There’s no time like the present, so now is a great time to stop and reflect on your business and its current position in the market place. You can consider what your business has achieved over the last year, what you’ve learned in readiness for the year ahead, and what strategies you can take advantage of. This is also a great time to make some resolutions – whether that’s cutting out bad business habits, or opening up to new opportunities.
While every business is different in its goals and challenges, here are a few financial and tax tips that all businesses can benefit from.
Review your growth and goals
Ask yourself how your revenues and profits compare with previous years, and where you want to drive them over the next year or so. Given that we’re in a period of wider political instability which impacts on the economic environment, it’s particularly important to review how your business goals fit in with the wider market. The business world is constantly changing and your position may not be the same as it was a year ago or indeed, where it will be in a year’s time. Take time to undertake a competitor review and use the analysis to formulate a strategy to stay on top of the market throughout the coming year.
Make a resolution to review your growth and goals more regularly throughout the year, on a quarterly or even monthly basis. You may want to get some professional advice from an accountant on how to realistically plan for the coming year.
Review your bookkeeping habits and internal systems
Avoid the disorganised panic at the end of the next tax year by putting robust processes in place now. Include time during each working week to manage your books. Even one hour a week to sanity-check your transactions and logging your expenses will give you a running idea of how your business is doing, allowing you to nip any problems in the bud.
Good bookkeeping habits don’t just make it easier for you to keep on top of your finances – they also facilitate sensible conversations with your accountant (and funders) based on an up-to-date reflection of how things are going and ensures that everyone’s on the same page.
It’s not just your overall finances that need reviewing. Updating systems such as payroll and accounting software will help to keep things running smoothly for your employees.
We recommend a number of cloud solutions based on your business needs. Whether its Xero, QuickBooks, Sage or another package, there is plenty of choice, but look for a business adviser who understands all of them to get the best solution for you (and make sure it can grow with you and has a decent eco-system of apps and add-ons). It also makes good business sense to make sure that all of your employees are paid online by direct deposit, saving the company time, money and resources.
Examine staff shares and options for your employees
By using tax efficient, flexible employee benefits you can deliver greater actual value to your employees without necessarily increasing costs, enabling you to keep up with the competition in attracting and retaining your top talent.
In addition to considering the usual tax-efficient benefits, employers can design benefits packages that provide what employees really want without costing the employer a fortune. These include:
Diversifying the reward structure to include other forms of remuneration such as shares, securities or options
Using salary sacrifice for pension contributions, childcare vouchers and other tax or National Insurance Contributions (NIC) favoured benefits
Introducing voluntary benefits where employers can use their purchasing power to obtain reduced rates for benefits employees want
Research & Development Tax Relief
Make sure you’re taking full advantage of the Research & Development (R&D) tax credits available for SMEs. R&D is perhaps one of the least understood reliefs, both amongst the companies that might have a claim and also amongst advisors who might help them to make one. They are a valuable tax relief that rewards businesses for investing in innovation. Companies that spend money developing new products, processes or services (or enhancing existing ones!) can reduce their tax bill or claim cash credits as a proportion of their R&D spend – and we’re not just talking about manufacturers or engineering businesses either.
Research and Development also has a much wider definition than people think. The following is just a sample of what may qualify for R&D relief:
Staffing costs related to research and development (including salaries, employers’ NIC and pension costs)
Consumable items
Software
Externally sourced workers
Contributions to independent research
The tax relief available on R&D can be generous but claims must meet HM Revenue & Customs (HMRC) stringent requirements – so it is important to work with experienced tax advisors to meet the necessary criteria. Talk to us, to find out more.
Prepare for Making Tax Digital
Major changes are being made to the way in which all taxpayers interact with HMRC. This is known as Making Tax Digital and work has already started. If the government and HMRC stick to their timetable, the first updates will come into effect in April 2018. It is a complete change to the way businesses currently report their income and expenditure to HMRC, and will have an impact on the majority of individuals and businesses, regardless of size. Keep an eye out on our blogs at www. carpenterbox.com for more.
Under the current system, businesses prepare one set of accounts and report the information on the annual tax return, so there is one submission of information to HMRC. Under the new system, there will be quarterly reporting of profits and then a further annual declaration, making a minimum of five submissions to HMRC each year.
How can you prepare? Make sure your finances are in the cloud! A good online accounting option allows you to access your accounts whenever you need and wherever you are, as well as giving your accountant access to all of your running totals. With powerful encryption and remote backups, cloud accounting is a secure option, allowing only the people you choose to access your important financial information.
As mentioned above, we partner with a number of top cloud accounting software providers and have won a national award that recognised our unique approach and expertise. Our cloud specialists can help you find a provider that would best suit your business needs and allow yourself some accounting peace of mind.
For more information on reviewing any of the above, please visit www. carpenterbox.com or call me on 01903 234094 and I’ll introduce you to the most appropriate member of our team.
