Category: Finance Function

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Finance Function Gym

Top Money Resolutions for 2025: A guide to financial wellbeing 

As we enter a new year, many people set resolutions to improve parts of their lives, such as fitness, health, mindset and finances, and this can be so overwhelming that they fall at the first hurdle. Taking on too much and making changes that are too big can impact your ability to succeed. My top tip, would be to break down the goal and take small steps to get started. 

If you have a goal to get out of debt, firstly ensure you know where you are starting and understand the amount of debt, repayments, when it will be cleared, create a simple table (on paper or a spreadsheet). Gathering the information is the first step, in fact the first step may even be opening the letters and then gathering the information. Then you can decide what to do next; consolidate debt, speak to the companies, overpay the biggest one, or the one with the highest interest rate.  

My top tips to help you achieve your financial goals in 2025 are: 

  1. Understand what you want to achieve in 2025 as this will determine your next steps. Do you want to clear debt, build savings, buy a house, invest, go on holiday, pay the bills?  
  1. Create a realistic budget. Track your income and expenses to identify any areas where you may be overspending or spending on things that do not align with your 2025 goals.  
  1. Build an emergency fund, this is a safety net that can protect you if the unexpected happens, aim for 6 months living expenses. If you are starting from £0, just start with whatever you can afford now, even if it’s £10. You may find you have some savings from above that can contribute here.  
  1. Automate your finances, this can save you time and energy. If the money towards savings, your emergency fund or debt, automatically leaves your bank on pay day, you are less likely to miss it. It doesn’t require you to take action and remember, the money moves to the correct place automatically.  
  1. Create pots for different areas of your life: food/bills, savings, holiday fund, Christmas 2025 fund, emergency fund. You can either have different bank accounts for this, or a lot of banks now have “spaces” or areas where you can transfer the money to, so it is separate. This is a good way to manage money on a monthly and annual basis.  
  1. Have a “fun” pot, this is money you can just spend and enjoy. If you are too restrictive with your finances, it is likely that you with eventually overspend or spend in a way that doesn’t align with your 2025 and beyond goals. 
  1. Improve your financial knowledge, there are many websites and books out there now. Starting with a government recommended one would be the best place to start, as not all information online is accurate.  

By implementing these money resolutions, you can take steps towards improving your financial wellbeing and your personal wellbeing. Remember, start where you are and take small steps, don’t be deflated by other people’s progress. And finally, celebrate your successes along the way.  

Categories
Finance Function Gym

What are the different financial mindsets?

person sat on money

A financial mindset is more than just spending habits. It’s the underlying beliefs, values, and emotions that shape our financial decisions. As we navigate life’s ups and downs, these mindsets play a significant role. Take, for instance, me, I used to meticulously budget every month, I fell under the “Planning” Money Habitude. Every pound was accounted for, ensuring I felt in control (and maybe a little relieved!). 

Dependent on which methodology you follow, there are a number of different archetypes, money story types or habitudes. I like to follow the Money Habitudes types (https://online.moneyhabitudes.com/), which categorises financial mindsets into six distinct groups. 

Planning: These individuals are thoughtful about saving and spending, often with a budget in place. While the plan itself might not be perfect, they prioritise sticking to it for a sense of control. 

Security: Often linked to planning, the Security habit prioritises financial safety. People with this mindset may save more than necessary, seeking a strong financial buffer. This can manifest as hoarding tendencies (something I can personally relate to – money used to be my security blanket!). 

Spontaneous: These individuals act impulsively, often making financial decisions based on emotions. While exciting, this can lead to impulsive spending and subsequent guilt. They are quick to jump on opportunities which planners may not.  

Carefree: This group may lack the skills or desire to manage money, often delegating financial responsibility to others. 

Giving: These generous individuals prioritise helping others, sometimes at a risk to themselves, potentially neglecting their own financial needs. 

Status: Driven by a desire to fit in and keep up with appearances, this mindset can lead to unnecessary spending to maintain a certain lifestyle. This is where the “keeping up with the Jones” saying comes from. They may spend on things they cannot really afford.  

It is important to remember that all archetypes and habitudes have pros and cons and that one is not better than the other, a balance is what we are aiming for. Many people exhibit a blend of Money Habitudes. By understanding your dominant financial mindset, you can make more informed financial decisions and achieve your long-term goals. 

