Get Your Financial Check Up

Writing a will

60% of the UK population a staggering 29.5 million have not made a will.

Many of which assume that their money will automatically go to the relatives of their choice when they die.

If your money is left unclaimed and no blood relatives can be found, your money will go to the Treasury. A record breaking £10billion in 2010.

What happens to your business if you either cannot work or die. These are things that business owners need to look into.

Inheritance tax

Take a look at your overall assets, your business, your home, other property, other sources of income, valuable and movable chattels.

The current threshold is £325,000. This has not changed since 2009

There are a lot of tax reliefs available for this depending on how you have set up your estate. Could you be giving away 40% of your estate (the current inheritance tax rate), to the treasury over and above this threshold.

Most financial advisors do not charge for a first visit consultation.

Savings

Take advantage of the ISA limit. Rates have recently gone up to 3%.http://www.moneysupermarket.com/savings/ is a great website for finding out the best rates of return. Its tax free too.

Pension

The pension system has taken a knock over the last couple of years with the financial services industry being in turmoil. The government has a new scheme of automatic enrolment starting in 2012. Directors are exempt, but do you have an alternative plan. There are many schemes which still offer tax relief on income tax. Could you be an employer who is going to be affected by the scheme, have you included this cost in your budget.

Sickness and Disaster Recovery

How have you planned your business in the event of you or a key member of staff becoming long term sick. Set up your risk assessment and come up with a solution. Keyman insurance, sickness policies, protection of income policies.

What would happen if there was a fire or flood at your premises, or your computer system had a virus.

Loans and debt management

There are still many companies out there that offer assistance if you have got yourself into trouble with debt. Don't put off what could be causing you stress. Consult a professional who can not only help, but give you stress relief too.

Loans and mortgages

The banks are still lending and looking for your business. Yes the system has been tightened up, but there is still credit out there to have. We have access to private investors as well as the banks. So give us a call if this is something we can help you with.

The Grant System

There are still grants available to the small business, it does depend on your industry but they are still out there to be had. http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&topicId=1073858790

Your business and its future

Could you benefit from a business review, do you use your business plan as a focus to plan ahead.

We look at your sales margin
Cost of Sales
Stock turnover
Your overheads
Comparison year on year
Give ideas on tax planning and working capital and liquidity ratios.

We can even help you with your marketing strategy by talking to our professional partners. Let us help you put a comprehensive business plan together. A tool that can be updated as you develop your business.

How is your business structured, if more than one director/partner is there a partnership/Directors agreement, setting out each partners job role, split of the profit etc.

The paperwork, do you have a good advisor that is keeping you up to date with all the current legislation. Putting your important dates in the diary and reminding you of them as they arise.

What is your exit strategy, do you plan on living off the income of the business into retirement, or is the business your pension plan. What is its value in the open market. You need to take into account Capital Gains Tax here.

Ive given you a lot to think about, but looking at all of these areas in turn, will set you up for the future, and will save you money, whether it be by looking at the cost of things, saving time and energy or saving you tax.

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.

I do get asked a lot of questions about going Limited and the timeframes that small companies should consider and the options available to them.

For Soletrader

• Your records are not public and your competition cannot see any financial information on you.
• The paperwork is fairly simple to upkeep and the Self Assessment online is straight forward, which is why a lot of soletraders do their own filing.
• Suits small companies with turnover of under £100,000 with not too many transactions and complications in their accounts.

Against Soletrader

• Your personal assets are at risk in the event of bankruptcy or liquidation.
• As your records are not public, your credit score is more likely to be lower than your Limited company counterparts.
• The fact that a lot of soletraders do their own filing, eventually costs them money, as they are not necessarily aware of the tax reliefs available to them.
• They may have a limited sales market, a lot of the larger firms will not deal with small companies under a certain size as they are more risky.
• More likely to pay a little more tax as you pay profit on everything you earn, whether the money has been spent by the soletrader or is sitting in the bank.

For Limited

I tend to start asking my soletrader clients to at least consider investigating into going Limited once they hit the £100,000 turnover threshold. They are probably VAT registered and have staff working for them so are already used to extra regulatory paperwork anyway.

• Increased credit score, as your records are now public record.
• Give the impression of a profession company of a certain size. Making you more desirable to gain larger sales contracts.
• Limited Liability, your personal assets are not at risk in a bankruptcy or liquidation, unless you have placed these assets as guarantees for the company.
• There are better tax reliefs available as the Directors/Shareholders are a separate entity to the Company.

