Float, Fathom and Futrli, use historic cash data to project your cash position forward in time. This helps you see where your cash may be in future periods.

Running detailed cashflow forecasts means you can:

Understand your future operational cashflow – helping you spot any cashflow holes, seasonal dips or predicted months of high expenditure before they become an issue.
Plan your costs and expenditure effectively – allowing you to stick to your planned budgets, manage your costs and plan for any steep price increases.
Avoid the cashflow issues before they happen – using your forecasts to look ahead, plan and get tighter control over your cashflow management.

Talk to us about setting up cash flow forecasts

Staying in a positive cashflow position is a challenge in the current economic situation.

When supplier prices and operational costs are fluctuating and revenues are hard to predict, it is difficult to juggle your inflows against your outflows.

We’ll help you get a tighter grip on your cashflow. Setting up detailed forecasts helps you understand your financial story and puts you back in full control of your cashflow.

Your Q2 2023 deadlines for the diary

Tue, 28 Mar 2023 13:12:31 GMT

As ever, we want to keep you on the ball with the latest dates and deadlines for your business diary. Get your online calendar fired up and highlight some of the upcoming deadlines and cut-off points for Q2 of 2023.

NOTE : If your company’s accounting period is longer than 12 months, the first tax payment deadline is normally 21 months and 1 day after your accounting period started, and the second one is 9 months and 1 day after your accounting period ends.

For example, a company with an accounting period running from 01/06/2021 to 30/09/2022 will pay the first tranche of corporation tax by 01/03/2023 and the balance by 01/07/2023

Some general deadlines to plan for:

End of personal/payroll tax year: 5 April 2023, but practically speaking, for monthly payrolls the last one processed in the tax year is to 31 March 2023
Provide P60 to employees (for 2022/23 tax year): 31 May 2023
Enterprise Management Incentives Scheme notice of options granted: within 92 days of grant
Make Capital Gains Tax payment for gains on residential property: 60 days after completion
PAYE and National Insurance Payments due: 19th calendar day of the month after end of month or quarter as applicable (22nd for electronic payments)
File P35 (Employer Annual Return) and P14: 19 May 2023

Talk to us about hitting your deadlines

If we’re doing your payroll processing and tax returns etc., we’ll be monitoring your dates automatically – but don’t forget that you remain legally responsible for meeting all deadlines.

Get in touch to discuss your deadlines.

Company year-end preparations: time to get ready

Thu, 16 Mar 2023 15:40:29 GMT

As your company year-end date gets closer, there are a number of administrative and financial tasks to start planning for – so it’s a good idea to get yourself organised and ready.

There are several things to check, either on the year-end date, or before the end of your company’s financial year. Some tasks are simple administrative processes, while others involve a deeper dive into your accounts. But, on the whole, this is about getting on top of the planning and making sure your year-end is as hassle-free as possible.

The benefits of good year-end planning include:

A smoother year-end – keeping on top of the company’s bookkeeping and administration means that the processing of your year-end will go more smoothly.
Better tax planning – reviewing your business performance before the year-end allows you to manage your tax obligations in a more effective way, improving your tax-efficiency and (potentially) saving money.
Improved personal wealth planning – as an owner/director, you can structure your own remuneration package in a way that you prefer. This improves your personal tax situation and wealth planning for the year-end, driving tax efficiency.
Enhance your reported profits – by changing the timing of some discretionary transactions, you can directly influence the results that will be reported for the company. This can be an advantage when looking for funding or investment.

A checklist for your company year-end tasks

We’ve highlighted the main year-end tasks to add to your to-do list, broken down into admin, tax-driven and cosmetic tasks – all aimed at a stress-free year end process.

Primarily admin issues:

Make sure that you are able to put a correct value to the stock you hold in the business and on your current work in progress (WIP).
Ensure all your sales invoicing is up to date and all jobs for the year have been billed out to customers.
Resolve any customer (and supplier) queries, where possible. And, if it’s practical to do so, write off or provide for any bad or doubtful debts.
Make sure all the company’s bookkeeping is up to date and that all balance sheet accounts have been reconciled.
Prepare draft figures at least one month before the end of the year so that any last interim dividend declarations can be made.
Keep final statements from all your major suppliers.
Keep an extra copy of the last invoices for utilities and services, for cost accruals.

Primarily tax-driven:

Generally, to qualify for tax relief, payment for fixed assets acquired during the financial year must be due no longer than four months after year-end, otherwise the actual payment date(s) is substituted for the date of acquisition. Where the asset is bought on hire purchase, the date on which it is actually brought into use is the relevant date for claiming tax relief. If you have plans to purchase new assets, it may be worth buying equipment a few months earlier than planned – this allows you to then claim the tax deduction. However, don’t buy things you don’t need just to save tax! Remember that the super-deduction falls away at the end of March 2023.
Because the corporation tax rate is increasing from 19% to as much as 25% on 1st April, it may be beneficial to bring revenues forward to March 2023, and defer expenses (other than on assets eligible for the super-deduction) until April 2023 to take advantage of the rate change. This will be particularly useful for companies with a 31st March year-end.
Charitable donations must have been paid in full to the charities in question; you can’t just provide for them in the accounts. If you donate a percentage of the company’s profits or sales to charity, then estimate the final amount as close as you can so that the obligation is largely spent.
Tax relief on pension contributions is given in respect of the period in which it’s paid, so don’t leave it until after year-end before paying contributions over.
Review the remuneration policy for your shareholder directors to ensure the right balance between salary, dividends and pension contributions.
Review directors’ loan accounts, particularly where they’re overdrawn and therefore potentially subject to Section 455 charges .

Cosmetic/other:

You may want to make the company’s performance look as good as possible – i.e. moving results from a future period in order to make the current period look better. This can be helpful if you’re looking to access finance in the next year, or want to woo potential investors etc.
You may want to think about deferring expenditure to improve your overall reported profits. This could mean reducing spending on things like stationery, advertising, research and development, capital expenditure and major repairs and renewals. Although that will result in a higher tax bill, it will also allow a higher reported profit to be disclosed.

Talk to us about preparing for your year-end

The better prepared you are, the easier your year-end will be. So, there’s real value in running through the checklist above and getting your finances ready for the close of the current year. As your accountant, we can help you get your numbers in order and advise you on any elements where you might need some help, or have queries.

5 signs you’re undercharging

Thu, 16 Mar 2023 15:35:12 GMT

Are you undercharging for your services? It can be hard to tell, particularly if you’re in a niche industry or you’re a contractor. Costs have been rising, so it may be time to rethink your own pricing.

Here are five signs that you might be undercharging:

Nobody ever questions your quotes - Do all your new clients accept your quotes or charges without asking any questions, requesting a breakdown or wanting a discount? It’s possible they’re delighted to be getting such a great deal.
You run off your feet but you can’t afford to get help - When you’re working yourself to the bone, but there’s not enough money left over to employ someone to help you, your prices are too low – or something else needs to change.
Your prices have been the same for two years or more - In most industries, prices increase just slightly each year. Leave your prices flat for too long and you’re not keeping up with the market; make sure you review your fees annually.
You’re overbooked - When business is booming and there’s no room for new clients, it’s time to raise your prices.
Clients don’t treat you as well as they should - When clients think they’re paying peanuts, they’ll often take you for granted. They don’t see your time as valuable, so they feel free to mess you around.

What should you be charging?

Finding your pricing sweet spot could take a little time. You’ll need to do some research, maybe ask around a little, and find out where your competitors are pitching their rates. We can help too – if we have clients in similar industries we might be able to give you some indication of typical fees, so give us a call or drop us a note. We’d love to hear from you.

Spring Budget 2023 – the key points for business owners

Thu, 16 Mar 2023 15:24:30 GMT

The Chancellor, Jeremy Hunt, delivered his first Spring Budget on 15 March 2023. Unlike the disastrous September 2022 ‘mini budget’, this budget won’t cause many ripples in the worlds of business and finance. In fact, it was a relatively dull affair, with few headline announcements for the average business owner to be concerned about.

However, there were some incentives regarding capital allowances on equipment and investment in research and development (R&D), to help push the economy forwards.