Are financial mindsets formed early in life? – and can you change yours? 

Financial mindsets are shaped early in life, our childhood experiences play a significant role in forming our beliefs and attitudes towards money and are formed by the age of 7. We are influenced by: 

  • Parents/ guardians:  The way our parents handled money – their spending habits, attitude to saving, and discussions about finances impact how we feel about money. Did you grow up in a household where money was a source of stress or was it secretive? Or was it discussed openly and positively? These experiences heavily influence our own money stories. It is important to remember that there is no blame here, as parents can only lead how they know from their own stories, habits and influences.  
  • Early Experiences: Did you have early successes or failures in managing money (like a paper round. I worked on a market stall)? These experiences can shape how we feel about money; how confident we feel managing money and the decisions we now make.  

Can You Change Your Financial Mindset? 

You can change your financial mindset, while our beliefs are deeply rooted, our financial mindsets are not set in stone. Here are some steps to get started: 

  • Self-Reflection/awareness: Start by identifying your current money stories. What are your beliefs about money? How do you feel about spending and saving? What is your earliest memory of money and how does that make you feel? 
  • Challenge Limiting Beliefs: Are you holding onto negative beliefs about money that are no longer serving you? For example, “I’m not good with money” or “Money is the root of all evil.” Challenge these beliefs, they did once benefit you but is that still the case? 
  • Try something new: Step outside your comfort zone. What new financial habits could you try, such as spending a bit more on yourself, setting up a regular savings amount or creating friction in the buying process (could you wait 24 hours before purchasing).  
  • Seek Guidance: Consider working with a financial coach to understand the stories you hold and develop more balanced money habits.  

Remember, changing your financial mindset takes time and effort, it isn’t often one and done. Be patient with yourself, celebrate small victories, and don’t be afraid to seek support along the way. 

How to navigate if your partner has a different money mindset 

When we have different money stories in a relationship, it can be challenging as we will often have different ways we save, spend and invest. Here are some strategies you can try: 

  1. Open and Honest Communication: 
  • Regular Money Dates: It is important to have dedicated time to discuss finances openly and honestly, otherwise we can make comments and start arguments when we are not in the right frame of mind. Set a regular time, that you can sit down together, with a cup of tea and talk through any money conversations that need to be had.  
  • Active Listening: Ensure you listen to your partner’s opinion, even if it differs from yours. Try your hardest not to comment immediately and let them talk. Often as people talk freely, a more open discussion can be had.  
  • “I” Statements: Avoid confrontational comments such as, “You always spend too much,” try “I feel anxious when we overspend on things we I don’t feel we need.”    
  1. Understand Each Other’s Mindsets: 
  • Identify Your Money Habitudes: Determine your dominant money habits (e.g., Saver, Spender, Planner) and encourage your partner to do the same.  
  • Acknowledge Past Experiences: Recognise that past experiences and upbringing shape your financial mindsets. Everyone has different experiences and it’s important to remember that generationally, your parents would have lived in different times with World Wars and rationing and this will impact your money stories.  
  1. Find Common Ground: 
  • Shared Financial Goals: Set joint financial goals, such as how much you need/want for retirement. What lifestyle do you want during retirement, do you want to spend more now or save? Do you want to travel or renovate your house? 
  • Compromise and Negotiation: Be willing to compromise and find solutions that work for both of you, as with all areas of a relationship and money is no different. 
  1. Consider Separate Accounts: 
  • Joint Account for Shared Expenses: Create a joint account to cover shared expenses like rent, bills, and food shopping.  
  • Individual Accounts for Personal Spending: You could have separate accounts for personal spending to accommodate different spending styles. You could also have a joint “fun pot” for opportunities. I have both, we have a shared “fun pot” and we have separate accounts that we can spend on whatever we like. My partner likes trains, I don’t understand it, but that is ok, it’s his money.  
  1. Seek Professional Help: 
  • Financial coaching A financial coach can provide objective guidance and help you develop a financial plan that works for both of you.    

Remember, navigating financial differences takes time and effort. Be patient, understanding, and committed to finding solutions that work for both of you. 

Can financial therapy help – and what would it involve? 

Financial therapy can be incredibly helpful for individuals and couples who want to improve their relationship with money.  

