As the clock ticks towards 01 April 2024, businesses across the nation are bracing themselves for the significant minimum wage increase set to come into effect. With no accompanying support from governments in these challenging times, the burden falls on the shoulders of businesses to adapt and plan effectively.


The Rise of Minimum Wage

As with every year, April 1st marks a pivotal moment as the minimum wage sees a substantial increase. Workers aged 21 and over will be entitled to the National Living Wage where currently it was workers aged 23 and over. While the intention behind such adjustments is to uplift low-wage workers and tackle income inequality, the reality for businesses is starkly different. For many, this hike presents a formidable challenge, with limited government assistance.

 

23 and over

21 to 22

18 to 20

Under 18

Apprentice

Current rate

£10.42

£10.18

£7.49

£5.28

£5.28

01 April 2024

£11.44

£8.60

£6.40

£6.40


For small and medium-sized businesses already grappling with rising costs, the wage increase poses a significant threat. Increased labour costs can directly translate into higher operational expenses, potentially squeezing already tight budgets.

The Importance of Planning

In these challenging times, proactive planning becomes paramount. Businesses must undertake a comprehensive assessment of their current financial standing, identifying areas where cost-saving measures can be implemented without compromising on quality. From optimising operational efficiencies to exploring alternative revenue streams, every avenue must be explored to mitigate the impact of the wage hike.

 

Conduct a thorough review of existing processes and workflows to identify inefficiencies. Planning is key more than ever and will help you weather the storm and emerge stronger on the other side.

Its a couple of weeks to get everything done and ready for the when the New Year starts up again

6 April 2017

 

The government have made a number of changes to taxation during the year so its good to have a plan to make sure you maximised your tax free allowances.

 

Check you have used up all of your tax code,   because once its gone its gone for good and starts  fresh again in April.   The tax code is currently £11,000 for the year for individuals.

 

Husband and wife you can transfer £1,000 from either partner to the higher earner, this is good for part time or if a partner doesn’t work.

 

Have you bought your equipment ready for the new year to start.  Think of new equipment as not a ill put that off until later but an opportunity be more efficient, speed up your work or even make it easier for you.

 

Capital Gains Tax allowances timing of when you sell an asset is key as theres £11,100 tax free allowance for each year this is additional to your normal income tax code.

 

Flat Rate Scheme is changing from April 2017 are you ready, it will be 16.5% payment over if you are a business that is mainly labour orientated.

 

Are you one of the many higher tax rate earners who is having to deal with the mortgage tax relief restriction.   Wear and tear allowance has now gone,  keep all of your receipts if you are replacing furniture or equipment in your rental house, you cannot claim without your documents.  It is replacement only, first year purchases are excluded now.

 

Again Child Benefit is restricted or even taken away if you are a higher earner over £50,000

 

Child Care Vouchers ceases at the end of April 2018, have you signed up to them its £55 per week tax free allowance which saves you tax and national insurance for income of less than £43,000 per annum.

 

Have you used your £15,240 ISA allowance it all starts again in April.

 

Don’t forget the dividend tax rules have changed dividends now attract 7.5% to basic rate if your dividends are over £5,000.   32.5% for anything over £43,000 make sure youre saving your tax money.

 

So get planning,  check these items if you missed any of these out of your routine this could be saving you money.

 

 

 

I am bringing up the balance sheet again as we have been seeing some sets of accounts coming into our business with insufficient information to be a credible balance sheet.

I am seeing far too many prepared using the cash accounting system. I know this is not the easiest of documents to understand when you’re reading a set of accounts so I wanted to tell you some of the differences between a good balance sheet, and one that has been thrown together as a last resort.

I have been preparing and reading this document for a number of years and have seen all shapes and sizes. Part of my training was to read ones prepared by the FTSE 100 companies, not recommended. The financial statements can be complex and lengthy.         But micro and small companies are done fairly simply so you don’t have to read 50 pages of detailed technical language.

Be sure that not only does the balance sheet contain information about the profit or loss you’ve just made during your trading year but has a number of components.

I would expect you to receive a detailed set of pages describing the different figures in the balance sheet. This doesn’t need to go to Companies House as small and micro businesses are abbreviated, but you should have a full copy that you can use for your business going forward, if you don’t you need to question this.

