Tag: cash

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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: 

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Business tips Cash Finance Function

Prime example of maximising extracting value

Prime example of maximising extracting value from your business

Let me introduce Gwil, a business man who knows what he wants; he wants to save tax, so the money he makes stays in his pockets (or his families…). 

Here is his story and if you can relate and would like to see how you can maximise extracting value from your business, get in touch to book a tax diagnostic review with me.

Gwil’s story

Household Income

It’s important to me that we maximise our household income in a tax efficient manner. The way we do that seems to have changed so much over the years as we’ve gone from care free pre-kids to responsible parents (ish) post-kids! Currently, this involves my Mrs being employed by the business, she’s an financial chartered accountant so we might as well use her! This suits the business as we have an important function covered. It suits my wife who wound down slightly from her career after we had kids. It also suits our household income because we are taxed across the two of us, not just me. This means we benefit from maximised personal allowances, lower level tax bands and the company can make a national insurance saving.

I needed a dividend for extra expenditure

Not the norm for me, but the current year was a bit of a spending year – ouch! Thankfully, they only seem to happen once every ten years as I’m such a tight arse! But this year we had some extensive work done our home…which seemed to go on forever! Plus, we had a few lovely holidays as me and the Mrs had been married for ten years. We took the family to Disneyland Florida over Xmas and New Year which is something I’d always wanted to do. Me and the Mrs went to Paris on our own, which we’d not done since before Oscar was born…now 8 long years ago! To do this, I took out a dividend, the £2K tax free amount, plus a little more to keep the clan in a happy home and enjoying our ten years married celebrations! 

Building retirement investments

My years of frugality in extracting money from the company paid dividends a few years back when I set up a SSAS which bought the office premises. Nice little arrangement which ensures the guaranteed rent is paid back into my pension tax free! Purchase of commercial property No 1 has wetted my appetite for more, so I’ll always invest as much as I’m able into this arrangement with a view to eventually planning the next investment. I’m a bit of a nerd so these kind of things excite me! I think it’s because I feel in control with it…firstly it’s a very tax efficient way to put money aside as you pay no income tax or national insurance when the money is paid in (subject to the limits). You also get a corporation tax deduction on the money paid in. Plus I get to dream…plan a future commercial property empire…long way off but hey, dream big! When I retire, which is probably never as I’ll get bored…so when I reach retirement age…I’ll take 25% tax free with the remainder being taxed but spread across multiple tax years, making the most of the personal allowances and tax rates. I want to live a highly active but extremely comfortable work / life retirement…I just can’t see myself retiring…but let’s see!

I’m not that into Cars, but…

I’m not massively into cars. I’ll be honest enough to say, I want something that looks decent, but not too flashy. One of the businesses had done really well so it was a bit of a no brainer to go for an electric vehicle when the time came around last year.  Reason being we got 100% corporation tax relief against profits in that year, plus there is no BIK on me. It’s all the extra running cost aspects I was able to put through the business and take advantage of as well like installing a charging point at home, charging tax free at the office, car insurance and servicing which all normally add up to a pretty penny. I did have my eye on also putting a personalised number plate (GWIL-1-AM) through the business (which is allowable) but Mrs D said she would divorce me! Quite right as well!

Company Loans

Way back when I lent money into the companies to get some started and the company paid me a commercial rate of interest back on that money which allowed me to take out £1K from the business tax free. However, the circumstances have changed, that money has now all been repaid to me and a few years back I instead took out a £10K tax free loan from the business. I didn’t need it, I just took it because the company had spare cashflow and you can take the loan of £10K tax free. My thinking here was to simply invest this and make more back, it’s a strategy that’s worked and I’ve made a fair amount on investing that £10K well.

Maximising business expenses paid for personally

Running a business takes grit, it’s hard to switch off and you are always working because it’s your passion. That’s why for me, it’s vital to maximise business expenses wherever possible. That means ensuring claiming travel expenses on trains/flights, mileage allowances,  when travelling for business. Also subsistence expenses when eating & drinking when on travelling on business as well.

I also ensure I double bubble the benefits by spending on a points reward card. My favoured card is Amex as they have a points rewards system connected to Airmiles. In the last year doing this I’ve build up enough points to travel to Paris 1st Class for £2. Then to Florida family of 4, 2 free tickets and upgrade to 1st class there and back. All because of the points I built which enabled me to do this!