What Does Financial Therapy Involve? 

Financial therapy/coaching goes beyond traditional financial advice (such as financial advisor or accountant advice). It involves looking into the underlying emotions, beliefs, and behaviours that influence your financial decisions and habits. Here are some common aspects of financial therapy:    

  1. Identifying Limiting Beliefs: Financial coaches help you uncover your beliefs and stories about money that may be preventing you from living the life you want. These beliefs can stem from childhood experiences,societal influences, or past financial setbacks.    
  1. Developing Healthy Money Habits: The financial coach can support you to develop and implement healthy financial habits, such as budgeting, saving, and investing. It’s important to note that while financial coaches can provide valuable support, some may not have formal financial certifications. and therefore, you may need to seek another person to support with budgeting, saving, investing and pension advice.  

Now, I am not saying it is easy to change your habits, learn about money and become confident in financial decisions. But everything else worth having, that you have already achieved in life, proves that you can do uncomfortable things.   

Imagine a life where you can confidently decide if you want to purchase that item, go on that holiday, put your prices up, invest in that course, retire when you want to, buy private health care, support that family member, or buy from that local shop.   

Being good with money not only gives you financial freedom but life freedom. To live a life that you choose and that aligns with your values.   

If you’re considering financial therapy/coaching, it’s important to find a qualified coach who is certified in financial coaching.  

Remember, financial therapy/coaching is an ongoing process. It requires commitment and effort, but it can have a profound impact on your financial well-being and overall happiness 

Can you influence the money mindset of others in your life – children/grandchildren – and how would you go about this?

You can influence the money mindset of children and grandchildren, just as you were influenced by your parents/grandparents, teachers and others.  

  • Lead by Example: Children learn by observing, so consider your habits and the words you use around money.  
  • Open Discussions: Engage in age-appropriate conversations about money. Discuss topics like saving, spending, earning, and charity donations. 
  • Involve Them in Financial Decisions: Allow children to participate in family budgeting decisions and having their own money which they can make decisions around.  
  • Read Books and Play Games: Playing games such as monopoly or similar games, can teach children about money and how it works without it becoming too complicated.  

By incorporating these strategies into your interactions with children and grandchildren, you can help them develop healthy financial habits and a positive relationship with money. 

Where to seek further help if you want to change your money mindset 

If you’re in the UK and looking to change your money mindset, here are some resources to explore: 

  • Books such as by Jen Sincero or Denise Duffield Thomas 
  • Podcast by Jen Sincero, Denise Duffield Thomas or me.  
  • Work with a qualified Financial Coach.  
  • Counselling Directory: This website allows you to search for therapists in your area who specialise in money-related issues. You can filter your search by location, type of therapy, and other criteria.  
Categories
Business tips Finance Function

6 reasons to look at your financial reports

6 reasons to look at your financial reports

Making time to look over your financial reports each month is an important task for any business owner. If you are not taking the time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend that you should start to. 

But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following: 

  • The Statement of Financial Performance – also known as the Profit and Loss report (P&L) or the Income Statement – tells you, as the name suggests, how your business is performing over a period of time, such as a month or a financial year. In broad terms it shows the revenue that your business has generated, less the expenses for that same period. In other words, it shows how profitable your business is. 

  • The Statement of Financial Position – also known as the Balance Sheet shows the value of the business’s Assets, Liabilities and Equity. 

  • Assets include things like money in bank accounts, Plant and Equipment, Accounts Receivable balances 

  • Liabilities include things like Bank loans and credit cards, Accounts Payable, and Hire Purchase balances 

  • Equity is the difference between your Assets and your Liabilities and includes Retained Earnings and Owner Funds Introduced 

  • Accounts Receivable Ageing report (Aged Receivables) – this shows how much money is still owed to the business as at a certain date in time, and is usually segmented as to how overdue they are, or sometimes by how far past the invoice date they are. Generally, you will have Current, 30, 60 and 90 days columns. 

  • Accounts Payable Ageing Report (Aged Payables) – this report shows who the business owes money to as at a certain date in time and, like the Accounts Receivable Ageing report, is usually segmented by overdue period. 

So why bother? 