If you are going to sell your business or go to the bank to borrow money, you are going to need this important document. This is an accumulation of your whole trading history whether you’ve been trading for a year, or 50 years. A company that is 50 years old balance sheet will look different and may have complexities that a new business will not.

Components to expect.

Fixed Asset Register

There should be a summarisation of the fixed asset register detailing accumulative costs and deprecation and changes happening during the financial year. There should be a net book value at the end so you know the value of your assets.  Fixed assets are your machinery, vehicles, refurbishment, furniture etc.

Intangible assets

These can be patents, trademarks, goodwill. This needs to be highlighted in detail, with amortisation or not.

Debtors

This can be money in the bank Trade debtors, customers that owe you money Other debtors can be prepayments, accrued income, if the company has loaned money to a member of staff etc.

Creditors

Overdraft facility at the bank Trade Creditors, Suppliers you owe money to Taxation HMRC any of the taxes, Corporation tax, VAT, PAYE Other Creditors Accruals, invoices you havent received from a supplier, but paid, directors loan etc.

Long term liabilities

Can be bank loans, lease agreements, hire purchase. If these components are known to you and are not in your accounts, you must question this.

The balance sheet is a financial document that tells the reader the financial position of your business it is vital to be correct. It is even more important than a profit and loss, that only tells you one year timeframe.

Make your business a strong one, a weak set of information will not help you move forward, it can have the opposite affect and hold you back.

Its in your hands!

What to do with your business if things have quietened down over summer

This may not be affecting you, but a lot of businesses suffer at some point during the year from seasonality or the great British weather affecting the productivity of their business.

Ive worked in the travel industry where if the weather is too good the telephone stops ringing, but Boxing Day the phone lines are maxed out.

Manufacturing tend to have a shut down over Christmas etc.

Everybody seems to be on holiday in July and August!

This might be adhoc or happens the same time every year, you know its going to happen, so planning ahead for that potential sales fall is vital to keep the operation moving and generating income for when the good times come back.

Keeping a buffer in the bank account certainly helps, you may need to scale back for a short period of time.

But for an ever growing business you are not going to want to scale back you want to keep on going.

Increase the marketing, do a special offer to either get things moving again in the Autumn, or get things moving now. The choice is up to you, but you are going to have to do something about it. Sitting on your laurels will not generate that income.

Use the time to look at your operation, are there systems you can tighten up on, costs to trim down. Think efficiency all the time, if you can do it better, add value, or save some time, its all a good thing.

Or a topical word at the moment, Collaboration. Get together with your network, maybe a couple of you have connected skills, and can promote each other, or do an event together and share the proceeds. What have you got to lose.

The important thing is to not sit back and wait for it to come, you make it happen.

 

 

 

 

 

 

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Love is in the air this month, with Valentine’s Day just here .. and now is the time to give your business the TLC it also needs.

Investment. Investment in a business can be many things. It can be your investment of time and energy in nurturing your business as it grows. It can be working on your operations, improving your processes and making yourself more efficient.

Investment is money. The business may not be generating you the income you were expecting, so investing some money into the business to spend on a marketing campaign, or buying that piece of equipment that will make the operation run smoother may seem painful initially. We are still at the start of the New Year, getting these investment ideas up and running will be worth it in the end.

Now is the time to take a closer look at your customer base, are you meeting their every expectation? Is there something you are not currently offering that could add value, or which you can use to up-sell to increase your sales turnover? A business which knows their customers very well, and manages their expectations always succeeds.

Marketing. Take a look at your marketing strategy. If you are putting time and money into activities that don’t work, then you need to stop them! Only spend money and time on what works for your business. Measuring the success of your marketing is a very important exercise that needs to be done on a regular basis.

Processes. Is there something you are doing that can be done more efficiently? The difference between profit and loss can often be a case of the process being too cumbersome. So, streamline your processes to meet the changing needs of your business. This will become increasingly vital as your business grows. If you don’t manage your processes – you are guaranteed to waste money.

You the owner. Make sure you are taking care of yourself. If you are busy and stressed you will not have the mindset to focus on your business effectively. Watch your stress points and take regular holidays. I still see far too many clients visiting me looking completely worn out. It’s not good for you – and it’s definitely not good for your business.

Your business is an investment for the future, feed it and it will grow.

 

 

 


This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.