Summary of the main Budget announcements

Whereas the primary aim of the Autumn Statement in November 2022 was to address the financial instability caused by the mini budget, this budget was labelled as a ‘budget for growth’.

Growth forecast

In 2023, it’s now predicted that the UK will avoid a technical recession (two consecutive quarters of declining GDP). Instead the economy is predicted to virtually flatline, with output shrinking by just 0.2%, compared with the 1.4% shrinkage forecast in November.

In future years, growth is now expected to be:

2024 – 1.8% (previously 1.3%)
2025 – 2.5% (2.6%)
2026 – 2.1% (2.7%)
2027 – 1.9% (2.2%)

So the outlook is better for this year and the next, then falls below the previous forecast.

Inflation (10.7% at the end of 2022) is predicted to be down to 2.9% by the end of 2023. This doesn’t mean prices are coming down of course, as it’s 2.9% on top of the current 10.7%.

Main tax measures

Getting back to a more-normal cycle, most tax measures are announced in the Autumn Statement, so there wasn't much tax-specific news from the Chancellor.

Fuel - duty Fuel duty will be frozen at current rates for a further 12 months, until April 2024.
Pension contributions: The maximum annual contribution an individual can make into a pension scheme with tax relief will increase from £40,000 to £60,000 from 2023.
Pension Lifetime Allowance - Currently there are tax charges where the value of an individual’s pension pot exceeds £1,073,100. That has now been scrapped, allowing individuals to accumulate unlimited pension funds.
Capital Allowances - For the next three years, the Government is introducing ‘ full expensing ’ where expenditure on most new plant and equipment will be deductible in full in the year of acquisition. 50% will also be deductible on ‘Special Rate’ assets such as cars with emissions above 50g/km. The intention is to make this change permanent to boost inward investment by UK companies.
Alcohol duty - The duty charged on draught beer and cider will be cut from August 2023 in what was optimistically called a ‘Brexit Pubs Guarantee’.
Research & Development - The proposed change restricting the inclusion in claims of some activities carried out outside of the UK has been deferred for a year. Enhanced payable tax credits will be available to SMEs where 40% or more of their expenses are for R&D.

Other measures

New announcements were thin on the ground in the Spring Budget, but there were some measures that will be of note for consumers and business owners.

Energy price guarantee - The existing annual cap of £2,500 for energy costs for a ‘typical household’ will remain at that level until July 2023. It was expected to rise to £3,000 from April. The additional charges currently levied on people who use prepayment meters will be abolished.
Childcare - There have been several changes to childcare support. Currently, working parents with children three to four years old can claim free childcare of 15-30 hours per week during term time. From April 2024, that will be extended to include 15 hours per week for 2-year olds, from September 2024 that will be extended to children as young as nine months, and from September 2025 the hours for all children will be raised to 30 hours per week. Funding will also be made available to allow all schools to offer pre- and post- school hours care by September 2026.
Investment zones - 12 new investment zones will be created across the UK where funding will be available in designated areas where schemes are developed to foster innovative businesses in cooperation with local authorities and academic institutions. Concerns have been raised from environmental and human rights groups regarding the deregulation of these zones.
Defence spending - Spending on defence will be increased by £11 billion over the next five years, reaching 2.25% of GDP, with an aspiration to increase to 2.5% of GDP at an appropriate point in time.
Leisure centres - Funding will be made available to help local authorities cope with the additional energy costs of heating public swimming pools.
Levelling up - The Government intends to disband Local Enterprise Partnerships and hand their funding and responsibilities to local authorities. Levelling up partnerships will provide £400 million for various levelling up partnerships across the country, an additional £200 million will be made available to fix potholes, and £360 million will be allocated towards regeneration projects across the country.
Energy Security - A new body, 'Great British Nuclear', has been launched to identify sites and develop supply chains for nuclear plants. The intention is for nuclear sources to provide 25% of the UK’s energy needs by 2050. Suitable players are being invited to submit proposals for Small Modular Reactors, the development of which, if found to be viable, will be co-funded by the government. This announcement is likely to come under fire from environmental groups who want the Government to invest in renewable energies.
Encouraging investment - To encourage investment in the development of medicines and medical devices, a new regulator will be established to give swift approval to items developed. Meanwhile, more-rapid (almost automatic) approval will be allowed of medicines for use in the UK which have already been approved in certain other trusted regulators such as the US and Europe. Funding will also be made available for development of artificial intelligence capabilities and quantum computers. Rules regarding pension funds will be relaxed to allow them to invest in these and other more risky areas than they currently support.

Talk to us about your concerns following the Spring Budget

In comparison to the fallout from Kwarteng’s economy-crashing mini budget, the Spring Budget has been a sedate affair. There are policies here aimed at growth of UK industry and pushing the economy in a direction that keeps the country out of recession.

However, there’s no escaping the current state of the UK economy and the challenges faced by small businesses. As a business owner, you may well be facing the hurdles of high prices and utility bills, poor supply chains and a prolonged talent shortage.

If you have any worries or concerns following the Spring Budget, please do contact us to arrange a chat. We’ll be happy to talk you through the main business measures.

Taking out cash for Directors vs Sole Traders

Tue, 14 Mar 2023 13:35:59 GMT

Every business owner needs to take cash out of the business at some point. But if you’ve just moved from being a sole trader to a limited company, you may get caught out by the different rules around withdrawing cash from the company.

Why are the rules different for directors and sole traders?

When you’re a sole trader, you and your business are one and the same legal entity. So taking cash out is a simple procedure. But as the director and shareholder of a limited company, you and your business are two separate entities – and that means that money in the business is no longer your personal money. It’s money that belongs to the limited company.

Do I need to keep my personal and business money separate?

Regardless of which way you operate, you should always have separate business and personal bank accounts. The business account should be used to deposit all funds from sales and other business income, and to pay for purchases and other business running costs.

As a sole trader, there’s no legal difference between your personal and business funds. The main reason for a separate personal bank account is to keep your personal expenses separate from your business expenses. So, rather than mixing up things like mortgage or house rental payments, groceries and household bills with your business expenses, you have two distinct accounts – one personal, one business.

If you need money for personal expenses, you just transfer it from the business account to your personal account – it’s all yours to do what you want with. Obviously, you need to leave enough in the kitty to pay suppliers when their bills become due. But, as a sole trader, there’s nothing to stop you draining the business account completely, if you want to.

How do I draw money out as a limited company director?

For a limited company, it’s a legal requirement to have a separate business bank account. Even if you own the company 100%, the money in the company bank account belongs to the company, it does not belong to you.

So, how do you take out money to live on?

There are four ways of taking money out of the limited company, and in each case you should do it by transferring funds from the company account to your personal account. Preferably you should make these separate transfers, even if they happen on the same day.

Claiming back your expenses – any business expenses that you’ve paid personally can be reclaimed. Your expense claim should include receipts or other documentation, and a description of what they were for.
Being paid a salary – you can opt to be paid a salary for your role. This salary is processed through your payroll system, with any PAYE and NI deducted. The net pay due should be transferred to you on the normal company payday.
Withdrawing a dividend – where there are sufficient after-tax profits available in the company, you can withdraw dividends. Paying yourself and your fellow directors a dividend requires some formalities, including board minutes and dividend vouchers.
Directors’ loans and repayments – if you’ve previously loaned money to the company, the loan can be repaid to you. Where nothing is due, the company can lend you money but there may be interest charged (or a taxable benefit may arise if no interest is paid). The company may also be liable for a 33.75% temporary tax charge ( section 455 charge ) if the loan is not repaid by the end of your company’s financial year.

Talk to us about taking out cash as a director

Withdrawing funds from your company for personal use takes some serious thought and planning. If not, you may well end up with an unintended overdrawn director’s loan account.

It’s important to remember that the company’s funds are not yours in the same way that a sole trader owns the funds in their business account. Getting professional advice as a director is the best way to manage your cash withdrawals from the business.

We’ll work with you to decide the best split between salaries and dividends, and help ensure that your company’s bookkeeping records accurately reflect the movement of funds between you and the company.

Cash is not profit and vice versa

Mon, 13 Mar 2023 13:10:29 GMT

The purpose of a business is to make money, and that means you need to know the difference between profit and cash flow .

