Category: Finance Function

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Business tips Finance Function Gym

How can gyms make a profit, besides membership?

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How can gyms make a profit, besides membership?

Over the past year gyms and fitness centres have been looking at different ways to add profit to their business, with covid meaning bricks and mortar businesses have been closed, many have “pivoted” to online. 

 

An online and offline gym offering are not the only options available to add important profit to your business and having other “revenue streams” can make your business less risky and more profitable. The most successful businesses diversify into different revenue streams alongside raising revenue through core memberships. This will protect your business in the future and make you less vulnerable to economic changes. 

 

The first major revenue stream is monthly memberships, these are the core of the business and the most obvious if you run an open gym or class model. These generally provide modest profit margins and are completely based on volume, how many members can you get signed up and keep loyal. Once at maximum capacity the only way would be to get a bigger venue, more equipment, pay higher rates and do the same again. 

 

The second major revenue stream is personal training, this is where the gym can build closer relationships with the members, help them feel confident and see results. This could include 1-on-1, small groups, skills sessions, online programs etc. These generally provide a higher profit margin and can bring in clients willing to pay more. 

 

 

 

What other profit making options are there?

 

Selling branded merchandise with your business logo on

Not only will you make money but you will get free advertisement, what is not to like? It also creates a feeling of inclusion, a “family” feel and shows loyalty to your brand. 

 

Selling drinks/meals either branded to your business or not 

 

This could include items to be taken home/away and consumed or you could even branch into having a cafe area and having items consumed on the premises. This would be a much bigger undertaking and you could start with take away meals as an easier/quicker start. 

 

E-commerce

 

Consider selling merchandise/products online through your website or via social media. Your members will be buying from a trusted source and you can reach non-members too. With platforms such as Instagram now offering an easy way to sell in the app, there are much lower barriers to entry (lower costs and less time). 

 

A 3D scan experience

You could offer the first one for free and then charge a monthly amount for a repeat. Once someone knows their body composition (which is far more informative than weight alone), they can track their stats and this could increase their motivation and time at your gym 

 

Offering advertising space in your gym for local businesses which match your ethos. 

 

These could be displayed on screens around the gym, not really costing you anything but providing extra revenue. 

 

Parent and children classes

This is something I have personally been looking for, I like the idea of taking part in something with my son. They have been popping up more and more lately and are a great way for parents to exercise/learn something new whilst their child is occupied. 

 

Referral program

Referral programs are a great way to acquire new members at a minimal cost, the only cost you will need to cover is whatever you are offering the referrer. 

 

A referral program will not only bring in the initial member but could increase the likelihood of the current member staying as people are more likely to attend if they know someone. 

 

It is a win-win for all concerned and is a very cost-effective channel for marketing your business. 

 

Hosting events

 

Events generally have a more relaxed feel and can be opened to non-members too. For current members it will enhance their experience and improve retention.

 

Offering a hybrid membership for online and offline

Combine offline and online services to offer your members more, and strengthen their subscription value.

 

Offering a wellness package to corporates

 

Could you visit the corporate clients once a month to offer an update/provide a class/or provide an online scheme. With home working increasing and more businesses becoming aware of mental health, there is an opportunity to also offer virtual boot camps or educational videos. This could be to increase movement at their desks or to provide advice on how to switch off at home. 

 

Partner with local businesses which compliment your offering

 

Are there any businesses in the local area which compliment your offering without being competition? There could be a cross business referral such as with a healthy food shop, a juice bar or fitness clothing brand. 

 

Rent space to businesses which compliment your offering 

 

This could include businesses such as hair dressers/barbers, chiropractors, physiotherapists. 

 

Workshops/courses/challenges which can either be short term or specialist

 

Courses such as 6-12 week flexibility course, strong course, nutrition course. 

Workshops/challenges which can either be short term or specialise on developing a certain skill. Maybe a 4 week-snatch clinic to hone skills specific to that lift or a 60-day nutritional challenge. You could maybe run a poll with your members to see what they would like and go from there. 

 

What are the benefits of having upsales or more than one revenue stream?

 

  1. It is easier to sell to people who already know and trust you, than to convince new members to join and either leave their current gym or start going. 

  2. It will not only be easier but much cheaper as new member acquisition is always pricey, there is advertisements, getting them onboard, completing the paperwork/checks and making the new member feel welcome

  3. Having more than one source of income reduces the risk of your business not having any income.

 

What are the disadvantages of having more than one revenue stream?