Against Limited

• More regulatory paperwork, accounts need to be prepared in a certain statutory format to be accepted by Companies House. Including the preparation of a balance sheet, which a lot of soletraders do not have prepared for Self Assessment. The requirement of an annual return, corporation tax form along with the self assessment return still required for the individual director/directors.
• There can be an increased Accountants cost for the extra paperwork required.
• Your records public, which means anyone can see them competitors, customers and suppliers too. Small companies qualify for abbreviated accounts, which contains only limited information that is statutory, so you’re not giving away your trade secrets.
• There is a lot more financial jargon, contained within the wording required for statutory accounts, and you have increased risk of getting fined if you are late in submitting the accounts.

We keep a great diary system, which reminds clients, when their dates for particular submissions are due which has been greatly received.

I hope you find this blog helpful in deciding your future business focus for the company.

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.

How to beat the recession blues

Planning your business through tough commercial times will be more of a necessity than ever, sales may be not as productive as before, cashflow may be tight. See my 6 point tips that will see you through. These methods work time and time again, so give them a try.

Look at your product or service

If sales are not converting as quickly as they were before look at what added value you can offer as part of that service to make it more appealing to your target market.

What is your Unique Selling Point?

What is your client retention? Its cheaper and easier to have a customer returning to you time after time, than them coming once, then never returning. This could be a project in itself.

First you need to know who are you are targeting.

Look at your demographics, ie

Selling direct to the general public
Age groups
Location is the product or service local or national, global
Gender
Business to business
Small businesses
Large business
Specific industry’s

The Competition

How is your product different, what are the added features
Separate yourself from everyone else
Are you cheaper
Are you local
Can you incorporate postage costs within your price
Take a look at the large corporations, they would have seen plenty of tough times, how do they get through the recession. Learn from the experts.

In times of recession price sensitivity and quality are always a priority for your customers.

Pricing Structure

How do you cost your product or service.
For example use the BCG Share Growth Model as below. This will help you assess which products are making you profit, which are not.

Split your costs and services into 4 categories, see the picture example.

Stars
Products that are high volume and high margin. These may be products that have always been good sellers, and a favourite with your customer.

Question Marks
Products that are low volume and high margin. These might be a niche market product that only appeals to a certain audience.

Cash Cows
High volume products, low margin. Low value products, but you sell a lot of them.

Dogs
Low volume and low margin. Products that don’t really have market, obsolete stock etc.




Costs
The cost of sale

Who do you buy your materials from

If you deal with a retailer, maybe its time to negotiate.

Look at your high volume products, can you buy direct from the wholesaler, you will save at least 30% doing just this. Look at your stock levels, even holding stock for three months. Look at the possibility of the savings versus cash outflow in holding stock. It might work out a better option.

Overheads
Assess every cost you have from the every overhead from rent, heating, electricity, the phone bill. Even the stationery bill. Get your negotiating skills at the ready. If your struggling, they may be too. They need your business.

Look at local businesses and see what they can offer, you’ll be helping your community and possibly reduce your logistics costs too.

The wages bill, it is a high cost for a business, make sure you get the maximum out of your investment. Don’t see your staff as just employees, they are an investment in your future. Look at training, how can they add value to your product or service.

Look at your car and fuel costs, don’t make unnecessary travelling journeys.

Don’t spend on unnecessary costs, keep the frills for the better times.

Cashflow
Look at all ways of protecting your cashflow. Plan ahead put together cashflow plans, even a simple one will show you ahead of time when you are going to need to fill the gap. Is your business seasonal. If you see a drop in cash, start saving for it now. Don’t leave it to the deadline date as you wont have given yourself enough time to build up your cash reserves.

Investment in capital expenditure, or taking on staff, assess a long term plan the viability of this, before you spend. Growth is lovely, but staying open is more important.

Look at ways to ease the cashflow burden. Look at your weekly, monthly overhead costs. Ie Ask yourself this question “What do I need to sell to cover my overheads.”

Gain credit from your suppliers.
Look at an overdraft facility with the bank, yes they charge, but you never know when you might need the cushion.

Look into leasing your fixed assets, this will also help with the cashflow.
Pay your VAT, PAYE monthly, at least it will reduce large amounts of cash going out of the bank at three monthly intervals. Ie spread the cost.

Look at your long term, possibly obsolete stock, sell to a scrap merchant, hold a sale. It costs money to sit in your warehouse.

Diversify
If you are not hitting the right note with your customer, maybe think about other sources of income. Look at the market place, what market isn’t saturated yet.

What services are connected with your products, its all about adding value to what you do already.

If your business is seasonal, what can you do with that time to keep the cash coming in. If its routine every year, make this year different.

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.

This blog has been requested by some of our clients who from time to time have asked us questions relating to the development of their companies.

As we are from a commercial background, we are a little bit different from the conventional accountancy firm.

Yes we will keep you up to date with legislation and offer tax advice to make you aware of tax savings and reliefs available to you personally and for your business.

But also offer advice for the development of your business.

Here are a few tips that can be shared and applied to many types of business industries.

I hope you like them.

Thank you
Nicola Cross

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.