Net profit is what you have left after you deduct all your business expenses from all your revenue. You can improve net profit only by changing the things that affect revenue and expenses.

For example, if:

You renegotiate with your suppliers, you may get stock cheaper, or carry less inventory
Your staff engage with customers better, you can learn more about what they do and don’t like – and get more business
You can roster staff differently, you may be able to run your business more efficiently.

Cash flow comes from various sources. However, it also covers operating expenses, taxes, equipment purchases, repayments, distribution, and so on.

Note that a profitable business does not always have good cash flow. And a business with good cash flow is not always profitable. For example, you can have good cash flow, and loss-making expenses.

To work out how fast you can grow your business, look at your projected cash flow. We can advise you on this.

Keeping cash crowned as King

Your business can’t survive without cash.

The following six takeaways are essential for business success:

Protect your cash position, by knowing what it is. Build a cash flow statement and always keep it up-to-date. If you foresee a shortfall, start at once to fix it.
Create a cash buffer as an insurance against unexpected difficulties.
Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses.
Be realistic with revenue expectations. Take action now if it looks like sales are not going to get you to breakeven.
Credit checking up front will reduce the risk of customer non-payment. Make sure you follow up with clear payment terms agreed in writing. Communicate regularly with customers and automate where possible.
Every pound you spend reduces cash reserves.

The best way to protect your cash is to create a budget for the spend you know you need, and stick to it.

Looking to improve cash flow? Make a time to talk to us. We're here to help.

Business tips - Learning to make good business decisions

Fri, 27 Jan 2023 12:09:36 GMT

Making good business decisions is easier to do when you have excellent information at your fingertips – and that’s the value of having great reporting at the heart of your startup.

Any cloud accounting software worth its salt will offer you straightforward ways to run your financial reports and track your important metrics. That’s standard in the new digital world. And this level of reporting gives you real, tangible data on which to base your decision-making. But good decision-making isn’t just about the numbers.

As well as having an effective understanding of your finances, you need a sense of what's good for the business, how decisions will impact on your growth and what your future path looks like.

How often should I look at management information?

Modern cloud accounting software makes it easier than ever to run detailed, up-to-date reporting on your financial position. With the click of a button, you can run numerous in-depth reports and statements that show your past and future position. Doing this regularly gives you a wealth of financial information on which to base your decision-making and strategic thinking, so we would suggest doing this at least once a month. At each stage in your startup’s growth, you’ll have to make important decisions about your next step – so, it’s important to think about the financial implications of any new projects, the amount of cash in the business and the availability of new sources of funding.

What can I use to inform my decision-making?

Setting up a custom dashboard to monitor the most important metrics and key performance indicators (KPIs) is definitely a good idea. Most accounting apps will let you tailor your dashboard, so you can pick and choose from KPIs that are most relevant to your startup.

Set clear and democratic targets for all of your main KPIs and track them on a weekly basis, so you’re monitoring the financial heartbeat of the business. If cashflow is looking poor, look at freeing up some cash, or borrowing money to fill the gap. If sales revenues are dropping, put some renewed vigour into your sales activity, or get a new marketing campaign underway to raise awareness of your most profitable products and services.

How can I use scenario-planning?

You may be the sole founder of your startup, or you may be part of a bigger team of co-founders. But the reality is that no one person can make all the decisions in a busy startup. To get the best overview of a challenge, or to come up with an effective way to grab a potential opportunity, you need to talk to your team or support network – that’s the only way to get an effective consensus. Talk through the current threats and opportunities and run through as many different potential scenarios as possible. What’s the best-case scenario, and how can you achieve it? What’s the worst-case scenario, and how do you plan for it, if things don’t go according to plan?

Why should I work with an experienced external adviser?

When you’re working in the business 24/7, it’s hard to see the business in an objective way. Your judgement on some issues can be overly emotional and clouded by internal or political factors. Working with an experienced accountant, business adviser or business coach brings a fresh perspective to the business – both financially, strategically and emotionally. Having a trusted external accountant on the team definitely helps you get your numbers straight. But they can also bring their knowledge and experience to bear on your strategic thinking, your decision-making and the impact of the business on your own mental health and wellbeing. You can open up to them about your worries, share your aspirations for the business and bounce strategic ideas off them – taking some of the pressure off your shoulders.

How can I track progress against goals?

To meet your goals and make good business decisions, it’s helpful to monitor and track your progress against these targets. If you refer back to your reporting and KPI metrics, you can easily measure your performance over time – and take action if progress is starting to slip.

Areas to keep an eye on can include:

Cashflow position – to make sure there’s enough cash in the business to keep your project moving forward and heading towards the agreed end goal.
Sales figures and revenue – so you can see how you’re tracking against your sales targets and if the intended revenue from the project is being achieved.
Budgets and expenses – to check that you’re not overspending on your project and that the team is being sensible with costs, expenses and essential overheads.
Gross margin percentage – so you can keep the business profitable and aim to meet your profit targets for the period, or year-end.
Growth against targets – to keep the business performing well and growing at the rate you predicted to meet your growth target for the period.

What are self-assessment ‘payments on account’?

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Thu, 01 Dec 2022 14:08:02 GMT

What are self-assessment ‘payments on account’?

If your only income is from employment, your tax payments are pretty straightforward. But if you have other sources of income – things like dividends, self-employment or property rental – your tax affairs can get a bit more complicated.

Under the self-assessment system , you’ll have to make ‘payments on account’ for your income tax liabilities. But what exactly is a payment on account?

How does self-assessment income tax work?

The self-assessment system for personal tax pulls together all of your taxable income (regardless of source) for each tax year (the 12 months ending on 5 April each year).

This covers your:

Employment income
Self-employment and partnership income
Dividends and other investment income
Property rental income, capital gains and any other income that falls within the tax net
It also includes National Insurance due on your self-employment and partnership income (but not on your employment income).

The gross amount of tax due, together with student loan repayments and National Insurance (other than NI on employment income), is then calculated. This gross amount takes account of your personal allowances and any deductions that may be available.

How are your payments on account calculated?

So, how does HM Revenue & Customs (HMRC) work out the payments on account (POA) that will be due? The relevant tax charge is the gross tax due (excluding capital gains tax and student loan repayments) plus Class 4 National Insurance contributions.

Where that amount is less than £1,000, or you paid more than 80% of the amount through PAYE, you can ignore POA and just settle any unpaid amounts by 31 January following the tax year end in question.

Where the relevant tax charge exceeds £1,000 and less than 80% is collected through PAYE, payments on account apply.

When are payments on account due?

There are two POAs for each tax year, each equal to 50% of the relevant tax charge for the previous tax year. The first one is payable by 31 January within the tax year, and the second one by 30 June after the tax year has ended.

If you believe that the POAs will exceed the tax that’s actually due, you can apply to reduce your payments. This could be because you expect income to fall, more of your income will be subject to PAYE or any other reason. If you reduce the POAs too much, then interest (but no penalty) will be charged on the underpayments.

NOTE: your January payment will be reduced by any tax that’s been deducted at source – for example, PAYE earnings from an employed job, or on interest that’s been earned.

So how does it work in practice?

We’ll calculate the payments on account at the same time as working on your self-assessment return. Where the POAs can be reduced, we will apply for that reduction on your behalf.

Once we’ve informed you of the amount that’s owed for January and July, it’s your responsibility to pay the tax due to HMRC. This can be paid online, or by filling out the form attached to your tax notification from HMRC and attaching a cheque.

Talk to us about your payments on account

POAs can sometimes come as a surprise to many, particularly for the first year of receiving income from sources such as self-employment and dividends, where it is not taxed at source, we’ll help you estimate the payments that are likely to be due and will prepare you for making these two substantial payments at both points in the year.

Jeremy Hunt's Autumn Statement

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Mon, 21 Nov 2022 11:45:46 GMT

Jeremy Hunt's Autumn statement - 2022

In his opening remarks, Jeremy Hunt said his priorities are stability, growth and public services.

