Methods of Finance

In our latest blog, we talk about the best methods of finance for your business. Sometimes it’s great to have that extra push to take your business to the next level. To attract the best funding for your business, you will need a business plan. We are experts in the field of preparing a cashflow and a business plan and can assist you in achieving the best method of finance for your business.

Finance Wales

Finance Wales are set up to aid in funding. They offer bespoke debt and equity investment packages designed to boost your business and accelerate growth. They offer three types of packages, micro loans under £10,000 have an easy two-day process. Have a look at their website, 

http://financewales.co.uk/business-finance-/growing-a-business/micro-loans-under-%C2%A35,000.aspx 

for more information.

Bank Loans

Bank loans are probably the most common types of finance for you and I. These types of finance are an amount of money borrowed for a set period with an agreed repayment schedule. The repayment amount will depend upon the size and duration of the loan and rate of interest. The terms and price will vary between bank providers. There isn’t just one type of loan, there are many different types, which I will look in to and describe the differences.

·         Working Capital Loan – This type of loan is usually required at short notice or emergency situations. This will usually incur the highest percentage of interest.

·         Fixed Asset Loan – For buying assets, where the asset itself is used as a security for repayment.

·         Factoring Loans – This type of loan is based on money owed to your business by customers or clients.

·         Hire Purchase Loans – For long term purchase of assets such as vehicles or machinery.

It’s best to talk to your bank or bank manager, as they will let you know the exact amount you can get for finance. The bank managers love an excellent business plan and cashflow, so make sure yours is current and polished to get in the good books of your bank manager!

Overdraft

This method of finance is a sum of money extended to you as credit by your bank, set at a pre-arranged limit when your account balance drops below zero. Usually charged interest on any amount of overdraft you use. The terms and price, like the loans, vary between providers. This is a good source to manage cashflow, but it is probably not suitable if you’re looking for long term financing.

Crowdfunding

Crowdfunding, also known as crowd financing or crowd sourced capital is usually carried out online. This allows several investors to individually invest smaller amounts of money in to a business. The individual investments are then combined to help a business reach its funding target. Crowdfunding is an excellent option for businesses that struggle to raise finance through loans or the conventional funding methods. Since crowdfunding is conducted online, you should make sure your idea is protected. In return of the funding, investors usually get a percentage of share of the business.

You can find more information by visiting http://www.crowdfunder.co.uk/help/what-is-crowdfunding

Government Offers

Governments usually offer support to businesses in all different shapes and sizes. https://www.gov.uk/business-finance-support here you can find from funding and finance, to grants and to mentoring for your business.

Caerphilly council are offering a business development grant. This grant can provide up to 45% of eligible expenditure to a maximum of £2,000. Business must be based in Caerphilly and be in the manufacturing or service to the manufacturing sector, or have a minimum of 60% business to business. For businesses in the Caerphilly area, please look at this link http://www.caerphilly.gov.uk/Business/Business-grants-and-funding/Business-development-grant to get more information.

Remember the key to accelerating your business in the positive forward thinking way to get that extra push is to have a business plan and cashflow in place. We offer a one hour no obligation consultation, where we can sit down with a cup of coffee and discuss your business. 

Visit our website on www.crossaccountingservice.co.uk or call us on 029 20 653 995 to see how we can assist you.

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.

Flat Rate Scheme

The Flat Rate Scheme is designed to simplify your records of sales and purchases. The process is to apply a fixed flat-rate percentage to your turnover to arrive at the VAT due. Fixed-rate percentage do vary depending on the type of business. You can find a list for percentage on this link https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7300

From April 2017, there will be a new rule to start regarding the flat-rate scheme, this is because the government is concerned that some businesses are using the Flat Rate Scheme to pay less VAT than is appropriate. This will mainly affect businesses that spend very little on goods, such as businesses that provide service.

 So, what is changing? The new change will only affect businesses which have a very low cost base. These businesses will now be called “limited cost traders”. A business will be a “limited cost trader” if it spends less than 2% of its sales on goods or less than £1,000 a year, even if this is more than 2% of the businesses turnover on goods.

VAT returns can be a pain and take up time and not allow you to do what you do best, running your business! Visit www.crossaccountingservice.co.uk to discuss your VAT issues with us.

Restricting finance cost relief for landlords

From April 2017, there will gradually be an introduction of a basic rate reduction restricting the relief for finance cost. Finance cost includes mortgage interests, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans.

Landlords will no longer be able to deduct all their finance costs from their property income to arrive at their property profits. Instead, landlords will receive the introductory basic rate reduction from their income tax liability for their finance costs.

The governments gradual change will be as follows:

·         2017 – 2018 the deduction from property income as it currently is will be restricted to 75% of finance costs with the remaining 25% being available as a basic rate tax reduction.

·         2018 – 2019 the deduction from property income as it currently is will be restricted to 50% of finance costs with the remaining 50% being available as a basic rate tax reduction.

·         2019 – 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction.

·         2020 – 2021, all financing costs incurred by a landlord will be given as a basic rate tax reduction.

This change is being implemented to make the tax system fairer. The government want to ensure that landlords with higher incomes no longer receive the most generous tax treatment.

For landlords in Wales, there is also a new law that has come in for self-managing landlords to obtain a licence or have an agent to deal with their properties. This is compulsory and to find out if you need to apply visit www.rentsmart.gov.wales

We have a lot of clients with a portfolio of properties and help them when it comes to their

self-assessment. If you’re a landlord and don’t understand the rules, you can contact us on 02920653995 or send through an email on nicola@crossaccountingservice.co.uk

We’re in the full swing of the Summer Holidays, as a business owner this can be a very busy time if youre in the food and leisure industry, it can also be a quieter time as many owners see because everything appears to be put on hold when suppliers and customers take time off and are on holiday.

How does Summer affect you? I see many business owners not taking time away from their business and carrying on regardless. Its important to have time away to recharge the batteries and to re-evaluate where you are going with it.

A lot of my clients are small micros businesses who might not have an army of staff to take care of things whilst theyre away. Heres a few tips they’ve shared with me on how they still manage to run their business but still take some important r & r.

Plan the diary around their holiday, do the bigger more important jobs in the run up to the holiday then plan the next jobs to be in the diary when they return.

Take small breaks so time away isn’t too dramatic and they don’t face backlogs coming back. Ie a long weekend away a couple of times a year.

Use a subcontractor to keep things ticking over until they come back.

Those companies with staff, leave clear instructions on what is to be done whilst theyre away.

Others leave the mobile phone on in case of emergencies but limit their workload reduced over the time period.

Whatever your business please take that rest time, you will read time and time again, those owners who take time away and have the rest are far more likely to succeed, than someone who never takes time away.

Work life balance is important to keep in the mind, we all like to think of ourselves as workaholics, and fully committed. Our health and wellbeing, and feeling motivated and energised is important too.

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.