 

  1. It takes time to manage all these different tasks/projects and make sure you are giving each the right amount of your attention. 

  2. You will need to measure them separately to ensure that they are all profitable. 

  3. It can be time consuming at the start to implement the processes needed and get the projects off the ground. 

Steps to creating a multi income stream business

  1. Create a mind map, so you see what options are potentially open to you

  2. In the middle put your main product/service and then create four spokes out the side: products, services, advertisement/affiliate and other  

  3. Off of these create further spokes which are how you will make money from these areas such as: online courses, merchandise, coaching, training, selling advertising. 

  4. What ways could you passively make income? So create an online course which you roll out. 

 

Avoid starting all your income streams at once

 

This would most likely end in disaster, each income stream takes time to develop and launch and then will take time to draw in customers. Make sure you have the processes in place that automate as much as you can and help you not become overwhelmed. 

 

Adding income streams takes time but adding them within your current business is faster and easier than starting completely new ones from scratch. It helps to generate income and reduces your businesses risk. 

 

The majority of business owners are overly reliant on membership revenue and therefore not reaching their profit potentials. I challenge you to start creating another revenue stream in the next quarter. What will you pick? Let me know on Facebook/Instagram/LinkedIn on what stream you decide to start now! 

 

 

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

The accounting trends you need to know about in 2021

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The accounting trends you need to know about in 2021

As a business owner, it’s important to stay on top of accounting trends and make them work for your organisation. If you don’t stay up-to-date you might just find yourself left in the dust whilst your competitors improve their efficiency with the latest and greatest software and practices. Here’s an overview of the top accounting trends for 2021 to help you stay one step ahead. 

1. Accounting Software Solutions

In recent years, there’s been a surge in accounting software solutions. By now, most industries are harnessing the power of the digital world and accountancy is no different. There are more demands than ever for computerised accounting and software companies are working hard to ensure that manual tasks are kept to a minimum. Pens and paper really are things of the past. 

2. Cloud-Based Accounting

Everything is in the cloud these days: your photos, your music and even your passwords are stored in the cloud, so why not your accounts, too? Cloud-based accounting is both cost and time effective. In fact, around two thirds of accountants believe that it will prove beneficial to their work. 

 

One big benefit of cloud-based accounting software is that it enables you and your team to access and update your numbers anytime, anywhere and crucially, all at once. Collaboration is easier than ever and there’s no need for constant backups and email exchanges. Speaking of backups, cloud based accounting software ensures your data is stored securely with military-grade encryption that certainly beats a USB stick. 

3. Automated Accounting

Automated accounting processes save time, money and, perhaps most crucially, error. More companies than ever are investing in automated accounting processes because it can prove very lucrative for businesses. Beyond that, it also increases companies’ ability to make data-driven decisions, and allows them to do so faster than ever before. 

 

However, there is a downside to automated accounting. Like any process that relies on technology, it comes with a cybersecurity risk that must be properly assessed and continuously monitored. 

4. Work-Life Balance 

Another benefit of the surge in automated processes and cloud-based software is that more accountants than ever are able to work from anywhere, at any time, promoting a greater work-life balance. These developments also save a lot of time in email exchanges and backups, leaving accountants with more moments to enjoy. 

5. Accountants Are Becoming Advisors 

There’s always been some overlap between chartered accountants and financial advisors but now the accounting industry is increasingly focusing on data analytics, and so many accountants are shifting into more advisory roles. Developments in accounting technology allow accountants to offer more accurate insights and provide their clients with valuable advice. In fact, harnessing the power of technology to provide business advice is one way accountants can ensure they’re not eventually replaced by machines.

6. Social Media 

Accountancy and social media may seem like strange bedfellows, but networking is important to any business. The coronavirus pandemic meant that even the staunchest of luddites had to resort to platforms such as Facebook and LinkedIn in order to interact with their peers and prospective clients. There’s no denying that social media platforms allow accounting firms to build a brand, drive more traffic to their website and make new connections. These channels are a powerful marketing tool for any business and accountancy is no exception, so it’s high time for the industry to catch up. 

Summary 

As you can see, advancements in technology are driving a lot of change in the world of accounting – mostly for the better. This means you can look forward to more effective and efficient accountancy, as well as the ability to make smart business decisions based on optimised financial data. Here’s to 2021! 

 

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

Four ways to Reduce costs and Boost your Profitability

Four ways to reduce costs and boost your profitability

Not sure why your bottom line isn’t pretty? Sometimes, overspending can hurt your profitability despite your record sales.