Stability - Stability is about reassuring the market. The Chancellor announced the following new, ‘fiscal rules’ that public sector debt must be falling as a percentage of GDP by the end of a rolling 5 year period, and net public sector borrowings must be below 3% of GDP at the same point in time. These are forecast to be met by year 4.
Growth - The main growth measures appear to be extra spending on schools of £2.3 billion in each of 2023/24 and 2024/25, public spending on R&D rising to £20 billion by 2024/25, and infrastructure spending, where Northern Powerhouse Rail, HS2 to Manchester and East West Rail survive (rumours were that these may have been cut). The Chancellor announced a plan is to have 85% of the country able to access gigabit-speed broadband by 2025, with nationwide coverage by 2030. The other growth measure is to ease rules regarding riskier investments, so they can invest in more, for example, in green energy and infrastructure projects.
Public Services - Planned spending on public services is broadly as already planned up to 2024/25, except for extra spending on education, health and social care. Thereafter, spending will increase by 1% per annum for the following three years.

Main tax measures

Income Tax Thresholds - From April 2023 the additional rate (45%) band applies from income over £125,140 (previously £150,000). The tax rates and brackets remain unchanged except that from April 2023 the additional rate of 45% is charged on annual income in excess of £125,140 (currently £150,000). Accordingly, the higher rate of 40% applies on income between £50271 and £125,140 whilst the basic rate is charged on income between £12,571 and £50,270. Personal allowances remain at £12,570. These bands will be fixed until April 2028. Freezing the bands in this way is a so-called ‘stealth tax’, because an increasing proportion of people’s income is taxed over time, and potentially in higher tax bands, due to wage inflation.

The table below shows the tax bands.

National Insurance Thresholds - The current Lower Earnings Limit (£6,396) and Small Profits Threshold (£6,725) will be unchanged for 2023/24. The Secondary Threshold, the level at which employers start to pay national insurance) will be fixed at the current £9,100 per annum until April 2028. The Upper Secondary Threshold (where the rate paid by employees drops) will be fixed at the current £50,270 until April 2028.
Inheritance Tax Threshold - Frozen at current levels for a further 2 years to 2028. The tax free threshold is £325,000 and residence nil rate band is £175,000
Capital Gains Tax Thresholds - Currently the first £12,300 is free of CGT. That will drop to £6,000 from April 2023 and £3,000 from April 2024
Dividends Tax Thresholds -Currently the first £2,000 is free of tax. That will drop to £1,000 from April 2023 and £500 from April 2024
National insurance - The Class 2 rate (flat rate for self-employed people) will increase from £3.15 to £3.45 per week from April 2023. The Class 3 (voluntary contributions) rate will increase at the same time to £17.45 from £15.85. These increases are in line with inflation.
Research and Development - From April 2023, the uplift of R&D expenditure in the small and medium enterprises scheme will be reduced from 130% to 86%, and the payable credit rate will fall from 14.5% to 10%.
Windfall taxes - The Energy Profit Levy on UK oil and gas profits will increase from 25% to 35% from 1st January 2023, and end on 31st March 2028. A new Electricity Generator Levy of 45% will extend the scope of windfall taxes to include excessive revenue received by electricity generators from January 2023.
Company Cars - The benefit-in-kind rate for electric and ultra-low emission cars emitting less than 75g of CO2/km will increase by 1 percentage point annually from 2025/26 to 2027/28, at which stage the rate will be a maximum of 5% for electric cars and 21% for ultra-low emission cars. The rate for all other vehicles will be increased by 1 percentage point for 2025/26 and fixed until April 2028.
Business Rates - There is a range of measures to support business with business rates. Businesses in the retail, hospitality and leisure sector will be entitled to relief of 75% of their rates bills. Measures will also be taken to limit the cost of increases arising from the 2023 revaluation and to ease the impact of Small Business Rates Relief and Rural Rates Relief where those reliefs are lost as a result of the valuation.

Other Measures

Benefits - Benefits will increase by 10.1% from April 2023. This is in line with inflation. There were some suggestions that the increase should be around 5%, in line with average earnings growth.
State Pensions - State Pensions will be increased by 10.1%,in line with inflation, thus restoring the triple lock which was suspended previously.
Energy cost savings - The cap on unit rates for domestic consumers will increase from April 2023 so that average user will be charged £3,000 (currently £2,500/annum) until March 2024. The scheme for non-domestic users expires from April 2023 and a review is being undertaken into further support thereafter, which will exclude public sector consumers and is expected to be at a ‘significantly lower scale’ for business users.
Cost of Living payments - Pensioner households will receive £300 in 2023/24, presumably paid with the Winter Fuel Allowance. People on means-tested benefits will receive £900 and people on disability benefits £150 in 2023/24.
National Living Wage - The rate for individuals aged 23 and over will increase by 9.7% to £10.42/hour from £9.50, with similar-scale increases for other categories of worker.
Stamp duty - The £125,000 increase in the nil stamp duty land tax band and to the higher threshold for first-time buyers is no longer a permanent change. It will be reversed after 31st March 2025.
Council tax - The maximum that councils can increase council tax by without a local referendum is now 5%, up from 3%.
ATED - The annual tax on enclosed dwellings charges (a levy on certain residential property held in structures such as companies) will increase by 10.1% from April 2023 in line with inflation.

If you’d like to talk to us about any concerns related to the main announcements, please do get in touch. We’ll be happy to help you start planning a 2023 strategy to overcome your biggest business challenges.

A fiscal U-turn without precedent!

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Wed, 19 Oct 2022 14:26:47 GMT

A fiscal U-turn without precedent!

Over the last few days, we have seen a gradual dismantling of the mini-budget of Friday 23 September 2022, along with the economic policies that Prime Minister Liz Truss based her leadership campaign on.

On Friday 14 ^th October, Ms Truss announced a change of Chancellor, from Kwasi Kwarteng to Jeremy Hunt. This was swiftly followed by a series of U-turns culminating in Mr Hunt delivering an ‘emergency statement’ on Monday 17 ^th October. This emergency statement effectively replaces and re-writes the mini-budget.

Income tax – the basic rate of income tax will remain at 20% until economic conditions allow for it to be cut. This had been due to drop to 19% from 6 April 2023. It had already been confirmed that the ‘additional rates’ of income tax for those earning more than £150,000 a year, including the 45% rate on non-savings income, would remain in 2023/24.

Income tax on dividends – will remain at the current rates of 8.75% in the basic rate band, 33.75% in the higher rate band and 39.35% in the additional rate band. They had been due to each drop by 1.25 percentage points from 6 April 2023.

Corporation tax - the increased corporation tax rates, already legislated to come in from 1 April 2023, will go ahead. These will take some companies from a 19% rate of corporation tax to 25% or 26.5%. It had been proposed that corporation tax would remain at a single 19% rate.

IR35 – the off-payrolling rules, as introduced in 2017 and 2021, will remain into 2023/24 and beyond. This keeps the IR35 compliance burden with medium and large sized employers.

Energy Price Guarantee – the support for households to cap average annual electricity and gas costs at £2,500 will be reviewed in April 2023. We had been told that households would receive this support until September 2024.

VAT – a VAT-free shopping scheme for non-UK visitors to Great Britain will no longer be pursued.

Alcohol duties – will not be now frozen from 1 February 2023 and increased duties will apply.

The following mini-budget announcements remain:

The 1.25% rise in NICs will still be reversed from 6 November and the government will not go ahead with the planned1.25% levy to fund health and social care next year.
The annual investment allowance will remain at £1 million from 1 April 2023, rather than reverting to £200,000.
There are to be more than 40 new “investment zones” in England.
The increased thresholds for Stamp Duty Land Tax in England and Northern Ireland, as implemented from 23 September, will remain in place.
The Energy Bill Relief Scheme for Business will continue to be subject to a governmental review after 31 March 2023. The Chancellor has now said that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

On 31 October, Mr Hunt will present an update on the government’s medium term fiscal plan, complete with Office for Budget Responsibility forecasts. Further changes to fiscal policy are expected to be announced at this time.

We are clearly in turbulent political and economic times and faced with such uncertainty you may ask yourself “What actions can I take as a business owner?”.