Employee Benefits

The tight arse in me ensures I maximise the hell out these with all the following being put through the business at every opportunity:

·       Life Insurance, it’s personally really important to me that my family is secure if anything were to happen to me.

·       My annual pension advice tends to be mostly covered by the £500 allowance

·       Mobiles – four in total for me and the Mrs – personal and business

·       Trivial benefits – albeit in £50 amounts the £300 from me and £300 amount for my wife ensures all Christmas and Birthday presents are covered in our household

·       £150 per head slap up dinner for the Xmas Do where we also have a good dance

·       Parking costs when visiting the office

New Bike and weight loss

It’s something that I’ve been aware of for a while, but never got round to doing. I used ‘Salary Sacrifice – Cycle to Work Scheme’ to purchase an expensive road bike, pre-tax, and in instalments. This reduced my tax liability on income & NI, plus it gets me a dream bike, without a surprise mammoth expense. Most importantly, it’s gets me exercising. Sexy bike. Sexy body. Tax is sexy!

Future intention

I would like at the right point to start exploring a family investment company.

For me this is about retention of earnings for me, my family and the business.

Inspired by Gwil’s story then book a Tax Diagnostic Review

To make sure you’re getting all the benefit from the tax saving opportunities available to you and your business, book a tax diagnostic review with me.

Get peace of mind you’re aware of all the tax advice relevant to you.  

 

Book a call

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: 

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Business tips Cash Finance Function

32 ways to get the maximum value out of your business

32 ways to get the maximum value out of your business

A question I get asked all the time is: ‘What can I take out of my business?’ and ‘how do I save more tax?’ Well, the quick answer is, ‘there’s up to 32 ways to get value out of your business, tax efficiently.’ Yep, that’s a lot of ways ⬇️ (checkout out the full infographic here). 

But the truth is, not all these 32 ways will be relevant to you and your business, and it’s likely that you’ll already be doing a few of them. But how do you know if you’re maximising every opportunity you could be, to improve your life, your families and your employees?

Value Extracting Tax Diagnostic Review

Well, we have a tax diagnostic review service that will do exactly that for you.

In our Value Extracting Tax Diagnostic review we will analyse your business and personal circumstances against the 32 ways, to identify all the ways you can tax efficiently put things through the business, or take value out of the business, benefitting you, your family and even your employees.

Every business owner can extract loads of value from their business, you just need to know what is relevant for you. 

Find out more about our tax diagnostic service here.

Let’s have a chat

If you’d like to review how much value you’re getting from your business, we’d love to speak to you, book in a
call & let’s have a chat: 

 

 

Book a call

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: 

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Business tips Cash Finance Function

Fed up of chasing payments?

Fed up of chasing payments?

Fed up of chasing payments and continually stressing about those awkward unpaid invoice conversations? 

Join me on Wednesday 4th November, when I am presenting a webinar via Zoom in collaboration with Rume2. This is a short session that will be packed full of tips on how to implement processes to prevent this happening in the first place and a few back up plans if needed.

Stop wasting time chasing late payments and implement processes before that happens, to book on and find out how click the link: https://www.rume2.co.uk/community-calendar

For further help see below:

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: 

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Business tips Cash Finance Function

Understanding Statement of Cash flow

Understanding statement of cash flow

Revenue is vanity, profits are sanity, but cash is king – or so the saying goes. That’s because cash is what customers pay in, and what shareholders get as a dividend.  So, you must want to know more about the impact of your business activities on your cash flow?  

Understanding Your Statement of Cash Flows 

The cash flow statement shows how your business has generated and used cash (and cash equivalents) within a specific time period. 

For each of the reporting categories, receipts and payments are listed (money in and money out), and this is reported as a net increase or decrease in cash held for that category. 

The net change in all categories is added to the amount of cash at the start of the reporting period to arrive at the current cash at the end of the reporting period. 

It is another important financial statement to understand alongside with the Profit and Loss statement and the Balance sheet. These three reports provide a good understanding of the financial position of your business. 

How Does it Work? 

The cash flow statement integrates the information provided by the profit and loss statement and the balance sheet into a current cash position. The cash flow statement is reported on a cash basis, while your other financial statements are usually reported on an accrual basis. Accruals basis being when the income was earned or expense incurred, not when the cash entered or left your business. 

Report Categories 

The statement of cash flows is organised into three sections: 

  1. Operating cash flows– Day to day operations of the business. All business income, expenses, assets and liabilities (except for those assets and liabilities reported in investing and financing activities). 

  1. Investing cash flows – the purchase and sale of long-term investments, property, plant and equipment as well as deposits paid to suppliers or received from customers and dividends received. 

  1. Financing cash flows – for example, issuing and repurchase of shares and bonds and payment of company dividends if applicable. Loans are also included in financing activities. 

Why is it Useful? 

The statement of cash flows gives you a valuable measure of cash flow in and out of the business over a given period. It shows the ability of the business to pay its bills and fund its operating activities. This gives you a picture of overall performance. 

It also shows the relationships between assets, liabilities, equity and cash accounts. It shows changes and movements over time, whereas the balance sheet and profit and loss reports show account values at a single point in time. 

The statement of cash flows gives you vital information on your business. 

  1. How strong is your cash position? 
  2. What is the long-term outlook for your business? 
  3. What activities generate the most cash flow? 
  4. What is the relationship between your net income and your operating activities? 

A useful metric is free cash flow, this is simply operating cash flow minus capital expenditure such as building and equipment. 

Cash flow from operations – capital expenditures = free cash flow. 

It shows what’s left over from operating cash after expansion and upkeep costs. A positive balance implies the business has cash left over to give back to shareholders, pay off debts or invest in R&D or acquiring other companies. 

It can be useful to ascertain if a company’s free cash flow is, and has consistently been, greater than the dividend paid. That’s another figure you will be able to find on the cash flow statement, under financing cash flows. 

If your business is growing, you’re looking to expand your business, or you have a tremendous amount of investments, chances are that calculating your free cash flow can be beneficial. 

If you’d like to understand your financial statements, cash position and future outlook in more depth, arrange an advisory session today. We’ll help you identify and appreciate the strengths of your business. 

 

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. Download our free Coronavirus support guide: https://debbiebaileymoney.co.uk//coronavirussupport/

4. Connect with me on social media:

https://www.linkedin.com/in/southbourneaccountancy/

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Business tips Cash Finance Function

R&D – How to get more cash back into your business

Research and Development - How to get more cash back into your business

 

In February 2020, the government pledged to increase public investment in R&D to £22bn a year by 2025, meaning there is a significant opportunity for businesses to invest more on innovation and get cash back into their bank. 

R&D is a tax relief which is massively underclaimed by UK businesses, it is money that many businesses need right now. You can claim up to 33% of eligible costs incurred and better still you can go back up to two years. The average claim made by SMEs in the UK is £53,714 (2017-18). 

You can decide if to receive a cash payment now or a corporation tax reduction. R&D exists in every sector, it is not just for scientists in white coats. 

How can R&D help your business get more cash? 

There are two schemes available, this article will concentrate on the SME scheme (companies which have less than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups, fall into this category.) 

A SME company that qualifies for R&D tax credits can account for an extra 130% of qualifying costs on top of the 100% already deducted. Loss making companies can in certain circumstances surrender their losses in return for a payable tax credit. 

If as a loss-making company you decided to carry forward that loss for future tax benefits, you may want to consider changing your tax return to so the carried forward loss is a tax credit. This would give you cash now when you might need it most.   

What is R&D? 

HMRC are looking for R&D that seeks to make a worldwide advance in some area of science or technology. It doesn’t have to be earth-shattering and it doesn’t have to succeed. In fact, failure on technical grounds e.g. it was too technically challenging. is often some of the best evidence of a qualifying R&D project!  

The work needs to involve technical ‘uncertainty’ i.e. it’s not straightforward and requires some iterative work and testing; and the work is carried out by staff who have either training or experience in the area of science or technology being advanced. 

Who can claim? 

To be eligible for R&D tax relief, your company must be Limited, and subject to corporation tax. Your company must have fewer than 500 staff and either not more than €100 million turnover or €86 million gross assets. Most companies, including start-ups, fall into this category. 

What are the criteria: 

1) There must have been at least one technical goal.  

2) There must have been at least one significant technological or scientific difficulty to overcome while trying to achieve this goal. 

3) There must have been people with the right skills and experience involved in overcoming this technical goal. 

What do you need to do: 

Once you have established if you have a valid R&D claim you will need to: 

  1. Work out when the R&D project starts and ends. 

  1. Collate qualifying costs 

  1. Complete the calculations 

  1. Send HMRC details to support your R&D claim, you may wish to use the online service. 

  1. Submit you CT600. 

This article does not go into the specifics of the claim and qualifying costs. Please speak to a trained professional if you require additional information and support.  

So, don’t wait to make a claim, assess your projects to determine if your business has been involved in Research and Development and get that cash back into your business’ pockets.  

2. Download our free guide on “stopping your fitness business running out of cash”  https://debbiebaileymoney.co.uk//fitness-ebook/  

3. Download our free Coronavirus support guide: https://debbiebaileymoney.co.uk//coronavirussupport/  

4. Connect with me on social media:  

 

 

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Business tips Cash R&D

Are you eligible for R&D?

Are you eligible for R&D?

Are you eligible for R&D? Some people enjoy reading long blogs whilst others prefer something quick to skim such as an infographic. Follow the step-by-step process below and then get in contact with our R&D specialist for a quick 15 min call to determine whether your business activities fall into science and tech

Make a start today

Contact us to arrange an initial consultation and discuss your requirements further.

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Business tips Cash

Free guide to help your business avoid running out of cash

Download

VALUABLE DOCUMENT TO GIVE YOU MORE TIME AND MIND FREEDOM.

Avoiding running out of cash in your fitness business.

  •  Be Proactive – Send automated reminders
  •  Be Timely – Use direct debit systems such as GoCardless to collect payments. Be in control!
  •  Be cautious – Run credit checks on high value clients. 
For more information, click the link to receive your free download. 

If you would like to discuss your cash flow further or have any other business queries then please use the button below to complete a contact form. Or email me on debbie@southbourneaccountancy.co.uk

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The Cash in your bank

Cash solves problems, cash is king 

What is cashflow? 

Snapshot of business finances, it is a picture of money flowing in and out of a business. This picture shows the long-term financial health. You can track this on a weekly, monthly, quarterly or annual basis.  

Why is cashflow important? 

It enables you to buy supplies, pay yourself and your employees and invest in assets.  

Inefficient management of cashflow will almost certainly lead to failure.  

There is a need to plan ahead to ensure all costs are accounted for correctly, on the correct dates and avoid penalties, fees etc.  

You can be profitable but be cash negative and this leads to issues.  

There is a need to account for short term cash flow issues, such as a customer who is slow to pay. 

How to analyse and monitor cashflow 

Add together all your bank accounts and any cash on hand, this is your starting number.  

Subtract all payments (do not forget VAT payments to HMRC if VAT registered, annual employee costs such as Class 1A NIC and PSA and corporation tax or payments on account if self-assessment) 

Add all income (not sales as you need to account for when you expect to be paid, not when you will make a sale) 

This will give you a negative cashflow (more cash out in the month) or positive cashflow (more cash in, in the month). It is best to do this for at least a year, so you can see the ups and downs that you can expect and when you may need to hold onto cash to ride out the negative cashflow months.  

It is good practice to use past data as well as future expectations to get the best cashflow forecast. Past data may reveal seasonal trends, or dates when major contracts are up for renewal.  

Consider future requirements of the business, such as will a greater work flow require you to hire more staff, are there any tax changes expect such as auto-enrolment pension increases and if you are not registered for VAT are you expected to reach the VAT threshold which would increase your prices to clients and change your cashflow.  

Consider if you like to see information presented visually such as graphs or in table format.  

What can you do to sleep soundly at night, reduce any potential stress and maximise opportunities? 

  • Avoid Surprises
  • Keep up to date accounts and cashflow forecast – add control and strategy
  • Consider if you will need finance in the future and start to seek out those relationships, understanding what you will need  
  • Make your cash work for you  
  • Could you move some of the funds into an interest baring account
  • Consider different methods of collecting payments such as; direct debit, GoCardless, stripe, up front payment or partial upfront payment.
  • Reduce costs
  • Repair equipment instead of re-buying
  • Look at your regular bills, have you reviewed them recently? Do you still require all the services you are paying for? Can you move utility provider?