  1. Understand your business better - by looking at your Profit and Loss report monthly you will get a good picture of how your business is performing month by month and it will give you a better understanding of what makes up your profit. It can be helpful to compare periods, or to look at a month by month P&L, so you can clearly see on one page the revenue and expenses month by month. This will help to identify trends in your data and many also help to highlight anomalies in coding/categorising. 

  1. Accurate information for lending purposes – If you are applying for a loan or an overdraft, the bank or financial institution will look closely at both your Profit and Loss report and the Balance Sheet as a lot can be learned about a business by looking at these reports together. If you are unsure what some of your balances are in your accounts, get in touch and we can explain them further. 

  1. Get paid quicker and reduce bad debts – by looking at your Accounts Receivable Aged Summary each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher the risk of it not being paid at all, so it is important to keep on top of this. 

  1. Better relationships with your suppliers – Assuming you are entering your supplier bills into your accounting software (recommended for most businesses to get an accurate profitability figure) your Aged Payables report will alert you to any unpaid or overdue amounts. Supplier relationships are an important aspect of your business and paying on time is crucial to maintaining those relationships. 

  1. Better cashflow – having an accurate understanding of how much money the business is owed, and how much money the business owes, can help with cashflow planning to ensure that there is enough money when needed. Additionally, understanding the trends of your business, its profitability drivers, its expenses, etc., can help to plan sales and marketing campaigns so that the revenue keeps coming in. 

  1. Better business decision making – Your financial reports tell the story of your business and it’s important that you understand the story that they are telling you. The better you understand what’s going on in your business the stronger position you will be in to make better business decisions that affect the profitability of your business and its financial viability. 

If you would like to know which reports are relevant to your business, and you want to better understand what’s going on in your business , then get in touch so we can make a time to go through them with you. 

Your business success is important to us and we are here to help you. 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 

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Business tips Finance Function

Succession Planning for Small Businesses

Succession planning for small business

It takes guts to start a business. It also takes a strategic mindset to succeed. 

Business owners are no strangers to weighing risk and navigating uncertainty, but the current climate has dialled everything up. Many business owners face the uncomfortable position of having to remap carefully thought-out succession plans and exit strategies and to consider selling their business before they’re ready and, possibly, for less than it’s worth. 

Transition may be a better option 

Rob Young, Managing Director of Platform 1, works with business owners on ensuring they get the best possible return when selling their business. Rob’s advice is to start by thinking about what options you have first. 

There are five different ways to sell: 

  1. Close the business down and sell the assets 

  1. Sell to a family member 

  1. Sell to an employee 

  1. Just a straight sale to an outside party 

  1. Gradual buy-out – The Platform 1 model. 

The Platform 1 model is a gradual buy-out program. It involves finding a manager to take the reins early on. Gradual buy-out a process that involves: 

  • figuring out what kind of individual would be right to run the business; finding that person, and developing them. 

  • Creating a plan where the new manager buys in gradually over 3 to 6 years. The objective is to get the owner out of the business physically as quickly as possible by transferring relationships and processes to the incoming person, so the owner becomes more of an investor rather than a manager. 

Preparing for sale – what’s important 

  • Get your house in order - Ensure you have systems and processes in place so the business isn’t reliant on you, but can run as a standalone entity. 

  • Maximise your profit - Make sure that you are not taking decisions to minimise your tax liability – because what you’re trying to do is create a profitable business. 

Don’t put off your succession plan – even if you are not ready to sell 

It’s a good idea to think about this long before you need to sell so that you maximise the value of the business and achieve a better outcome. It’s also worth remembering that retirement doesn’t need to be doing nothing. If your business can run as an asset without your involvement, you don’t have to sell it completely, so not selling down 100% of the business is a viable option. 

Talk to us today about your succession plan 

If you don’t already have a succession plan in place, we can help so that you have options when you need them. 

 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 

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Cash Finance Function R&D

Spring Statement Update 2022

man with a clock head

Spring Statement Update 2022

As you may have seen on the news, the Chancellor announced his Tax Plan on 23rd March.

Here is a quick overview of the key changes which may apply personally and/or to your business(es):

Employing staff and taking salary from your business:

· The threshold for paying National Insurance Contributions (“NIC”) will be aligned with the personal allowance from July 2022. This will mean employees pay less NIC on their income. NIC will be paid on income over £12,570 (increased by around £3k) from this date. The change is expected to save employees over £330 per year.