It is a good time to look at your business’s strengths, weaknesses, opportunities and threats and get a clear understanding of its position in the marketplace, the competition, the systems and the way things are done and the improvements that could be made. Focus on what the business is to look like when it is “complete” or running profitably and successfully. Then you can determine priorities – the big issues that need to be focussed on – then you can make a plan. Get in touch if you’d like our help!

Mini Budget Update

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Tue, 27 Sep 2022 11:56:17 GMT

Mini Budget Update on 23rd September 2022

On 23 September 2022, Kwasi Kwarteng, the new Chancellor (the fifth in as many years) delivered a Tax Cutting “Fiscal Event” or Mini-Budget to help boost economic growth. This was in line with promises made by the new Prime Minister Liz Truss when she was campaigning to be elected as new leader of the Conservative Party.

Why was that not a real budget?

The normal budget process is for the Office of Budget Responsibility (OBR) to report on the state of the UK economy at the time of the Budget and also assess the impact of the Budget proposals. As there was insufficient time for a full OBR report, the Chancellor’s statement was referred to as a “fiscal event”. We still anticipate a ‘real’ Budget later on this Autumn.

Health and Social Care Levy Scrapped

The Health and Social Care Levy has now been abolished and will not come in next April. Further, the Government is removing the associated 1.25 percentage point increase in NICs from 6 November 2022.

Employers will need to make sure that they update their payroll software in time for this third change in NIC rates and bandings in 2022/23!

Dividend rates reduced from 2023/24

Many director/shareholders of family companies pay themselves a small salary and take the rest of their “pay” in dividends. With dividends being free of NIC, this would have allowed them to avoid the extra 1.25% NIC charge when it was originally introduced. Consequently, the Government added 1.25% to the dividend income tax rates for 2022/23.

Although the NIC increase is being abolished from 6 November 2022, the additional 1.25% will continue to be applied to dividends paid throughout 2022/23.From 2023/24 the dividend income tax rate will however revert to 7.5% where dividends fall within an individual's basic rate band and 32.5% for higher rate taxpayers. Note that the first £2,000 of dividends continue to be taxed at 0%.

Income tax rates cut for 2023/24

The previous Chancellor, Rishi Sunak, had dangled a possible cut in the basic rate of income tax from 20% to 19% from 2024/25. This will now be brought forward by one year to 2023/24 and will apply to non-dividend income. The 45% and 39.35% ‘additional rates’ of income tax that apply to income over £150,000 will be abolished from 6 April 2023. This will mean that, in 2023/24, there will be just two rates of tax on general income - 19% and 40%, with two dividend income tax rates of 7.5% and 32.5%.

Further, those who would have otherwise been additional rate taxpayers will, from 6 April 2023, benefit from a Personal Savings Allowance of £500, in line with higher rate taxpayers. This was not previously available to them. Savings income within the Allowance is taxed at 0%.

Corporation tax rate increase scrapped

In the March 2021 Budget, Rishi Sunak announced that the rate of corporation tax would increase to 25% from 1 April 2023 where a company’s profits exceeded £250,000 a year, with the current 19% rate continuing to apply where profits were no more than £50,000 a year. There was also scheduled to be an effective 26.5% rate on profits between £50,000 and £250,000 a year.

Nevertheless, the planned increase will not now go ahead - in line with the promises made by Liz Truss in her campaign to be Conservative Party leader and Prime Minister. All companies currently paying corporation tax at 19% will continue to do so.

£1 Million Annual investment allowance now permanent

Businesses investing in plant and machinery will welcome the decision to make the £1 million Annual Investment Allowance (AIA) permanent. This has been extended several times and was scheduled to revert to just £200,000 from April 2023. Unlike the super-deduction, the AIA is available to unincorporated businesses as well as limited companies and the equipment does not have to be new.

IR35 U-turn

The much criticised “off-payroll” working rules were introduced for the public sector from 6 April 2017 and then extended to large and medium-sized private-sector organisations from 6 April 2021. The rules replaced the ‘IR35’ rules where workers supplied their services to these organisations via a personal service company (PSC) or other intermediary. The effect was to transfer the, not insignificant, tax compliance burden from the PSC to the service-acquiring organisation.

The off-payrolling rules will now be removed from 6 April 2023 and the IR35 compliance burden will revert to resting with the PSC itself. This means the PSC must calculate and pay PAYE and NICs if the worker (often the Director) would be classed as an employee if they were working directly for the service-acquiring organisation. This aligns with the requirements in cases where a PSC supplies services to a small private-sector organisation.

New Investment zones

The Government is in discussion with 38 local authority areas in England to set up ‘Investment Zones’ in specific sites within their area.

Encouraging investment in unlisted companies

The new Chancellor has given his support to the tax-advantaged Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and said he sees the value of extending them in the future.

The vision is for the UK to be an entrepreneurial, share-owning democracy.

Employee share ownership

The Government has announced two changes to the tax advantaged Company Share Option Plan (CSOP) scheme. There is currently a maximum employee share option limit based on market value at grant of £30,000. This will be increased to £60,000 for any new options granted from 6 April 2023. Existing options are unaffected by this change.

There will also be increased flexibility for share options granted from 6 April 2023 due to a removal of conditions around the class of shares used.

SDLT threshold increased to £250,000

Chancellors always like to pull rabbits out of the hat and make surprise announcements at the end of their Budget speech. Although rumoured in the run up to this mini-budget, the SDLT announcement was still a surprise as house prices have been steadily rising. Increases in mortgage rates are likely to slow the market so the SDLT announcements are designed to stave off a housing slump.

Moving house has a multiplier effect on the economy as people tend to spend money decorating and furnishing their new home, with estimates suggesting that doing so drives additional spending worth about 5% of the house value.

For residential property transactions completed on or after 23 September 2022;

The Nil Rate Band (NRB) has been increased from £125,000 to £250,000.
The NRB for first-time buyers has been increased from £300,000 to £425,000. This applies where first-time buyers purchase a property costing less than £625,000 (previously £500,000).

Different taxation rules apply to property transactions in Scotland and Wales and no changes have been announced in this regard.

Our Business Coaching service

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Fri, 09 Sep 2022 09:56:41 GMT

Our Business Coaching service

Owning your own business is hard work and can often leave you feeling unsupported. Our Business Coaching service will provide you with the accountability and support needed to achieve your goals. We will help you to overcome obstacles and challenges in your business, maximising the synergy between your expertise and ours.

Our Business Coaching service gives you the chance to:

Meet quarterly with one of our senior team members
Interim monthly momentum telephone call to update
Review your results and find areas of improvement
Discuss burning issues and opportunities in your business
Work out ways of achieving the goals set in your Business Plan
Increase business performance and unlock growth

Ideally, coaching takes place once you have completed a Business Plan. However, the programme may also be used as a vehicle to work through major changes in your business circumstances or to help you implement a strategic or succession plan.

By joining our Business Coaching programme, you’ll:

Increase accountability and support from your Coach
Improve your business’s profitability and cashflow
Identify and solve your burning issues
Improve business performance by identifying ways to overcome challenging issues
Access the collective wisdom of our accountants, our systems, products, and services

If you need to be held accountable for completing actions and achieving your goals, get in touch for more information about how our Business Coaching programme could help you.

How much is my business worth?

AnnaStubbs@chartwellpractice.com (Anna Stubbs) — Wed, 31 Aug 2022 18:46:21 GMT

How much is my business worth?

This is a question many of our clients want an answer to! The truth is, it depends on a range of factors and any valuation is only helpful as a guide for planning forward. The ultimate value of a business is the price a willing buyer is prepared to pay for it.

The prevailing economic climate and state of the business’ sector can affect company valuation for better or worse, as can your reasons for selling. For instance, if you need a fast sale due to ill health, the value may be lower than if a sale was taking place under more favourable circumstances.

Valuing a business is a complex process and we are available to support you throughout.

So what are the most common methods of valuing a business?

Price to earnings ratio (P/E)

The price to earnings ratio uses multiples of profit, so this may be an appropriate valuation method if you own a well-established business with a good track record of profits. ‘Price’ refers to the company’s current share price and ‘earnings’ refers to the earnings per share (EPS). The P/E ratio indicates the business’ expected growth in earnings per share in the future.