Profitability doesn’t only come from sales numbers. And a profitable business isn’t always the one with the most members and the highest sales.

The sign of a business profitable depends on what’s left in the account at the end of the month or the fiscal year.

It’s important to account not only for the money coming in but also the money going out. That’s why cutting costs is one of the best ways to boost profitability… assuming that you do it right.

Tip #1 – Address Material Costs

Sellers of products are most concerned with raw material costs. That’s why increasing profitability can be as simple as lowering your purchase costs for items such as protein powders, clothes, cleaning products etc.

You’d be surprised at how much this move can make your business profitable.

Tip #2 – Reduce Labour Costs

Is there something in your business that you can replace with an automation system?

Have you considered hiring a VA as opposed to an on-site assistant?

Reducing the amount of money spent on wages can also boost profitability when you draw the line on your finances. So, evaluate the daily tasks that your team members perform and look at some of your own duties as a business owner.

In today’s environment, outsourcing is one of the best ways to cut costs. It’s also one of the smarter ways to hire as you may have access to a wider pool of experts. 

Properly executed, you can lower costs and maintain a high level of quality with outsourcing.

Tip #3 – Manage Expenses

Many businesses are overpaying for marketing.

For example, pumping money into Facebook or Google ads but not monitoring the performance and not targeting their ideal client.

In that scenario, it may be a good idea to drop the non-performers.

The same principle applies to all other expenses and services. If you pay for things and they don’t end up improving your business or what you offer, these may be expenses worthy of the chopping block. These are what I call money leaks.

Needless to say, this would affect your bottom line directly.

Tip #4 – Know What Costs to Cut

If only cutting costs were simple, right?

Most business owners don’t know where to start. If you’re one of them, it’s ideal to start by performing an internal audit of your finances.

Identify where all the money comes and goes and decide what you can or can’t cut. What does the gym need to survive, what gives the gym a good return on investment (either financially or in time) and what do you simply not need?

Tip #5 – Get Better Deals

Many industries work with vendors, which happens to be a great area to look at if you want to boost profitability.

You may already know that it’s possible to renegotiate vendor contracts, though it’s easy to be put on the back burner. Getting better deals, however, doesn’t always have to involve other vendors, as you can also leverage your relationships with existing vendors.

You can even consider changing service providers and utility contracts.

Cut Costs Smarter, Not Harder

You don’t have to make massive cuts in a single area. Even small amounts add up to significant savings if you make enough of them here and there.

 

These tips are particularly helpful to anyone operating a cash flow-dependent business. That said, they apply to both B2B and B2C companies looking to boost their bottom lines.

If you would like help with improving your gym or fitness centres profitability, then book a discovery call:

 

 

 

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Business tips Cash Finance Function Gym

What are the benefits of paying by direct debit?

Cloud Accounting - Xero

Why direct debit is beneficial to you

When deciding which accountant best suits your business, understanding how you will be charged for those services may be a key component. Will you have one large bill after the accountant has finalised your accounts and will you know when this might be?

Even though the cost of working with me is different for every business, the way every business pays is exactly the same. This is because it comes with massive benefits to their business (and also to me). 

I use an app called GoCardless for the direct debit collection, that is because it is secure and works really well. There is a cost associated with it but I absorb that cost, so you don’t need to worry. 

Direct debit will give you peace of mind, save you time and spreads your cost:

  • It is one of the safest and most convenient ways of paying your invoices

  • Payments are made automatically so you never forget (don’t worry I cannot and wouldn’t take a payment without your agreement)

  • You can spend more time doing the things you want, knowing that your invoices are being paid without any involvement from you

  • Every business must go through a vetting process

  • It is all handled online, so protects the environment and reduces waste

  • The cost is spread across 12 months, which helps your cash flow and helps you forecast and budget going forward. 

  • Direct debit is highly secure and fraud is highly unlikely

GoCardless is really easy to set-up, the link will be included in the first onboarding email and takes minutes to do. It works seamlessly with Xero which I use with my clients. 

You may already have used GoCardless as it is a popular method for collecting payments and does link in with gym management software such as ClubRight. 

By using direct debit, it means that when life gets in the way, we will never have to have the awkward conversation about unpaid invoices, this reduces your stress so you can concentrate on building your business. 

If you want to understand how I price accountancy services then click here: https://debbiebaileymoney.co.uk//how-much-does-accounting-cost-for-gym-owners/

 

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 Gym

Thinking of changing accountant but worried that it is too hard?

