Businesses

By measuring and reviewing the financial performance of your business, you can see where there are areas of growth. If you have good data, we can make that useful information. From this, we will also identify a route to success by being able to see what works well, and look at whether these successes can be applied in areas where things are not going so well.

If you measure performance, you can then use this to grow your business. Make a budget, and then compare actual trading against this. Refine the budget based on more accurate information, and go again.

Think of your budget as the map of your business taking you on a journey to places you have not reached yet.

If you have not prepared a budget before, let us help you. We are experienced at preparing budgets and can help you discover more about your business.

Keeping good financial records provides the information you need to see how well your business is performing.

A deeper dive into the information allows you to see where things are going well and areas where you might have lost your way. Aim to do more of the things that are going well, seek advice on how you can find your way to a better business if things are not going so well.

We can advise you on the best way to keep your accounting records, for example using cloud based accounting software such as Xero.

We have tools that help you analyse the data.

The short answer is yes!

A business plan is an essential document that sets out what your business is about, and includes a strategy for its future success.

Your business plan should include:

• An outline of your overall strategy for the business.
• Financial projections of expected performance.
• Marketing and operational plans.

At the outset some of this maybe quite sketchy, which is absolutely okay, commit this to the document and regularly review and update your business plan. Remember this is a working document, it not something that you publish and look back and admire. It is a working document that should be always evolving as the business develops.

Financially, it provides the first benchmark for the performance of a new business. Update your financial projections as you go on and gain empirical information, evidence achieved through observation and real day to day experience within your business.

Your business plan should also include competitor analysis and set out your funding requirements. Are you providing all of the funding yourself or do you need to seek outside finance? A good business plan will provide a great source of information to help persuade banks or potential investors to provide the support you need.

Having decided to start your own business, you need to start preparing your business plan. This will enable you to build a model of how your business should look. The financial projections will help you understand the scale of your business and the financial risks and uncertainties related to your plans.

All of this will help shape the structure of your business in terms of

1. Who will be working in the business, what you are selling and where you are operating from.
2. The formal structure of the business, whether you should form a limited company or be a sole trader. If you are going into business with others, will you be a traditional partnership or a hybrid called a Limited Liability Partnership? Or a social enterprise or charity?

We guide you through these different options and can provide you with the analysis to help you decide which would suit your current circumstances. We can also advise on making changes, after all you are not stuck with the option you start with. You can always change from a sole trader to a partnership or a limited company, or dispense with the limited company to become a sole trader.

Arrange a call today.

For accounts each year we need details of income, expenses and any other information we will help us prepare the accounts. We will discuss this with you so you know what to provide. We do not always need all of the invoices and receipts.

For tax returns we will remind you of the items included in the previous year, and would expect the same plus any new items. That could include gift aid, details of income, pension contributions and interest paid.

HMRC’s rules on business expenses state that the expense “must be necessary, wholly and exclusively incurred as part of the day to day running of your business.”

Most things will be common sense and obvious that it meets this requirement. The difficulty comes in some trickier areas where it is not so clear. These will be different for each business as it is how the expense relates to your particular circumstances.

Some of these areas include:

• Business travel including mileage.
• Overnight allowances.
• Cost of the use of your own home as an office.
• Protective clothing.
• Subscriptions.
• Equipment used in the business.

Other costs have special rules, including:

• Pension costs.
• Interest.
• Fixed assets and capital allowances.

There are also certain costs that, whilst can be paid by the business, are not allowable for tax purposes. The most common areas:

• Entertaining expenses.
• Some legal and professional costs.
• Gifts.

We would be happy to carry out a review and point you in the right direction.

Your business is a very important part of your life, in most cases it will provide a substantial part of your household income.

It also provides the opportunity to make a positive impact on your quality of life. On average, we spend approximately 1/3 of our lifetime working – that’s a significant proportion of your time. It’s therefore vital that your business does not take over your life, but supports it, furthers your purpose, and provides the freedom and change you seek.

We appreciate it can be difficult to get the balance right.

If you have not set business and life goals, this is the starting point. We can help you with this initial part and then assist in the measurement and assessment of progress towards these goals.

The journey is never a perfect straight line, there will be diversions and re-routing along the way, let us help you navigate your way through this.

When you are thinking about setting up a business you should consider what is the best way to operate the business. In many cases starting from scratch as a limited company is the most appropriate.

You may wish to have the protection of the limited liability it provides (although there are exceptions to this, including having to sign personal guarantees). As a sole trader you have full liability, and as a partnership each partner can be liable for all of the debts, not just their share.

This is just one of the reasons you may choose to operate through a limited company.

Each has a consequence for the taxation of profits and relief for losses.

Give us a call to discuss and we can provide you with our opinion of whether you should form a limited company.

HMRC have spent a considerable amount of time and effort trying to distinguish between employees and contractors, purely to try and increase their tax revenue, as generally a contractor pays less in tax and national insurance.

That being said, a true contractor/freelancer has risks associated to their work and are not entitled to the same benefits an employee receives (such as holiday pay, statutory sick pay and pension contributions).

There needs to be a contract of employment or a subcontractor agreement in place, which should provide assurance to the respective sides of the agreement as to their status.

Most cases are clear and all parties know the situation, but there are always cases that are potentially grey areas that could be open to challenge by either party or lead to an HMRC enquiry.

Our advice is to review the contract that is in place and the actual way the work is performed for signs that could be more significant than the terms of the agreement. There have been cases where the decision was reached because of actual working practices rather than the written contract.

Talk to us.

As a company you need to pay corporation tax based on the profit for the year shown in your accounts and is usually due 9 months and 1 day after the end of the accounting period. For example, an accounting period that ends on 31 March 2021 the corporation tax would be due 1 January 2022.