Discounted cash flow

Discounted cash flow relies on estimating future cash flows and a residual business value, and may be suited to businesses with few assets.

Entry cost

Entry cost valuation involves calculating how much it would cost to build your business to the stage that it’s reached now, including startup and recruitment costs, marketing, and the value of assets. Any savings that could have been made should then be deducted to arrive at the valuation.

Asset valuation

The asset valuation method may be suitable if your business is well established and owns high levels of tangible assets. The Net Book Value (NBV) of assets is calculated and then adjusted to account for external factors such as depreciation and inflation.

Valuation based on industry

Some businesses are valued based on the industry in which they operate. The retail industry is one example, where the number of outlets is an important element for consideration. Industry ‘rules of thumb’ use factors specific to an industry and can provide a more accurate calculation in some cases.

Other considerations when valuing your business

Intangible assets are a key factor when valuing a business. Intellectual property, goodwill, business reputation, and even a premium business location can all add considerable value in the eyes of potential purchasers.

Spotlighting these intangible assets also allows you to improve their value where appropriate. For example, registering ownership of a trademark or patent, building up their reputation even further or improving the condition of their premises.

Please talk to us about valuing your business as this can lead to a range of important considerations and actions.

When should a business register for VAT?

Tue, 16 Aug 2022 16:33:12 GMT

When should a business register for VAT?

The rules regarding VAT registration appear relatively straightforward — a business must register if its VAT taxable turnover exceeds the VAT registration threshold (currently £85,000, remaining at this level until at least 31 March 2024). A business that makes taxable supplies is liable to register if, by the end of any month, the value of such supplies in the previous 12 months or less is more than the VAT registration threshold; or at any time, where it is expected that the value of taxable supplies in the next 30-day period will exceed the VAT registration threshold.

The problem comes with the definition — what exactly counts as taxable turnover?

What is taxable turnover?

Taxable turnover is the total of all taxable supplies incurred over the previous 12 months of trading except exempt supplies.

This definition includes:

standard rated goods
zero-rated goods
goods hired or loaned to customers
business goods used for personal reasons
goods bartered, part-exchanged or gifted
services received from businesses in other countries that you had to ‘reverse charge’
building work over £100,000 undertaken for the business (‘self-supply’)

but excludes:

income from employment
grants
disbursements on behalf of a client
one-off’ sales of capital assets e.g. proceeds from the sale of a van

The calculation also does not take into account any income that is exempt from VAT. The more common sources of which are:

income from financial services or selling insurance;
rental income from properties or the sale of land or existing buildings; and
betting, gaming or lotteries.

Voluntary registration

A business that makes taxable supplies below the VAT threshold can choose to register voluntarily. This has some benefits (although the business will also have to charge output VAT to customers), for example it allows the business:

to reclaim input VAT (especially relevant if the business is buying capital items such as a van).
to build positive impressions to clients – the business looks larger than it is.
generate a VAT repayment for businesses that sell zero rated goods as they can reclaim the input VAT on purchased goods.
to back date the registration by up to four years if sufficient evidence can be supplied to HMRC. This means a business may be able to reclaim VAT paid on equipment being used.

Exceeding the threshold temporarily

A business that temporarily goes over the VAT registration threshold e.g. from making a one-off high-value sale, may not have to register for VAT. This exception applies if the VAT registration threshold was exceeded in the previous 12 months, but the business can demonstrate that taxable supplies in the next 12 months will not exceed the de-registration threshold (currently £83,000). The business must apply for an exception in writing less than 30 days after exceeding the registration threshold explaining why expected taxable sales in the next 12 months will be less than the deregistration threshold.

Exception from registration requires HMRC’s approval and cannot be assumed. If the exception request is submitted late HMRC must still be notified and given the known facts as at the time that the threshold was exceeded. HMRC will only give weight to evidence that was available at that time, not information which subsequently becomes available, e.g. actual turnover figures for the months following.

Practical point

It should be noted that exception cannot be granted if a business is liable to be registered under the 30-day future turnover rule.

Overpayments of SEISS grants - HMRC are chasing repayments

Tue, 16 Aug 2022 16:27:53 GMT

Overpayments of SEISS grants - HMRC are chasing repayments

The Self-Employment Income Support Scheme (SEISS) came as a welcome support for many self-employed earners during the Coronavirus crisis. Initially, four grants were available with a fifth and final grant covering May to September 2021. Eight months later and some freelancers and small business owners are receiving a letter from HMRC requesting repayment of all or part of their fourth or fifth grant. The letters are being issued to those claimants whose tax returns have been amended either by HMRC or the taxpayers themselves after 2 March 2021 for the tax years 2016/17 to 2019/20 such that the amendment affects their SEISS entitlement.

If the amendment shows more than £100 overclaimed, the letter asks for that amount to be repaid. HMRC will also look at the turnover figures and if it is found that the taxpayer was eligible for the lower (30%) grant, but claimed the higher (80%) grant, they will also ask for the difference to be repaid.

The letter includes a formal assessment and shows how the amount being demanded has been calculated. Repayment must be made within 30 days otherwise interest will accrue. If the repayment has not been made by 31 January 2023, a 5% late payment penalty will also apply (unless a ‘Time to Pay’ arrangement has been set up which spreads the payments over an agreed extended period).

Are all grants being checked?

Only the fourth and fifth SEISS grants are being considered and only if there has been an amendment to the tax returns on which the grants were based which reduces the amount of grant that should have been paid. However, if you are aware that the turnover figure on any of the relevant returns was less than the amount declared initially, then just because a letter has not been received does not mean that HMRC do not need to be informed.

Can you appeal?

If you believe HMRC’s calculations are incorrect, you have 30 days from the date on the letter to make your appeal – instructions are given in the letter. With your appeal you will need to include your calculations.

Practical Point

HMRC have online tools that can be used to calculate the amount potentially overpaid.

https://www.gov.uk/guidance/tell-hmrc-and-pay-the-self-employment-income-support-scheme-grant-back#check-how-to-tell-hmrc-and-pay-money-back

Capital Gains Tax - main residence may not be tax-free

Tue, 16 Aug 2022 16:24:33 GMT

Capital Gains Tax - main residence may not be tax-free

The sale of every property is potentially taxable under the Capital Gains Tax (CGT) rules. When an individual sells their only or main residence, generally the gain is exempt from CGT due to the Principal Private Residence (PPR) relief. However, we are so used to saying this that we are in danger of forgetting the two conditions that must be satisfied for a claim to succeed.

The property must:

not have been purchased ‘wholly or partly’ for making a gain; and
be the individual’s only or main residence at some point of ownership or claimed to be so

Queries are most likely to arise in situations where a property has been bought and sold within a relatively short period; here HMRC will be looking at whether the taxpayer is, in reality, trading. If HMRC are not satisfied that the relief is due they will look at whether the owner had any intention of living in the property permanently and require proof that the property has been lived in as the PPR.

Recently HMRC have been targeting self-build builders, questioning as to whether the property has been built intending to be the main residence. If a self-builder repeats the process of building, moving in, selling and rolling equity gains into subsequent houses, HMRC may take the view that the self-builder has become a business and seek to tax the gains as income rather than as exempt under the CGT rules. Such a situation is more likely if the person has no other income or works in the building trade.

Proving ‘permanency’

HMRC will require proof that the property has been lived in as the PPR. However, there is no set rule as to the number of days of residency and there will be some circumstances where the ‘intention‘ has been to live ‘permanently’ but was not possible for some reason.

Practical Point

Should HMRC query a PPR claim the following may help in your appeal:

Documentary evidence – home insurance, telephone bills, DVLA records or credit reference agency records, utility bills in the owners’ name at the property address
The property address being on the electoral register in the owners’ name
Receipts confirming purchase of furniture etc for the property
Bank accounts registered at the address

A final suggestion is for the owner to introduce themselves to neighbours to let people know who lives there.

Tax relief for losses - Coronavirus concession

Tue, 16 Aug 2022 16:20:57 GMT

Tax relief for losses - Coronavirus concession

Those businesses that have struggled through the pandemic may find that when they come to do their accounts where usually there is a profit, the business made a loss. Whether and how that loss can be utilised depends on whether the accounts are prepared using the ‘cash basis’ (recording revenue when cash is received, expenses when they are paid) or the ‘accrual basis’ (recording revenue when earned and expenses when incurred).

The ‘cash basis’ is how many businesses with turnover of less than £150,000 prepare their accounts. This method might save time but unfortunately it severely restricts how a loss can be used as it usually can only be carried forward against future profits of the same business and not relieved against other income or carried back against past profits. If you have losses that you want to utilise other than by carrying forward, you will normally have to ‘opt out’ of the cash basis and use the ‘accrual basis’ instead. However, for the year 2021/22 special Coronavirus concession rules allow carry back without the need to ‘opt out’. Companies and Limited Liability Partnerships are required to use the ‘accrual’ basis.

Sideways loss relief

Losses calculated under the ‘accrual basis’ of accounting can reduce the tax payable on any other income of the current tax year or tax that has been paid for the previous tax year. Tax relief can also be claimed by offsetting the loss against any capital gain incurred but only if offset is not possible against other income. Where a claim is made for both the current and the previous tax year, the taxpayer must specify which tax year takes priority. The loss must first be set against the first-choice year, any balance remaining after profit for that year has been reduced to nil can be set against the second-choice year – it is therefore not possible to make a partial claim, e.g. to preserve personal allowances.

Coronavius concession

As part of the measures to help businesses during the pandemic, the government introduced a temporary Coronavirus concession to allow the carry back of losses over a longer period with a view to enabling a tax refund, if available. This concession applies to trading losses made by unincorporated businesses for tax years 2020/21 and 2021/22 and companies in accounting periods ending between 1 April 2020 and 31 March 2022. The rules permit losses to be carried back for a period of three years to the extent that they have not already been fully utilised under the normal offset rules, with losses being carried back against later years trading profits first. For businesses using the ‘cash basis’ of calculation usually losses can only be carried forward; under the Coronavirus concession the losses can be carried back up to three years against trading profit only. Loss relief for the current tax year 2022/23 will revert to the normal rules.

The ‘cap’

Under the usual offset rules, up to £50,000 or 25% of ‘adjusted total income’ of the loss can be claimed against general income (and capital gains) for either the current or previous tax years. ‘Adjusted total income’ is total taxable income before personal allowances but after taking into account Gift Aid contributions and pension contributions. There is no ‘cap’ on losses carried forward.

Under the ‘Coronavirus concession’ rules the ‘cap’ was increased to £2,000,000.

Practical Point

The time limits for claiming the ‘Coronavirus concession’ relief is 31 January 2023 for trading losses in the tax year 2020/21 and 31 January 2024 for trading losses in 2021/22.The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

Paying employees more than HMRC's approved mileage allowances

Tue, 16 Aug 2022 16:17:21 GMT

Paying employees more than HMRC's approved mileage allowances

It seems as though the price of fuel is increasing every day. If you have employees for whom you pay their business fuel you may be finding that paying at the HMRC’s set mileage rates does not cover the cost to the employee. Paying above that rate has tax and NIC consequences.

These days few employees have petrol or diesel driven company cars or vans because the tax charged on the benefit in kind generally means that it is not cost-effective to do so (more favourable benefit in kind rates are available for low emission electric vehicles, as well as tax reliefs for companies on purchase). Instead, many employees travelling on business, use their own cars and their employer reimburses them usually to the HMRC approved amount per mile.

The Approved Mileage Allowance Payments scheme allows employers to make tax-free mileage payments up to an ‘approved amount’ where the employee undertakes a business journey in their own car or van. These ‘approved’ rates have not changed for years being 45p per mile for the first 10,000 business miles then 25p per mile thereafter for the tax exemption; the NIC exemption rate is 45p per mile for all business miles.

The problem comes if you pay more than these tax-free set amounts, as it is becoming increasingly likely that businesses may have to in the current financial climate. If payment is more, the excess is a benefit in kind charged on the employee usually taxed via the employees PAYE coding. For NIC purposes the excess is charged to Class 1 NIC in the same way as the payment would be if it were a bonus or salary – all of which increases the tax and NIC bill for the employee so they may be no better off. If HMRC’s set rate does not cover the actual cost, the employee can claim deduction for the difference (but this can entail a lot of calculations in working out the actual figures so maybe not worthwhile).

One option to not using the approved rates is to reimburse the actual cost but again this can involve a lot of calculation work. Otherwise, the employer could pay an enhanced rate to cover the cost to the employee of using the car for business plus the tax and NIC payable on the excess over the approved rate but the employee would have to take the tax hit.

Can employing a family member save tax?

Tue, 16 Aug 2022 16:14:09 GMT

Can employing a family member save tax?

Regardless of your business structure (sole trader or limited company) employing a spouse/ civil partner (or any other family member) can be one of the more efficient ways of reducing tax for your business. Such employment can take advantage of lower tax rates and personal allowances that may be available to your family member. If they are a shareholder of the company and also employed, a mixture of salary/bonuses, benefits, and dividends, could be paid thereby reducing the overall tax bill.

The work undertaken by the family member must be ‘wholly and exclusively’ for the business. The National Minimum Wage does not apply to family members working in the family business if they live in the same household so technically you could pay whatever you wanted. However, the payment must be commercially viable, the amount realistic and not excessive for the work undertaken. If no work or little work is undertaken, HMRC could refuse the company a tax deduction and treat the payment as a distribution to the director. By appointing the family member as a director, a small salary could be paid, even if little work is undertaken.

Whether the family member lacks sufficient NI contributions towards their state pension (or is not liable to NI payments) may also have a bearing on the amount to pay. For a year to qualify for state pension purposes payment needs to be of 52 weeks x Lower Earnings Limit of £533 a month (£6,396 a year).

Should HMRC question the amount paid and decide that the payment is ‘excessive’, then the amount will be disallowed in computing the taxable profits. If the employment is in a company not only will the amount be disallowed but if the family member is also a shareholder, that amount may be treated as a distribution, taxed at the dividend tax rates.

The salary should preferably be paid into the family member’s personal bank account and recorded in the accounts as payment just like any other employee. Payments for wages to children must follow similar principles and caution is needed if employing minors to ensure that working regulations are not breached. It would also be preferable for the family member to be included on the payroll.

Apart from the payment amount being similar for comparable work outside of the business, when working out the amount to pay, consideration will be needed to ensure that the tax saving achieved is not counteracted by a higher tax bill for the family member. Other factors to consider include whether:

the family member has another job or income and if so, how much personal allowance remains to be allocated against the salary
the transferable marriage allowance is available
the employee is over state pension age as no NIC contributions are payable or under 21 years as no employer’s NIC is payable
the Employment Allowance (EA) can be claimed (enabling eligible employers to reduce their annual NIC liability by up to £5,000). Whether or not the EA can be claimed will also have a bearing on the optimum salary payable.

As ever in tax – evidence is important. Bank statements and recording payments in the business accounts would provide evidence of what had been paid, which could be linked to the recorded hours worked.

Tax relief for rental property losses post Covid

Tue, 09 Aug 2022 13:37:14 GMT

Tax relief for rental property losses post Covid

Landlords could have been said to be the ‘forgotten business’ of the Covid pandemic – granted, they were able to take a three month ‘holiday’ from mortgage payments but they were not given any direct help from the government (apart from business rate holidays and grants for Furnished Holiday Lets).

Despite assistance via the furlough scheme for employees and the self-employment income support scheme for those running their businesses, some tenants fell into rent arrears such that many landlords are currently sitting on losses (although the tenant remains liable for the unpaid rent). How those losses are dealt with taxwise depends on the type of rental property and whether the landlord uses the ‘cash basis’ or the ‘accruals basis’ of calculation.

Profits and losses on property income are calculated in the same way as for a trading business but the letting is taxed as investment income such that the normal reliefs for trading businesses (including those available to offset losses) are not available. In addition, if a landlord has more than one type of ‘property business’, separate ‘pools’ are used for similar types of property i.e. furnished holiday lets, UK and overseas lets are kept separate.

As part of HMRC’s ‘Making Tax Digital’ strategy where an individual landlords’ annual total turnover (gross rents) is less than £150,000, the default accounting method is now the cash basis. Companies and Limited Liability Partnerships are required to use the ‘accrual’ basis (i.e. recognising income received, and expenses paid on an invoice basis, regardless of whether or when the cash is received). However, an individual landlord can ‘opt out’ of the cash basis and use the ‘accruals’ basis by making an election on their tax return. In addition, should the landlord have separate types of property businesses they can opt out of the cash basis for one property business and remain within for another. The ‘opt out’ election takes the landlord out of the cash basis for one tax year only and must be made for each subsequent year as required.

The calculation of profit or loss is undertaken at business level so providing automatic offset if one property makes a loss and another makes a profit. Although the general rule is that losses from a property rental business can only be relieved by carry forward and offset against future profits of the same property business, there is a limited set off available for commercial properties. If there is an overall income tax loss on an individual’s continuing commercial property portfolio over a tax year and that loss has been created by excess capital allowances claimed, then the loss can be relieved by being offset against the owner’s other (‘general’) income for the same and/or next tax year. Otherwise, the loss is automatically carried forward and set against future profits of the same UK property business.

This loss relief may be further restricted because it is only available up to £50,000 or 25% of the taxpayer’s adjusted net income, whichever is the lower.

If a landlord’s other income is less than the personal allowance, the accrual basis of calculation has been used (possibly because the rental income exceeds £150,000) and the loss has been incurred due to capital allowances, then rather than offsetting the total loss against general income in the year of loss, better tax planning would be to disclaim some or all of the capital allowances and carry forward the balance so as not to waste the personal allowance.

How an accountant can support your business development

Wed, 16 Mar 2022 16:02:07 GMT

HOW AN ACCOUNTANT SUPPORTS YOUR BUSINESS DEVELOPMENT

As your accountant, we won’t just look after the financial side of your business. We can also advise you on the strategic side of your company, including the importance of business development as vital part of your growth plan.

Business development (BD) is what helps your company move from slow, organic growth to fast-paced, hypergrowth. And it’s only by putting the right drive and expertise behind your BD that you can turn your strategic ideas into real success stories.

So, how can we help you achieve this?

HOW AN ACCOUNTANT SUPPORTS YOUR BUSINESS DEVELOPMENT...

TALK TO YOU ABOUT YOUR STRATEGIC GOALS

The starting point for any kind of BD activity is to pin down your goals and aims as a business. When you know what you want to achieve over the coming months, it’s far easier to define a strategy for success. And that’s easier to do when you talk to an objective adviser, like us.

We can sit in on your board meetings, talk to your executive team and get a real handle on what makes the business tick. And, armed with this knowledge, we’ll work with you to drive the direction of your BD and find the best opportunities for you to focus on.

HELP YOU CREATE A CLEAR BD STRATEGY AND PLAN

Having a defined set of BD goals is a good starting point. But to put this all into action in a productive way, you’re going to need a comprehensive plan for your BD projects.

Our years of experience advising business leaders and their teams really comes into play here. We know the best routes to take, the budgets that will be needed and the right tactics for bringing in more contracts, sales and partnerships. By putting these strategies into a clear plan, and linking this to agreed timescales, you have a BD route map to follow and action.

INTRODUCE YOU TO A BROADER NETWORK OF BUSINESS PARTNERS

We work with a wide range of businesses across many different sectors, industries and niches. By introducing you to our network of clients, we welcome you into a supportive community of like-minded business owners. And that’s excellent news when looking for new partnerships.

Whether it’s attending a local conference, an online webinar or one of our in-house client events, you’re going to meet new people, share new ideas and make the right connections. This is a great way to build alliances and work together with other local businesses. And when you’re well-connected, you set the very best foundations for your future BD activity.

PROVIDE BETTER ROUTES TO FUNDING AND INVESTMENT

Whatever goals you’ve set for your BD projects, it’s likely that you’re going to need additional funding to finance this activity. Investing in your expansion, or new partnerships, is vital to getting a good return on your BD, so great access to finance is a definite bonus.

We’ll advise you on the most appropriate funding channels and how you can use these facilities to finance your BD plans. And we can also link you up with banks, lenders and business finance specialists. You will get the advice and finance you need to bring your BD to life.

HELP YOU TRACK AND MEASURE YOUR BD PERFORMANCE

Meeting your BD targets takes time – and a whole lot of dedication. Measuring your BD performance over time, helps you stay on track and gives you a good indication of how well you’re tracking against your planned progress.

We’ll help you create the reporting and metrics you need, so you have clear data to track your progress over time. You can log your activity in your project management system, or your client relationship management (CRM) software, and keep clear notes on contacts made, relationships built and targets converted etc.

If you want to get more from your BD, please do get in touch. We’ll partner with you to put some real drive, experience and impetus behind your BD strategies.

Time to review and plan for 2022!

Sat, 01 Jan 2022 15:54:56 GMT

What are your business goals for 2022?

The beginning of a new year, or season, is an excellent time to review the chapter just finished and reflect on what worked, what didn’t, what you’d like to change and new things you’d like to implement.

Last year, there were inescapable impacts on businesses, with some thriving, others failing, and others just getting by. So what kind of year was 2021 for your business?

Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business efforts.

Your Yearly Business Review

What were the most significant impacts on your business in 2021? How well did you meet the challenges?
What worked well last year? What systems, technology, products or services were successful?
What accomplishments can you celebrate?
What situation, event or experience provided the biggest learning opportunity?
What is the biggest challenge or frustration you face as you prepare for 2022?
What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it!
Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable?

Get Ready for a Great 2022

While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for 2022.

If you’d like to chat about what you can do differently this year to enable your business to thrive, book a time with us today.

What to do when employing staff

Mon, 16 Sep 2019 14:56:57 GMT

WHAT TO DO WHEN EMPLOYING STAFF

As your new business grows, you’ll inevitably need to take on some employees. Having more hands at the pump helps you scale up, delegate tasks and broaden the scope of your operations. But what are the important things to get right when employing staff for the first time?

LET’S LOOK AT THE MAIN RESPONSIBILITIES WHEN BECOMING AN EMPLOYER.

REGISTERING AS AN EMPLOYER

If you employ anyone at a rate of pay above the National Insurance lower earnings limit (£123 per week, £533 per month) you must register as an employer with HMRC. This will mean operating a payroll to pay your employees wages, and applies even if no tax or National Insurance liability actually arises.

Once you’re liable to register, all your employees must be processed through your payroll system, regardless of amount. It’s a common misconception that casual or weekend staff can be paid ‘cash in hand’ without the payment going through payroll. That’s not the case and all wages must go through the payroll system
If you’re operating a limited company, directors in the company are considered to be employees in much the same way as anyone else. So, any salary paid to directors must also be processed through the payroll system.
You will need employers’ liability insurance with minimum cover of £5 million against the risk of your employees becoming injured or ill as a result of working for you.
None of your employees can be paid below the applicable National Minimum Wage. Some employers have a policy of paying at least the Real Living Wage.
You should check that your employees have the right to work in the UK and have the required visas and paperwork to do so.
Where necessary (e.g. if they work with children or vulnerable adults) you should carry out a DBS check on any new employees. This checks their background and criminal record to make sure they are suitable candidates to work with vulnerable people.
No later than the first day of work, you must provide each employee with a written statement of employment. This must include details of their role, rate of pay and pay interval, holiday entitlement and any probationary period. At the same time, they should be given details of notice periods, sick pay and other statutory paid leave.
You’ll have an ongoing need to look at your obligations regarding auto-enrolment into a workplace pension scheme. And you must report your payroll information to HMRC regularly, including on or before each payday through the Real Time Information system.

TALK TO US ABOUT MANAGING YOUR PAYROLL

Becoming an employer is good for the business, but does add a whole new layer of employee admin work.There are plenty of associated administrative tasks to be taken care of – and the penalties for getting it wrong can be severe.

We can take care of payroll processing and the reporting to HMRC, to make sure you stay compliant with the regularly changing rules.

If you want to run your payroll inhouse, ask us about a ‘health check’ to give you the peace of mind that everything is in order and looking shipshape.

Get in touch to talk about your payroll needs.