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Thinking of changing accountant but worried that it is too hard or you are too busy

I have seen this regularly, you are comfortable with your current accountant, they are not doing anything wrong as such, the accounts are submitted on time and you are compliant. But it has been playing on your mind that changing accountants might be worth it.

You have seen on social media that accountants can offer so much more than just keeping your gym business compliant. They can have a positive impact on your bottom line, provide advice, give you confidence in your business and save you time.

You put off changing as you think it will be a hassle, it will mean working with someone else and learning how they do things. It seems daunting and complicated when sticking with the status quo is effortless.

But you went into business to make a profit whilst helping people keep fit and healthy. So why stay with an accountant that is not helping your business more forward and achieve your personal goals?

These are some of the reasons I have seen for not moving accountants and maybe you recognise some of them?

  1. People think it is hard to change accountants, they don’t want the hassle, it feels like a huge task! It is just easier to stay put. 

  2. Their accountant is a nice person and they don’t want to upset them. Maybe they have even become friends (or friends on social media).

  3. They have been with their accountant for ages and know how they work.

  4. They are hesitant about change, it’s in our nature to keep things consistent

  5. They are concerned that the new accountant might not understand their business or be as good as their current one.

  6. Their accountant knows their business inside out and so they don’t want to spend time explaining it to someone new. 

  7. It is not a priority right now, they will look at it later but then something else comes along that is easier to deal with and the change never happens. 

  8. They just don’t know what to expect with a new accountant, what happens, how does it happen and how much does it cost?

Therefore they decide its best to stay put and not upset the apple cart. But we all know that life is about change and amazing things can happen just outside our comfort zone. 

A new accountant could help you to understand your vision, ask you the right questions and ultimately help you reach your goals. 

If you are not 100% happy with your accountant but still don’t move, this is what it could be costing you:

  1. Your time! If you don’t fully trust your accountant, you may spend time worrying, double checking and asking questions. An accountant should put your mind at rest and take that worry away from you.   

  2. Money – if your accountant doesn’t help you to find the underlying reasons why your business is not profitable enough then they are costing you money. We all know that simply getting “more sales” is not the answer to this complicated problem. 

You don’t want this and that is why you are looking around. Below I have outlined the process I follow and it’s actually really easy. I will do most of the leg work for you, so it’s easier than you think.

Once you have decided to move your financials to me, the process is: 

1.   E-sign the proposal and letter of engagement (the terms and conditions)

2.   Gather your personal and business information and set-up the direct debit

3.   You use our template to tell your current accountant that you are moving

4.   Then leave it with me to contact your previous accountant

5.   I will then handle the access rights with HMRC

6.   Then we can begin speaking specific numbers and how we can improve them. 

This will pretty much happen behind the scenes with me working with the old accountant to move your business finances across. Sometimes there can be delays but I will handle these as much as possible.

Right now, all you need to do is book in a discovery meeting via this link and have a free no-obligations meeting to help us both decide if we are a good fit and moving is the right decision.

If you would like to learn more about the process I follow for the discovery call and beyond then read this blog:  https://debbiebaileymoney.co.uk//how-to-get-started-with-southbourne-accountancy/

 

Curious about prices:https://debbiebaileymoney.co.uk//how-much-does-accounting-cost-for-gym-owners/

Why a local accountant may not be the solution to your problems: https://debbiebaileymoney.co.uk//choosing-an-accountant/

You use Xero, so do you really need an accountant: https://debbiebaileymoney.co.uk//do-you-really-need-an-accountant-for-your-gym-if-you-use-xero/

 

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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Finance Function Gym

How much does accounting cost for gym owners?

How much does accounting cost for gym owners?

This must be the most common question I am asked and let’s be honest we all expect that answer to be available at the click of a button nowadays. However, I will liken it to when you got a price for your gym fit out, you did not receive an out of the box price, as every gym is unique, and every gym owners’ vision and dreams are different. The price would have been dependent on the size of your space, the type of equipment you wanted, what services and experiences you wanted your members to enjoy.

I realise that not having prices on my website could make you think I am hiding something and fill you with anxiety about jumping on a call with me, it might even distract you during the call as you are waiting for price at the end. So even though I cannot give you a price, as my fees are tailored to each individual business and their needs, I wanted to talk you through the process and give you an understanding of how I price.

Firstly, I just wanted to advise that I only work with businesses who either use Xero or are prepared to move across to Xero. This is for your benefit, as it means you can seamlessly access your finances, no matter where you are. It can be accessed via any device, enabling you to check your bank, pay invoices and use the app to take pictures of receipts on the go, saving you time. 

The investment in moving your accounts to me will be dependent on a few things:

·       To start there is a minimum monthly fee of £100 and this is for the smallest of businesses and minimal service level. This is because under this level of investment I would not be able to provide the level of service you need, to have up-to-date accounts and information for you to make informed decisions. 

·       Turnover level/size of business, this because the bigger the business the more work I need to do.

·       Number of transactions and how frequently you require the bookkeeping to be updated (weekly or monthly). This is due to the level of work involved. 

·       Number of employees on payroll. Does that mean if you get an additional employee that the cost would go up? Yep, the price will increase, just as I would expect you to charge for additional services.

·       Whether you have an in-house finance team or bookkeeper maintaining the records or whether you would like me to complete the bookkeeping. Bookkeeping is a highly skilled role, which takes years to learn and requires continuous development. Therefore, when you invest your bookkeeping with me, the actual fees you pay are lower than a business who needs constant checks. 

·       Frequency of management reports and forecasts, due to the level of work involved every month or quarter to review the information and produce advice. 

·       Requirement for cash forecasts and management of cash forecasts, some businesses have an annual cash forecast, whilst others upgrade the service to include a regular review and adjustment with me. This requires a greater investment of preparation and review. 

·       Strategic advice and 12 monthly goals/business plan, this is a service that provides a greater level of business support, with the business owner working with me to establish their goals and create a plan which is monitored. 

·       I offer a “quick query” service which means you don’t need to worry about asking me those little questions you have, you can ask me quick (10 min) questions without incurring any additional charges, this service is included free as standard. 

You pay Xero and invite me in, Hubdoc is part of the Xero subscription so you will receive access to that for free. As mentioned above I only work with Xero as it works so well for businesses and gym owners. Xero allows you to seamlessly access your finances, no matter where you are. It can be accessed via any device, enabling you to check your bank, pay invoices and use the app to take pictures of receipts on the go, saving you time. 

Any additional work which takes longer than 10 minutes or requires additional research will be chargeable, this will always be discussed beforehand and added to the service agreement and priced accordingly, but don’t worry I will not commence any work without discussing with you beforehand.  No surprise bills!

If you sign up part way through the year, this will create an alignment fee which is payable at the start or can be spread over 3 months. This is because the annual fee is spread across 12 months and if you join after say 7 months, certain elements such as annual accounts fees will need to be caught up. After that going forward the annual amount will be spread across 12 months and charged as a direct debit, as I found that business owners prefer to spread the cost evenly across the year, so they can budget and manage their cash. There is no large bill at the end of the year to pay. 

Any examples of price then?

So you are still none the wiser about cost! Well, I can provide some examples which will help this.

Gym requiring accountancy work (all prices are per month)

Turnover of £500k per annum, payroll for 5 employees, VAT return submitted quarterly, annual accounts, tax and confirmations statement submitted, 1 directors tax return and 200 transactions a month to be reconciled (by me):

This would be £468pm 

If you wanted to add a quarterly zoom meeting it would be £37pm and a set of quarterly management accounts would be £92 per month. 

Larger gym requiring finance director support: (all prices are per month)

Turning over £1m per annum, all bookkeeping and compliance work (accounts, tax, VAT, payroll) is handled by an in-house bookkeeper and an external compliance accountant. The business owner wants to grow the business and make more profit, ultimately to be able to take more cash from the business and take the family on holiday. They are looking for a part-time finance director as they don’t need and cannot afford a full time finance director. 

I will provide monthly management accounts, an annual cash forecast and monthly management meetings which involves going through the accounts, providing advice and answering any questions the business owner has. Together we will look where improvements can be made, costs saved and profit increased.

This level of support would require an investment of £615pm 

As your business changes the level of service you require will change, so I wanted to outline the frequency with which we review the service levels:

1)  Payroll and software fees are reviewed every month

2)  Bookkeeping every quarter

3)  Account fees annually, providing you with an update 3 months prior to the year end.

4)  I have the option to increase fees annually by up to 5% to account for inflation.

 

The monthly invoices are updated going forward to reflect any changes, this will be discussed with you before hand.

There is no need to worry about direct debits being taken without prior notice. 

Monthly invoices are sent on the 1st of each month, which are payable by direct debit. This is set-up, so you don’t need to worry, GoCardless will process the payment on 15th of month. It doesn’t require any input from you and will be the same amount every month as agreed in the proposal (unless there is an agreed adjustment due to a review). 