· The rate of income tax is planned to be reduced from 20% to 19% in April 2024 provided the UK meets its economic targets.

· The rate of employment allowance given to employers with more than 1 member of staff will increase from 6th April 2022 by £1,000. This means employers’ NIC bill will be reduced by £1,000 next tax year.

Self-Employed Individuals:

· From April 2022, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will continue to build up National Insurance credits but will not pay any Class 2 NICs. This will ensure the first £12,500 earnt is tax free.

· From July 2022, the Lower Profits Limit will be aligned to the personal allowance of £12,570 (to be on par with employed individuals).

R&D Tax Reliefs:

· From April 2023, R&D costs incurred outside of the UK will no longer be eligible expenditure for R&D tax relief. On 23rd March 2022, it was announced that R&D costs incurred overseas are still claimable provided there is a material or regulatory requirement for this work to be carried out overseas.

· Also from April 2023, your business will be able to claim for all cloud costs along with all mathematics as part of your R&D Tax Relief claim. This change will mean more businesses can claim for R&D costs incurred next year and in turn, increases the money they will receive back from HMRC either as a tax credit or reduction in their corporation tax bill.

· Later this year, we expect some further reforms of the R&D tax reliefs to be announced. Further updates will be provided in due course.

Capital Investments made by businesses:

· No changes have been announced to tax relief on capital investments made by businesses as there are currently enhanced tax reliefs in place until April 2023. Later this year, we are expecting an announcement on new tax reliefs for capital investments post April 2023. We will keep you updated on the changes in due course.

VAT on energy saving materials:

· VAT will be cut to 0% on purchases of energy saving materials (a 5% saving) until 31 March 2027. This change comes in on 1st April 2022 and applies to businesses that provide and install energy-saving materials and customers who have them installed in England, Wales and Scotland.

If you have any questions on the changes or want to find out more about tax reliefs you can claim personally or as a business, please contact me

Categories
Cash Finance Function Gym

5 Ways to Grow Your Fitness Business Without Breaking the Bank

5 Ways To Grow Your Fitness Business Without Breaking The Bank

Business growth often requires hefty investment, but there are ways of growing and improving your fitness business without spending a huge chunk of cash. If you’re trying to build your gym or fitness business on a conservative budget, take a look at the following seven wallet-friendly ways to grow your business. 

1. Analyse Your Marketing Efforts 

Fine-tuning your marketing efforts can help you use your marketing budget more wisely and achieve a better return on investment. Take a look at the marketing strategies you’re putting the most money into and work out which ones are driving sales. Tools like Google Analytics can help you figure out where your website traffic is coming from, allowing you to prune the practices that aren’t serving your business and focus on the ones that are achieving real results. Social media tools like HootSuite can also give you a clearer picture of the type of content that engages your audience the most. 

2. Fine-Tune Your Website

Many business owners build a website and then consider it a job done. However, your website should be regularly reviewed, optimised and updated to make sure that it’s delivering the best possible results for your business. 

 

Make sure that your contact information is correct and visible on each page. Strive to improve your loading times – for example, by compressing images – to boost your SEO score. Focus on local SEO strategies to find new customers in your local area and make sure that your site is content rich to attract a bigger audience. 

3. Take Advantage of Trends 

Show your customers that you’re an agile organisation by creating content, products and offers that reflect what is happening in your community and industry. For example, in recent years there has been a rise in micro influencer marketing and a focus on shopping locally due to the covid-19 pandemic. You could capitalise on this by collaborating with micro influencers in your local area, proving that you’re an on-trend business at the heart of the local community. 

4. Upgrade Your Sales Funnel with Content Marketing

If you generate a lot of leads but relatively few sales, then something is going wrong somewhere in your sales funnel. Either you’re not filling the top of the funnel with the right kind of leads, or you’re not nurturing them appropriately to convert them into paying customers. 

 

One key way to convert leads who are not yet ready to buy into paying customers is nurturing them through content marketing. A first-time visitor to your site will rarely make a purchase, so you need to give them a good reason to keep on coming back. When you share content to your audience every single day, you remain front of mind and build trust. Then, when a prospect becomes ready to buy, voila – you’re right in front of them. 

5. Understand Your Finances 

Knowledge, as they say, is power. Gaining a deeper understanding of your business’ finances will empower you to make better decisions and grow your business more effectively. Using cloud accounting software such as Xero can be enormously helpful here, as these programs create easy-to-understand reports and summaries. If you work with an accountant, be sure to consult with them regularly and don’t be afraid to ask questions – a great accountant is not just a number cruncher, but a partner and guide.

Summary 

 

Growing your business does not need to break the bank. Often, accelerating small business growth is a case of fine-tuning practices that are already in place and capitalising on the opportunities that are already in front of you. By working to improve your existing website and sales funnel, you can generate more high quality leads and nurture them to become paying customers via content marketing. It’s also important to remain agile and respond to local and market trends. Finally, it’s essential that you understand your finances so that you can make smart financial decisions that will really benefit your business growth. 

 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

Categories
Cash Finance Function Gym

Capital Allowances 130% Superpower! Kapow!Invest now or later?

Capital Allowances Super Deduction

Capital Allowances. Invest now or later?

 

Earlier this year, you may have seen in the news – or online – talk of a new super duper 130% Capital Allowances deduction intended to accelerate investment by businesses. AKA the Capital Allowances Superpower! But unless you’re already claiming capital allowances tax relief, this might not mean much to you. But it really should. Why? Well, in a nutshell, the government will PAY YOU to invest in new assets for your business now until 31st March 2023.

If you are looking to invest in your business you should read on….


WHAT IS CAPITAL ALLOWANCES TAX RELIEF?

Capital Allowances is a tax relief which enables a limited company to deduct the cost of capital assets from its profits. The result of this means the tax the company pays is reduced, for the year the claim is made.  

Usually, Capital Allowances are for purchases of assets up to £1m, of which the company can claim back 100% of the purchase cost. It’s already a generous tax relief but now it’s even better…..


HARNESS THE CAPITAL ALLOWANCES SUPERPOWER!

If a limited company invests in a qualifying NEW asset, they can now deduct 130% of the cost from their profits, and the even bigger benefit…there is no £1m  limit on the amount which can be claimed. This is a huge opportunity!

The only BUT, purchases must be made between 1st April 2021 and 31st March 2023, and it only applies to certain new assets. However, the list is long!

Take a look inside the building below and find out the types of items that qualify for the relief, there is everything from laptops, to furniture, to lighting systems…….even toilets!

Capital Allowances Super Deduction

Please note this isn’t an exhaustive list of qualifying assets.

SHOULD I INVEST NOW OR LATER?

If you are a limited company, thinking about buying new business assets, refurbishing or fitting out a commercial property, and your company has cash available to invest in new items before 31st March 2023, you might want to make that investment sooner rather than later.

Specifically, limited companies with profits less than £250k should consider investing now and bringing forward any planned purchases of capital assets. However, this isn’t a decision to jump into without having a clear strategy in place.

 

The rules around Capital Allowances are inherently complex, so if you’re planning to invest in capital assets to benefit from this superpower, we recommend seeking advice first.

Please book in a call with us, and we’ll make sure you are doing this in the most tax efficient way. 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

Categories
Finance Function Gym Tax

What tax deductions might you be missing?

lady with weights

What tax deductions might you be missing?

They say that only two things are certain in life: death and taxes. Paying tax is inevitable but there are things you can do to reduce the percentage of your income that the taxman takes. As a small business owner, the likelihood is that you’re probably paying too much tax, which is why we’ve put together a list of the most overlooked deductions to help you reduce your bill. 

 

Of course, in order to claim the following tax deductions, you need to be on top of your bookkeeping. Get into the habit of updating your records and file all of your receipts and invoices in a well-organised system. 

1. Startup Expenses – you can reclaim relevant expenses up to seven years before

Money is usually tight during the startup phase and every penny counts, but many small business owners overlook startup costs. Don’t assume that it’s too late to claim, either; in the UK, for example, limited companies can claim relevant startup expenses for up to seven years before the business officially begins operations. Just because you’ve been in business for a few years doesn’t necessarily mean that you’ve missed the boat. 

2. Home Office Expenses – if you need a laptop to operate the business, then its claimable

If a room in your home functions as your primary place of business then you may be able to claim a home office deduction. Expenses such as gas, internet and electricity will usually be deductible based on the percentage of your home used for work, and for how long. Therefore, it’s important to keep a record of how many hours you work each month in order to calculate this deduction. 

 

You will also be able to claim expenses such as office furniture, although again you will have to calculate the usage portions. If you buy an office chair for £100 and use it exclusively for work, then you can claim the full amount. However, if you use it for personal reasons 30% of the time then you will only be able to deduct £70 from your taxable income. 

3. Carryovers – loss carry forward or for the 2021 budget you can carry back over the last 3 years

Business owners often overlook capital and net operating losses as tax deductions. It’s possible to carry these losses over into future tax years to reduce taxable income. With so many small businesses suffering due to the covid-19 pandemic, this is definitely a deduction to make note of. Carryovers can be used to reduce either the business’ or the owner’s income. It’s best to speak to your accountant about how your business can best benefit from this type of tax deduction.  

 

You can understand more about the carry back rules here: https://debbiebaileymoney.co.uk//covid-losses-cash-back-bonus/

4. Losses on Bad Debts – claim as a tax deduction

If your business loses money due to a customer who won’t pay, an employee who quit after receiving advance wages or loans to clients that your business is now unable to collect then you may be able to claim this amount as a tax deduction. You will have to prove that you have taken reasonable steps to collect this amount but have been unable to do so. Of course, this situation is less than ideal but it may help to soften the impact of a bad debt. 

5. Education and Training – for yourself or your employees can be tax deductible

It’s a good idea to invest in your employees and you should be able to deduct the cost of doing so. Many business owners overlook the fact that educating and training their employees is a deductible tax expense, so keep a careful record of your spending in this area to receive a smaller tax bill. 

Summary 

We would all like a smaller tax bill, so be aware of these often-overlooked deductions to ensure that you don’t end up paying more than necessary. It’s important to keep a careful track of all of your expenses so that you don’t miss out on any potential tax deductions. If you’re unsure about whether an item qualifies for tax deductions, be sure to speak to your accountant or bookkeeper so that you don’t end up making a costly mistake. 

 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: 

 







Categories
Finance Function Gym

How do you know if your fitness business is profitable?

How do you know if your fitness business is profitable?

As a gym owner or fitness business owner, you always have a million-and-one things to think about. It can be difficult to stay on top of the numbers and know which ones matter when it comes to the financial health of your business. However, it’s essential that you know whether you’re operating at a profit or not. Burying your head in the sand is never a good solution. Instead, you need actionable data that will allow you to stay on track and strengthen your business. Even if things are going well, there’s always room for improvement. Here’s how to work out whether or not your small business is profitable.

Net Profit Margin as Revenue is not the whole story

In order to determine profitability you need to calculate your net profit. Fortunately, this is easy to do – so long as you have been maintaining accurate records. The equation is as follows:

 

Revenue – Expenses = Profit 

If your answer is positive, then you’re turning a profit. If it’s negative, then you’re losing money. 

Net profit refers to the amount of money you keep after paying taxes and interest on debt, as well as business expenses. Therefore, you must include those numbers in your calculation. 

 

Remember that revenue doesn’t tell the whole story. For example, a business that makes £100,000 per year and spends £20,000 on expenses has a net profit of £80,000. However, a business that makes £150,000 but spends £160,000 has actually lost £10,000, despite having a larger revenue. 

 

You should review your net profit margin more than once per year. We recommend performing a monthly analysis so that you can monitor how your profit margins are changing and spot seasonal trends, too. This will prove enormously helpful in predicting future profit and creating a realistic business budget. It’s also important to be aware when your profit margin is decreasing so that you can take action before it’s too late.

Gross Profit Margin is good for product based businesses

Gross profit margin is another important indicator of profitability for your small business, especially if you sell physical products rather than provide services. You calculate gross profit as follows:

 

Sales Revenue – Cost of Goods Sold = Gross Profit 

 

Gross profit differs from net profit, though many confuse the two. Gross profit refers to the percentage of profit you keep after the cost of goods sold, whereas net profit includes other expenses and can be after costs such as tax and interest paid on debt. 

 

Again, it’s important to review this on a monthly basis and compare your gross and net profit. This can help you to identify areas of improvement or concern. If your gross profit margin remains healthy but your net profit is decreasing then product cost isn’t your problem and you need to look closely at your overheads, taxes and debts.

Operating Expenses Should Be Regularly Reviewed

If your revenue is increasing but your profit margins are decreasing then you need to take a look at your expenses. It’s easy for expenses to outpace revenue as your business grows, so you must keep a close eye on these numbers to ensure that you remain profitable. Some expenses, such as new equipment and employees, are unavoidable during a period of growth but be sure to review your costs regularly and look for areas where you may be able to save. 

Profit Per Client/Member – some members will buy additional services whilst some will attend every single class available

Some clients generate more profit than others for your business, and it’s in your best interests to identify these clients. The answers may not always be obvious: the clients who pay the most in fees may have a poor revenue to expenses ratio.

 

Summary 

 

As a small fitness business owner, regularly reviewing and analysing your numbers will provide you with valuable data that you can leverage to become or remain profitable. In order to improve your business, you must first get clear on your current reality. If you want to increase profitability, it’s time to start crunching those numbers.

 

 

 

Categories
Finance Function Gym

What can a virtual finance director do for your fitness business?

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What can a virtual finance director do for your fitness business?

After a sustained period of growth, business owners often find themselves in a tricky position. The business now requires an experienced professional to take charge of the finances, but hiring an in-house finance director is still out of reach. In this case, it’s time to think about hiring a virtual finance director (FD) to lighten the load and ensure that your business continues to achieve success. Let’s look at five reasons to hire a virtual FD. 

1. Your Business has Grown 

When you first start out, managing your finances alone, or with the help of a few team members, may suffice. However, as your business grows, the financial management becomes evermore complex and demanding. You may find yourself in the position where you require professional help but cannot yet afford to hire a full-time financial director. A virtual FD gives you the best of both worlds. 

 

Hiring a virtual FD is more affordable than hiring an in-house position because a virtual FD will work remotely and on a part-time basis, therefore significantly reducing the cost. However, you will still gain access to top level financial management. 

2. Flexibility

Working with a virtual FD gives you the ability to scale your services as your requirements change. This flexibility means that hiring a virtual FD is far less risky than shelling out for an in-house hire. 

3. Cash Flow Management 

Often, it feels as though business growth and cash flow issues go hand in hand. When you first start your business, you may be just about able to manage cash flow by yourself but as your company grows, failing to enlist the help of an expert presents a huge gamble for your business. In fact, according to a U.S. Bank study, poor cash flow management contributes to 82% of business failures. 

 

A virtual FD will monitor your cash flow, create projections and allow your business to grow sustainably whilst ensuring that your cash flow stays healthy. You’ve worked incredibly hard to reach your current level of success, so don’t risk it now. 

4. A Fresh Perspective

Virtual FDs work with many different clients which gives them vast experience of varying company ideas, business models and management styles. This experience can prove hugely beneficial, as your virtual FD will be able to offer valuable new insights and introduce different perspectives. As a business owner, you have a relatively narrow perspective of your industry whilst your virtual FD has access to a much broader view. 

5. Handling Multiple Responsibilities

A virtual FD saves you a huge amount of time by handling multiple financial responsibilities at once, including:

 

  • Tax planning

  • Cash flow management

  • Reviewing business performance

  • Financial forecasting 

  • Recruiting and managing financial staff 

  • Keeping you up to date with the latest rules and regulations 

  • Offering financial insight

  • Preparing annual budgets and monthly management accounts

 

By hiring a virtual FD you are outsourcing a wide range of financial responsibilities, saving you and your team a huge amount of time, which can be re-invested in growth. Furthermore, with a virtual FD handling the above responsibilities, you can be confident that your business will remain in great financial health as it continues to grow.

Summary 

Hiring a virtual FD is a flexible and affordable way of ensuring that your business is well prepared for the financial challenges that inevitably come with growth and expansion. A virtual FD can handle multiple responsibilities at once, freeing up your time and providing you with expert financial guidance to help you plan for future success. Most importantly, a virtual FD gives you access to top-level financial advice without breaking the bank, so if your business is growing, it’s time to consider hiring one. 

 

 

1. Book a call with me: https://debbiebaileymoney.co.uk//contact-us/ 

2. Download my free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://debbiebaileymoney.co.uk//fitness-ebook/ 

3. Connect with me on social media: