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Quarterly snapshot for business owners who want to be in the know March 2018
One way to get your clients to TAKE ACTION...
I’m writing this in the first week of January, a time where I get a lot of new and old clients sheepishly coming in the office to ask if I can do their tax return before 31st January. These clients usually feel like they are the only person on the planet to leave it this late, however, we’re a nation of procrastinators. According to the Financial Times, last year, of the 10.8m people that submitted a tax return 768,905 were submitted on the 31st January – and that was a Sunday!! Why is this relevant to marketing? Just imagine the chaos if HMRC didn’t set a deadline for Self-Assessments, would the majority of people get around to submitting their tax return?? The same goes for your marketing … you could have a well-crafted offer for something the person reading it needs, however, if you don’t have a deadline on it are they ever going to pick up the phone and ring you. Our lives are so busy in this digital age and, if you’re like me, you need for something to get to TI Accountancy: Tip The Wink - March 2018
the top of your list for it to become a priority. You need to remind yourself that your customers are probably just as busy, so it’s crucial that you grab their attention and make whatever your offering become a priority. Deadlines are a fantastic way of doing this. How this recently happened to me... Over the first 6 months of 2018 my focus is to build my personal brand as I want to help other bookkeepers become bookkeeping companies. To do this I had a list of “to do’s”, one of which was to do create online courses but this wasn’t my top priority as I hoping to establish my brand first, but then Shaa Wasmund popped into my Facebook life. She was offering a course on “How to run simple online courses” (ironic as that sounds) and I felt that it was something I would be extremely interested in when the time was right. Shaa had other ideas. She set a very specific deadline for signing up for this course. The next one wouldn’t be available until 2019 – yes 2019... way after when I would be ready to participate. www.tiaccountancy.co.uk
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One way to get your clients to TAKE ACTION... cont She also limited the numbers of people who could sign up, once their quota was full the subscription would be turned off. After all, she could only help so many people at the same time without diminishing the value she could give. I, like many others would have, took weeks to consider it, asked business groups I’m involved in whether they thought I could add this to my already full to do list for the next 6 months and watched as every email came in reiterating the reasons as to why I needed to press the “Sign up now” button. Guess which day I eventually took the plunge to sign up… you guessed it, less than 24 hours before the deadline. Without the deadline I’d still have “Write an online course” on my to-do list for sometime in the future..
And that leads me on nicely to the key question you might want to ask yourself. How can you make this work for you? If you’re a landscape gardener then maybe you could you offer to mow the lawn for free when you tidy up the trees and bushes (if they agree by XXpm on XXdate).. Or offer to mow the lawn for free for the first 10 people that take you up on the offer before the end of the month. Anyway you get the idea.. add a deadline and increase the urgency for your prospective client to take immediate action.
Tracy x
Implications of an Overdrawn Directors Loan Account If you take out more money from your company than you’ve put in - and it isn’t your salary or a legal dividend (i.e. you take a dividend during the year but it transpires at the end of the year you did not make sufficient profit to take this dividend) – it will be declared as a director’s loan. The first thing to remember is that you and your company are totally separate, the company’s money is not your money! Therefore, each time you take money out of the company to pay for a personal bill or accidentally use the company’s card to pay for a personal expense etc., this may result in an overdrawn director’s loan account.
HMRC believes an overdrawn DLA provides company directors with an unfair tax advantage because they don’t pay any income tax on the amount overdrawn, so unless you do something to pay back the money, both you and the company will be penalised. Impact on you If you owe your company more than £10,000 at any time and either no interest or interest below the market rate has been paid on it, the loan is regarded by HMRC as a benefit in kind. For the 2016/17 and 2017/18 tax years the interest rate used by HMRC is 3%. Your company will need to record the benefit in
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kind on a P11d form, the benefit will attract income tax for you (payable on your self-assessment tax return), and National Insurance Contributions for the company. The simplest way for you to avoid this charge is to not have your director's loan account go overdrawn by more than £10,000 at any time during the tax year. Or if your director's loan account does go overdrawn by more than £10,000 and you don’t want to have the headache of preparing a P11d, then the company can charge you interest on your overdrawn loan account at HMRC’s approved rate. Impact on the company When your company’s financial year ends and you have an overdrawn balance on your DLA, you must include the amount on your annual Company Tax Return. The overdrawn amount needs to be repaid within nine months and one day of the date of your company’s financial year end for you to avoid paying tax on the amount. If loan is not repaid within this time period your company will have to pay a penalty tax. For 2016/17 and 2017/18 this amount is calculated at 32.5% of the overdrawn DLA amount (this is the upper rate band for dividends for the tax year). Once you’ve repaid the overdrawn DLA you can reclaim any penalty tax you’ve paid on it. You have to make your claim to HMRC within four years of repaying the loan.
Bed & Breakfasting Bed and Breakfasting is where directors repay their overdrawn DLA amount before the year end to avoid any tax but then immediately put their DLA back into an overdrawn position at the start of the new tax year with no intention to repay the amount permanently. HMRC have put legislation in place which means where a director’s loan of £15,000 or more is repaid, a period of 30 days must pass before this amount can be taken out of the company again. If the director makes any cash withdrawal from the company within the 30 day period, which is not a salary or dividend, HMRC rules state that the loan has not been repaid. Written off loans If your company writes off your overdrawn DLA, the loan will be treated as personal earned income. This will be recorded on your self-assessment tax return and you’ll be charged income tax at the same rate as dividends are taxed. If you would like any further clarification please do not hesitate to contact us.
Lucy www.tiaccountancy.co.uk
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A Company Profile shower rooms.
What is your business? Izzy and Dean from Dean Taylor Bathrooms make dreams come true! They supply and install quality bathrooms and wetrooms, from a general upgrade, to a full bespoke service. For those who are struggling with mobility, they also take away the fear of climbing into the bath by installing accessible wetrooms or
When they met 11 years ago, Dean was working as a self-employed General Builder, and installing many bathrooms and wetrooms alongside other property work. Izzy had a successful 18-year career as a Television Producer and Director, working in factual programming. In 2011 Izzy produced ‘Big Body Squad’ for Channel Five and featured a lovely lady who was having a wetroom installed as she had poor mobility. After filming her take her first shower in years – all very tastefully done of
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Dean Taylor Bathrooms course! (The clip is still up on YouTube) and seeing the difference it made to her life it made her want to be able to help those for whom showering has become a bit of a nightmare too. Izzy joined Dean in the business which meant they could specialise in Bathrooms and Wetrooms, offering a truly unique service. TV was a great career for Izzy which took her all over the world, but with constant travel she’d known the day would come when it was time to do something different. They both knew they wanted to work together to grow the business and create a solid family firm they could be proud of. What were your challenges that led you to TI Accountancy? Being fairly new to the South Lakes and having limited contacts has made things a little harder for Izzy and Dean than if they’d had a pool of people they could call on when they got really busy.
have departments you just have to do everything – and that means learning about everything first. Not everything can be outsourced, not immediately anyway. How did TI Accountancy help? TI Accountancy have been great. They have helped in a very practical way but they also send out some really helpful emails to keep their clients updated on changes coming/things to look out for – all sorts! Would you recommend TI Accountancy to other businesses? As a very small business, you have to do everything, and there is so much to learn! At first, Izzy did payroll as she was keen to learn about how it works, but says it is a huge responsibility and handing over to TI Accountancy was a big help and relief to her.
Building a team and network was absolutely crucial and is still ongoing. They also went from both being sole traders, to suddenly being a business, so that also was quite the learning curve, and is also still ongoing! Izzy feels auto-enrolment pensions have been unfair for businesses with 5 employees or less. She thinks that they should be exempt, or enrolled automatically with the hard work done for them. Watching pension webinars at 11 pm because you’ve been dealing with the business all day and it’s the first chance you’ve got to get your head around AE isn’t helpful for anyone, but when you are a very small business, you don’t TI Accountancy: Tip The Wink - March 2018
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Rise of the machines? machinery and computers to replace actual people. Think that won’t happen? Think again. Now I’m not talking about the downfall of the human race at the hands of power-hungry killer robots but you’ve only got to look at the supermarkets, who have replaced the check-out team with banks of automated tills overseen by a single till supervisor.
The rise in minimum wage employees over the last few years is set to continue, rising from the 4% of employees in 2015 to an estimated 12% by 2020. Good news for business? Not necessarily according to the Institute for Fiscal Studies, who have warned that the payroll bill for minimum wage employees is set to rise with above-inflation pay increases. The explosion of minimum wage employees in the hospitality and personal service occupations, including retail cashiers and receptionists, has meant cheap labour has replaced the need for automation. But there is a tipping point when the cost outweighs the benefit. Could this come when the minimum wage rate increases to £8.50 in 2020? (from the £6.70 rate paid in 2015) The Institutes analysis has revealed that beyond some point, yet to be determined, a higher minimum wage will have adverse consequences for employers, leading to strategic changes to the business in terms of
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Payroll has an increasingly important strategic part to play in business. Understanding the number and percentage of employees employed on minimum wage can help determine the tipping point for change. Combined with an analysis of ‘routine task intensity’ (RTI) of each occupation HR teams can determine the make-up of a business going forward, critical to competitiveness and business success.
Minimum Wage – no excuse for business In an ever more challenging payroll landscape it’s still amazing that companies still haven’t got a grip on minimum wages, with further companies named and shamed by the HMRC in December 2017, including Sports Direct and Primark. Businesses with good payroll software should easily report on minimum wage and payroll outsourcing companies should easily be able produce those reports on request.
Stuart
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Flood risk doesn’t mean no insurance… It is 12 months ago since BIBA launched a commercial insurance scheme including flood cover to cater for risks in flood hit areas. Even for some areas of the country that haven’t flooded, it is becoming more and more difficult for businesses to insure themselves if they are unlucky enough to be in an area that is seen as high risk from potential flooding. This scheme is available to those businesses also. There are 3 specific products available:• Commercial Combined for manufacturing and distribution trades • Retail, Office and Surgery packages • Property Owners for individual and portfolio property investors Each product has wordings that include loss damage and liabilities that you would expect from a standard comprehensive commercial policy.
Key benefits of the scheme are:• Recognition of flood resilience and resistance measures in pricing and terms • Availability of optional additional policy covering high flood excesses • Potential to consider resilient repairs as part of claims solution • 24 hour 365 day property claims notification line As mentioned above, the scheme includes an Excess Buy Back facility. Should a high flood excess apply, this can be insured for an additional premium. TI Accountancy, through Ten Insurance Services, are members of BIBA meaning we have access to this scheme, should you require a quotation please do not hesitate to get in touch.
Sarah
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TI Accounting have looked after my books and wages for 4 years now – despite the distance from my office, I am based in Somerset – they are very efficient, from collecting my invoices on a weekly basis to the management accounts they are timely and efficient and I thoroughly recommend them Print Guy www.tiaccountancy.co.uk
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