It is impossible to calculate a price without speaking to you, finding out what help and support you need, what support you already have and how frequently you want certain services. That is why we have the initial discovery call to decide if we are both a good fit and then a second call to go through the services, frequency etc to calculate the price.

As a business owner it’s critical to look at your accountancy fees as an investment rather than a cost. 

An accountant is someone who can help your business progress, help you increase your profits and reduce your stress, giving you back time to do what you want. By investing in an accountant you are giving yourself a chance to experience this, a cheap once a year accountant won’t be able to provide that. 

To understand what your price would be, contact me for an initial 15 minute free discovery call and if you decide to move to a proposal then I will provide the price. 

 

I will provide you with a proposal which clearly outlines the price and services included, as well as the additional services you may wish to consider in the future as your business grows.

 
 
 
 
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Business tips Cash Finance Function Gym

5 common accounting mistakes that could hurt your gym business

5 common accounting mistakes that could hurt your gym business

Many gym and fitness centre owners – especially those just starting out – tend to handle their own accounting and bookkeeping. However, keeping track of the finance-side of the business– everything from income to expenses to tax compliance– can be overwhelming.

Mistakes can happen quite easily and can have costly consequences to your business, especially as the business grows. Below are five of the most common DIY accounting errors that you should avoid.

Unorganised Records

It takes excellent organisation skills to be able to do your bookkeeping and accounting right. You would need to keep a record of every transaction, keep receipts or digitise them for future reference, calculate taxes accurately, and more. If your records are not kept organised and updated, it is highly likely that you’ll miss something out, which could get you into trouble during the tax season.

To help with this using an accounting system such as Xero is really the way forward. You can access your records anywhere, you can connect it to your gym management software or upload CSV files to Xero, this will give you up-to-date information. Plus it means when you do seek support from an accountant/virtual finance department you will not be restricted by location.

No Accounting Schedule

As a business owner, there are surely a lot of other things that you need to attend to and accounting can easily be pushed to the bottom of your seemingly endless To-Do list. Yet, it is extremely important to set an accounting schedule to add your recent income and expenses into your records. If daily updating is not possible, at least dedicate some time once a week to do your accounting.

Unreconciled Accounts

Regularly check if your bank account reflects the same balance as you record your cash flow and other financial data into your books. If you find a gap, there is likely a mistake somewhere that you need to find or even a fraudulent transaction. Taking immediate action will help you prevent worse problems further down the line. Even if you use bank feeds into your accounting software, it is not guaranteed that transactions will not drop out or duplicate. So by checking your bank balance regularly against your accounting system you can feel comfort in knowing everything is being correctly captured.

Failing to Take Into Account Small Transactions

It can be easy to forget about minor transactions such as the office supplies that you picked up on your way to the office or the freebie that you sent a loyal customer. However, no matter how small you think the transaction is, it’s important to keep a record and get a receipt. In case of a tax audit, you will need to be able to present records of ALL business expenses, even these small ones. This is why I would recommend using a tool such as Hubdoc, Xero expenses or receipt bank, you can then quickly take a photo of the receipt, upload it and not have to worry about losing the receipt.

Not Backing Up Data and Using an Accounting Software

Imagine if the laptop where you store all your financial data was stolen, lost, or broken beyond repair and you don’t have a back up. You would need to redo everything from scratch, which could be a huge waste of time.

If you’re still using a spreadsheet or paper ledger to keep track of your business finances, you might want to consider upgrading into a cloud-based accounting software such as Xero. By migrating to the cloud, you will be able to easily back up your accounting data and even access them wherever and whenever you need to.

These cloud-based accounting systems also integrate well with your bank account and other powerful business apps. The results are streamlined processes, less manual work, enhanced efficiencies, and better overall business performance.

Spend Less Time on Your Books and More Time on Your Business

While being aware of these common accounting mistakes could help you avoid them, the most convenient and efficient approach to stay on top of your business finances is still to entrust your accounting to the experts. Our team of experienced accountants can integrate the most suitable cloud accounting software for your business and even train your in-house staff on its proper implementation.

Let us take charge of your books, while you focus on growing your business. Get in touch with us today.

 

 

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

2. Download our 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
Business tips Cash Finance Function Tax Uncategorized

More money for your business – tax savings during covid 19

More money for your business than you know

Even with a little glowing light at the end this unimaginably long tunnel, it does feel like for 2021, things just managed to get worse. But we’re not here to spread doom and gloom. We want to bring hope and open your eyes to options that until now you might not have considered for your business.

More options than you realise.

You’re probably feeling like you’ve exhausted all of the support, funding and loans available to you. However, as Accountants and Advisors we have a duty to ensure our clients leave no stone unturned in these remarkable conditions we find ourselves in. And there are ways, many ways.

As expected, we have seen the government extend initiatives, pumping more money into the pot. Money to give businesses and individuals the necessary support to try and survive. But government support and loans are not the only options for businesses right now.


Cashflow from Tax Advice & Reliefs

We highlighted it back in March but still tax advice seems to be getting missed out of the opportunities. 

Now is the time to consider tax reliefs and advice for your business

And there’s a lot to consider – see the image and summary below:


Tax is a very real cost to businesses. To fail to reduce it, is to miss out on money that should
be working for you, in your business. Having an awareness of the tax consequences of grants and loans when using them is vital. You don’t want to walk into unexpected tax charges. But with the right advice you can identify major cash injections.


If you’re a business owner reading this, valuable tax savings could help counteract some of the damage you and your business are feeling right now. There are essential and popular advisory opportunities that can get money back in a relatively short timeframe with HMRC.


And tax savings don’t need to be paid back. No debt hanging over your head. Just money back
into your business. Take R&D Tax Relief as an example, you could claim up to 33%
of the costs incurred on activities that are considered eligible. This money
can be used for absolutely anything.

Don’t leave any stone unturned

Work with us, or your Accountants and Advisers, and do not leave any stone unturned. Don’t miss out on any opportunity for money back into your business when you’ve come this far.

Take a look at the image and summary, see if anything flags up for you. If they do, let’s talk.

We can help get you through this. 

 

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

2. Download our 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
Business tips Finance Function Gym Tax

Should you voluntarily register for VAT for your fitness center/gym?

Should you voluntarily register your fitness center / gym for VAT?

You are considering starting up a new fitness facility and the outgoings are racking up fast. You need to purchase the equipment up front, sign leases, pay consultants for gym design/layout etc, most of these businesses are likely to be VAT registered. You are currently not trading and therefore haven’t even considered being VAT registered.

But is there a case for voluntary registration prior to getting to the £85,000 compulsory limit? In other words, registering for VAT when you don’t actually have to? Seems a bit crazy but there may be good reasons for considering this and it all depends on individual circumstances.

Registering for VAT

You must register for VAT once your turnover passes £85,000 or at the point during the year when you expect your VAT taxable turnover to be more than £85,000 in the next 30 days.

Once you’ve registered, you must, charge VAT on top of your goods and services to the end users. In most cases this will be 20% (i.e. on gym memberships) but there will be some products which are rated at 5% VAT and others which are zero rated (i.e. frozen meals to be heated and eaten at home). In most cases however, it’s fair to say that you will have to charge 20% VAT on (almost everything).

When you sell something, you collect the 20% VAT you charge customers – this is your output VAT. The VAT you pay on your supplies is your input VAT. At the end of the VAT period, you add up all your output VAT, subtract the total input VAT you’ve paid and then you either pay HMRC the difference or they pay you it.

When you sell to the public (aka gym members), they will not be able to claim VAT back and all they’ll really see is that you’ve put your prices up by 20%.

So, in addition to the extra paperwork that being VAT registered involves, there are serious business considerations to think about too. So, what are the pros and cons?

Advantages of registering for VAT

Deciding whether to register for VAT voluntarily before the registration threshold is reach is a  big decision. It is vital therefore, that the matter is given careful consideration. There are several positive reasons supporting voluntary registration, including:

  • The number one reason we will consider in this article is that you can claim VAT on certain items that you purchased prior to the date of VAT registration. Talk to your accountant about the exact details.
  • If you are in a VAT reclaim situation then you will definitely be better off.
  • You’ll appear to be a bigger business if you’re charging VAT, as the current limit for compulsory registration is £85,000 on VATable turnover (2020/21).
  • Maintaining up to date records will provide better information for running your business.

Here’s an example of how being VAT registered can help:

Sandra is starting a new gym and has on order £120,000 (£100,000 + 20% VAT) of strength and cardio equipment. Being a non-VAT registered business, Sandra will have to accept this amount as a full cost to the business and set this against her business profits for corporation tax. However, if the business was VAT registered, Sandra would claim the output VAT (£20,000) back from HMRC, as she is still in start-up mode and hasn’t received any income yet. This would be a saving of £20,000 cash and give Sandra a better cash position. 

Disadvantages of registering for VAT

As we mentioned earlier, registering for VAT could put you at a price disadvantage over non-VAT-registered competitors because you have to add 20% to everything you sell. There is more paperwork and administration involved too.

  • There can be increased admin and bookkeeping costs.
  • If your customers are not VAT registered themselves then you will immediately appear 20% more expensive when you add VAT onto your price.

·       You will also have to make VAT payments to HMRC once a quarter/month/year if your input VAT is lower than your output VAT. This will need to be factored into your cashflow forecasting.

·       You could end up paying penalties if you do not file and pay the VAT on time. HMRC give you a month and seven days to file your VAT and pay anything you owe over.

VAT Is non-registration preferable?

VAT registered businesses supplying goods and services to private individuals often feel dis-advantaged compared with their non-registered counterparts because they have to charge an additional 20% to their members. 

 

It is important to consider your business plans and forecasts, if you believe you will be above the VAT threshold in the near future then it may be worth registering early to reclaim your output VAT (VAT on supplies). You will also want to set your price at the start and not have to suddenly increase it by 20%. 

 

Purchases made before registration
There is a time limit for backdating claims for VAT before registration. From your date of registration the time limit is:

·       4 years for goods you still have, or that were used to make other goods you still have

·       6 months for services

 

You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your “business purpose”. This means they must relate to VAT taxable goods or services that you supply. As a gym your taxable service is gym membership, so you will be able to re-claim VAT on items such as gym equipment, flooring, advertisement etc. 

 

In summary, every gym owner will need to consider their own circumstances and future plans before deciding if to voluntarily register for VAT. If you would like more help in deciding if to register then please contact me to discuss. 

 

 

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

2. Download our 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
Business tips Finance Function Gym

Why is our tax service different and how does this benefit you?

Why our tax service is different and how does it benefit you?

There are 3 ways that we deliver over tax service to you as a client. 

The 1st is vitally important, its tax compliance, its how we help you account for the tax
that is due and therefore we help you fulfil your compliance obligations and
give you peace of mind. It’s box ticked, brilliant, that’s really important and
a key part of the service we offer to you.

However, what we really like to do as an accountancy firm is to focus on two additional areas, that in the market place don’t tend to get delivered in a consistent way to clients. What we are about as a business is delivering services in a consistent
and optimized way to clients.

So the way that we do that with tax services, is that as well as offering tax compliance we also deliver tax advice and tax consultancy to you.

Tax advice is delivered to you in a singular area of tax where we will charge you a fee
and you will usually benefit to a greater degree from the work that is delivered
via tax savings that will dwarf the fee that is charged in that area.

We are usually able to spot that piece of tax advice really in 1 of 3 ways.

ONE: you come to us and tell us you are doing something, sometimes if we leave it to
that point, it can be too late for us to do anything, because maybe you have already done it, or taken it too far and we cannot do some planning that can help you better your position.

Two: sometimes the nature of the area is that we can do a surface level spot. In other words, if you are a new start up fitness center and incurring large equipment costs and you walk into my office, I would say to you, you should look at getting VAT registered. It is a surface level spot.

The reality with tax advice though is that there are over 1000 tax reliefs, incentives, allowances and planning opportunities, that can apply to any client and we cannot leave delivery of these services to just surface level spots. 

So instead of waiting for you to come to us, we need proactively get on the front foot
with you and consult with you on the areas that could apply to you, as you move through your evolution as a business. And the way we do that is with tax consultancy, where we get under the skin of your business and really understand what the tax reliefs, allowances, incentives and planning opportunities are that at this point in your evolution specifically apply to you.

 

So (a) you are fully aware of what those areas and (b) we give you the full opportunity at implementing those areas with us. At every different point we will come to you and suggest to you an appropriate level of service and that level of service will be contingent on what you need. It will always comprise of the different tax areas; always tax compliance, often tax advice that we can initially identify you will need and we provide a level of tax consultancy that you need proportionate to where your business is up to.

If you think of your business as an iceberg, tax compliance is the tip, tax advice is the bit above the water (surface level) and tax consultancy is the majority of your business below the water. How we help you the most is by tailoring the package we offer to you with these three things in mind.

 

So how do we deliver to you as a client the different tax
consultancy levels I will go through this in the next article. (To be released shortly).

Until then take a look at the 32 ways you can extract value from you business: https://debbiebaileymoney.co.uk//32-ways-to-maximise-extracting-value-from-your-business/

Here is an example of how the tax consultancy service could benefit you: https://debbiebaileymoney.co.uk//prime-example-of-maximising-extracting-value/

 

2. Download our 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: