The Business Bulletin Issue #13 - Focus On Finance by Paul Green

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Focus on… Finance Spotlight on Wendy Tate PLUS Beware the elephant traps Is your property portfolio safe from tax? Start-ups – what are your options for finance? What’s the point of a mortgage broker?

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The Business Bulletin

A magazine that works for everyone Paul Green Founder & Chief Editor

Welcome to the thirteenth edition of The Business Bulletin. Hopefully you will enjoy this edition which focuses on finance. Published every four weeks, it will cycle through the following themes: ■ Finance ■ Sales & Marketing ■ Operations & Resources ■ Strategy & Personal Development It will bring together a collection of articles aimed at any small business owner who doesn’t have all the answers and is open to some thoughts and advice from some of the leading experts in their fields. So what makes this different to any other publication? I’m glad you asked! For the reader – no more advertorials. All the featured articles have been chosen for their valuable content, not because the author has paid to be published or taken out an advert to get their slot! For the contributor – you can submit articles for inclusion without having to pay for the privilege or having to advertise. If your article is deemed suitable based on its merits – that it is

All the articles featured in this magazine have been chosen because of their valuable content

relevant, good and engaging content and not promotional of your business, then it will be published. For the advertiser – if a publication is more engaging due to the content, then it is more likely your adverts with be noticed. The number of full-page and half-page ads is limited for each edition and there will be a limit on the number of advertisers from a given industry sector. This means your advertisement is more likely to stand out from the crowd and not be lost in a sea of competitors. Your feedback and thoughts on this magazine are welcome –

Join in!

let us know your experience. Contact us to contribute an article or

Thanks,

place an advert for future editions contribute@business-bulletin.co.uk

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Proof-reading: James Tarry

© Copyright 2021 The Business Bulletin. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanic, photocopying, recording or otherwise without prior permission of the editor or the author of the article. Disclaimer – no responsibility can be accepted for any actions that you take as a result of the content provided in this magazine. There is no guarantee that implementing any of the advice contained in the articles will definitely ensure your business success or have a positive impact. They are presented as information based on the experience of the authors working with many different types of businesses in their field of expertise and are provided as a choice for you to consider if they will be useful for your business.

Issue 13 – Finance | 3

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The Business Bulletin

Contents This edition focuses on finance and brings together a wide range of topics with a selection of quality articles from leading experts in their field.

So, why should I purchase my own commercial premises? James Blacklaws

Beware the elephant traps Jamie Cochrane

What you need to know about your pension Neil Wattam

Spotlight on

How can an Enterprise Management 12 Incentive scheme benefit my business? Sarah Randall

Wendy Tate

Is your property portfolio safe from tax? Tim Mullock

Are you using the right finance tools for your business? Matthew Goude

Landlords – are your books in order? Paul Simpson

The power of package pricing 36 Margot Clarke

Start-ups – what are your options for finance? Peter Douglas

What’s the point of a mortgage broker? Mark Chapman

Are you tax aware? Wendy Tate

Ask the experts

SME survey

Expenses… what can I get away with?! 24 Ruth Chettle

Issue 13 – Finance | 5

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So, why should I purchase my own commercial premises? So many of us own

It’s commonly said that in the UK

our own residential

contrast with our European friends

property but so few own the freehold premises which our business trades from!

6 | Issue 13 – Finance | 6

we are a nation of homeowners, in who prefer generally to rent their homes. Despite this, a vast majority

The reality is that there are many benefits to renting your premises. These include: ■ The ability to leave the

of business owners either trade from

premises if required due to the

home or, if they do require offices or

business folding, outgrowing

a factory, either prefer to rent their

the premises due to a business

premises on commercial terms or

expansion or a disagreement

don’t understand the benefits of

with the landlord. Most

property ownership.

commercial leases have break

The Business Bulletin

clauses and all have a fixed

In fact, if the client decided to

he decides to buy it in his

term after which there are no

overpay the mortgage with monthly

personal name and rent

restraints to remaining there.

payments in line with their current

it to Jones Roofing Ltd. In

rent, they would be mortgage-free

this example, the business

within 12 years!

continues to remain a separate

■ Depending on the nature of the lease signed, it’s possible that any significant work required to the property falls to the landlord to pay, not

If they paid the same amount as rent over the same period, they would

or even damage resulting from natural disasters. ■ During recent economic uncertainty, landlords have been compelled to offer leniency to tenants regarding non-payment or underpayment of rent. This won’t have a negative impact on the tenant’s credit history, unlike if they missed a mortgage payment which can leave a ‘footprint’ on credit history which can take months, if not years, to shake off. Despite all this there are an enormous number of reasons why you should consider buying your own freehold to trade from, irrespective of

and Mr Jones can offset the

You will hold a longterm asset

against his personal tax return

Sadly, even after a lifetime of paying commercial rent, the landlord continues to hold the asset. In fact, I have seen multiple cases where a tenant who has been in situ for many years has paid the landlord’s mortgage off in full for them, after which the tenant moves on while the landlord can sell the property or continue to rent it out to another business. By purchasing the property, you will continue to hold it even if your business fails, you move the trading premises or even if you sell the business. In fact, it’s reasonably common for an entrepreneur to sell the goodwill of their trading business

the nature of your industry.

while retaining the freehold ensuring

It’s generally more affordable on a monthly basis to buy than rent.

lease. This can continue to provide an

Yes, as with residential property, it’s likely to be cheaper monthly to pay a commercial mortgage than rent the same unit. A standard recent example was a gym I was referred to, which was paying £36,000 rent annually for their premises (this was fair market rent for this particular property), but they held an option to buy the freehold which they wished to take advantage of. With this particular deal, a 25-year

doesn’t lose Mr Jones the asset

have no tangible asset to show for it.

the tenant. This can include structural work, electrical work

legal entity so its failure

that the new owner signs a long-term income for the former business owner as well as the possibility to benefit from capital appreciation (a rise in the value of the property).

It can be more taxefficient This is not advice – always consult your professional advisors such as your accountant before deciding how to purchase a commercial property It’s important to understand that there are multiple ways to purchase a commercial property

commercial mortgage interest ■ In a pension fund. Again, specialist advice is required, but often a very efficient way to purchase a commercial unit is through a SIPP (Self Invested Pension Plan) or SSAS (Small Self-Administered Scheme), both of which are available from a majority of financial advisors. By purchasing a property through such a scheme, a trading business will be paying the pension scheme monthly rent, growing a director’s pension pot. For this to work the property must be 100% commercial (no upstairs flats for example) and the fund must hold significant value. To find out more about the rules of such schemes, please ask for specialist advice or visit a website offering such an overview ■ In a Special Purchase Vehicle (SPV). More commonly, I am seeing a separate company established solely for the ringfencing of a commercial property purchase, despite there being common ownership of this company and the trading company. This ensures, as above, the property is safe in the case of business failure, and the additional benefit of not impacting on personal tax if drawings are not taken.

mortgage at an interest rate of 4%

■ In your personal name. i.e., Mr

with a 25% deposit gave monthly

Jones is the sole director of

otherwise known as the ‘old

repayments of £1583 or annually

Jones Roofing Ltd but when

fashioned way’. Despite being

£18,996 – roughly half the rent paid!

purchasing the property,

seen as slightly antiquated by

■ In the trading business name

Issue 13 – Finance | 7

The Business Bulletin

many professional advisors,

The good news is that, despite

there are some customers

COVID restrictions and the recent

who still prefer to purchase

economic downturn, the market for

the trading premises in the

such mortgages is still reasonably

name of the trading company.

buoyant. While High Street providers

This may be because they

are reluctant to lend to all but the

have built up reserves in the

(what they deem to be) the very

company name, they wish to

lowest risk clients, mainly those they

use or simply a preference.

already have as customers, there

So, while there are obstacles to buying a commercial freehold such as raising a deposit (generally anywhere between 25 – 35% of the property value is required) and generally economic uncertainty, there are significant upsides as well which make it a viable option for business owners.

is a strong alternative marketplace providing a service level often above those seen with High Street banks and with comparable charges and interest rates.

James Blacklaws JB Commercial Finance James, an ex-banker, is a highly experienced and fully Independent Commercial Finance broker, authorised and regulated by the FCA. With whole-ofmarket access. He specialises in helping businesses declined by their banks; businesses looking to grow, survive and purchase commercial property. 07722 432128 james@jbcommercialfinance.co.uk jbcommercialfinance.co.uk

The Business Bulletin

Beware the elephant traps Something I have been asked several times recently is when should directors seek advice from an insolvency practitioner. My answer is always “as soon as possible” as there are more options available the earlier advice is sought, with the likelihood of rescue and recovery markedly higher.

The other advantage is that a director

one of the creditors or guarantor for

(e.g. a director or relative of a director

is less likely to step on what I call the

any of the debts and [the insolvent]

or a company of such a person) then

elephant traps. These antecedent

does anything which has the effect

the desire is presumed. Finally, the

transactions, explained below, can

of putting that person into a position

payment needs to take place within a

lead to personal liability for the

which will be better than if that thing

relevant time which is 6 months prior

director to restore the position to

had not been done”.

to the company entering liquidation

what it would have been prior to the transaction taking place.

1. Preference

It needs to be proved that the company was insolvent at the time (or as a result) of the transaction and that there was a desire to prefer the

or administration, although this is extended to two years when the recipient is connected. Typically, preference payments

The Insolvency Act 1986 defines a

creditor or guarantor. However, where

involve payments being made to

preference as where a payment is

the recipient of the preference is a

directors to clear loan accounts, to

made to a person and “that person is

party connected with the company

creditors personally guaranteed by

Issue 13 – Finance | 9

The Business Bulletin

the director or to suppliers which the director intends to utilise should they start a new business.

2. Transactions at an undervalue A transaction at undervalue occurs when a company “makes a gift or otherwise enters into a transaction that provide for no consideration” or “enters into a transaction for a consideration the value of which is significantly less than the value provided” in the two years prior to the company entering liquidation or administration. Additionally, it needs to be proved that the company was insolvent at the time (or as a result) of the transaction. The most common examples are the gifting of assets to directors or the transfer of an asset the director believes is theirs (e.g. a company car) for a value far less than it was worth.

3. Transactions defrauding creditors A transaction defrauding creditors

4. Wrongful trading Wrongful trading occurs where “at some time before the commencement of the winding up, [a director] knew or ought to have concluded that there was no prospect of avoiding insolvent liquidation”. Case law has held that a director can be held personally liable for the increase in liabilities from the point where they ought to have reached the conclusion to the time when the company ultimately enters liquidation or administration. A statutory defence is available to directors where “they took every step with a view to minimising the loss to the company’s creditors”. An example would be directors acknowledge their company had suffered losses and there was insufficient capital to keep the company trading. Over the next two years (say) debts increased by £200,000 and the company went

Fraudulent trading carries criminal

transaction that provide for no

sanctions as well as personal liability

consideration” or “enters into a

for any party “knowingly … carrying

transaction for a consideration the

on business with intent to defraud

value of which is significantly less

creditors or for any fraudulent

than the value provided”.

purpose”. The company does not

to be proved there was an intent to put assets beyond the reach of anyone likely to make a claim (typically a creditor). There is no need to prove insolvency and the transaction does not need to occur in a relevant time period. Often these cases involve scenarios

adequate books and records and paying dividends where there were not the available reserves to do so. It is a common policy for directors/ shareholders to pay themselves a mixture of salary and dividends to reduce the tax liability but recent court judgments have held that dividends cannot subsequently be converted to salary if challenged. Except with the statutory defence outlined above for wrongful trading, the antecedent transactions outlined have no defence so if a director steps on the elephant trap there is mitigation. As a result, I must return to what I said at the outset that if advice is not taken as soon as possible, then this position could result in significant sums becoming payable by the director.

need to be insolvent at the time of the fraudulent trading, which could be as simple as a single act. A single act could be the taking of a loan, using the funds for personal benefit and having no intention of repaying the loan. This would include the government-backed Covid support schemes.

6. Misfeasance

where financial arrangements are

Misfeasance occurs where a director

changed to ensure one party holds the

breaches their duty (fiduciary or

assets while another takes all the risk.

otherwise) in relation to the company.

10 | Issue 13 – Finance | 10

& Customs, failing to maintain

liability) is the £200,000 increase.

a gift or otherwise enters into a

undervalue but in this case it needs

avoiding paying taxes to HM Revenue

The wrongful trading (and personal

5. Fraudulent trading

exactly like a transaction at

adopting a systematic policy of

into liquidation owing £350,000.

arises when a company “makes

On the face of it, that sounds

Common examples of this include

Jamie Cochrane PBC Business Recovery PBC is a specialist business rescue and insolvency practice that provides practical, helpful advice with financial problems. Our approach is friendly, professional and effective and has resulted in us becoming a trusted and respected firm in the business community. 07525 807225 jamiecochrane@pbcbusinessrecovery.co.uk pbcbusinessrecovery.co.uk

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The Business Bulletin

How can an Enterprise Management Incentive scheme benefit my business? An Enterprise Management Incentive, or EMI, is a government‑backed, tax-advantageous employee share scheme.

This scheme is available to most

to acquire shares at a pre-

trading companies looking to share

determined price at some future

shareholder for their shares when

their successes and incentivising their

point in time and on certain

they can exercise their option will be

team as the company grows. An EMI

conditions. At this time, they do

the number of share options they

scheme offers significant tax incentives

not become actual shareholders.

hold multiplied by the approved

for employers and employees, provided certain qualification criteria are met. Businesses are also able to set specific conditions for recipients, such as performance or length-ofservice milestones. These schemes can offer flexibility, in terms of both the conditionality and the time frames that can be set as part of their terms.

■ Exercise of options over shares –

ownership: ■ Options over shares – this gives qualifying employees a right

12 | Issue 13 – Finance | 12

option price.

with all necessary pre-conditions met, the option over shares is exercised, the participating employee pays the option price for the shares and becomes a shareholder of the company. ■ The employee sells the shares acquired.

EMI Basics There are three stages to share

The price paid by each EMI option

The Option Price

What is a “Qualifying Employee”? To be a qualifying employee, you must either: ■ Work for the company for a minimum of 25 hours per week, or; ■ Work at least 75% of your total working time for the company.

Preparation and submission of VAL231

So, for example, if you work 20

Form agreeing on the market value of

hours per week for the New

the shares with HMRC.

Company and 5 hours per

The Business Bulletin

week in another part-time job,

years of an option being granted

then you will qualify because

(to meet HMRC regulations).

you are spending 80% of your working time at the new company, and; ■ You must not hold more than 30% of the total shares in the Company.

■ Exit only scheme – employees are restricted to only exercising their options when the company is sold. The EMI scheme is quite flexible and so both of the above can be

When can an option be exercised?

chosen on an ‘earliest of…’ basis. There

There are two main structures to be

exercising an option.

considered when deciding on an exercise date for the options:

can also be performance-related criteria set as a pre-condition of Additionally, it is possible to include

What happens if an employee leaves before options are exercised? In normal circumstances, the options will simply lapse and the departing employee will lose all rights to the shares. At the company’s discretion the forfeited option may be offered to another employee, but at a valuation of the share at that time. If the employee is a good leaver and these criteria are chosen to be included, the option may be exercised. There may be a shareholder’s

criteria where options can be exercised

agreement, if not already covered

when an employee becomes a “good

within the EMI Option Agreement,

exact date or a set number of

leaver”. A “good leaver” will generally be

that states that the shares acquired

years after the grant date, for

someone who leaves the company for

can be bought back by either the

example, on the 3rd anniversary.

health reasons, retirement or, in some

company or other shareholders on an

However, it must be within ten

cases, redundancy.

agreed basis of value.

■ Time-based – this can be on an

Issue 13 – Finance | 13

The Business Bulletin

If options are exercised, who might buy the shares?

Tax issues to employees for EMI Shares

This depends on the exit and timing

at or above the market value agreed

of the exercise of the option: ■ If immediately before a sale the options will be exercised and the shares will be immediately sold. ■ If, for reasons of being a good

If the share options being granted are with HMRC there is no tax charge on being granted the option. There is no tax charge on the option being exercised, even if the market value exceeds the option price. If the option price is set at a value below the value agreed with HMRC,

leaver, there will be a defined

a taxable benefit will arise on the

path by which options are

employee when the option is granted.

exercised and the shares acquired to be sold.

There is a potential tax charge when the EMI shares are sold to the

■ In any other circumstance,

extent that the net proceeds after

■ The market value of an option (including all other share options) must not exceed £250,000 per employee at the date of the grant; ■ Your business must have a permanent establishment in the UK; ■ If your company has any subsidiary companies, they must also qualify for EMI; ■ Your company must be independent. More than 50% of the ordinary share capital must not be owned or controlled by another company.

there will be procedures in

disposal costs exceeds the option

place to be able to offer shares

price. This is treated as a capital gain

back to the company, or other

and therefore may be subject to tax at

Further Considerations

shareholders to be acquired

20%, or even 10% if the time since the options were granted to final disposal

There are several remaining points

at market value. Shares will not normally be allowed to be

of the shares exceeds 2 years.

retained by anyone who does

Based on current rates (as of

not remain as an employee of

September 2021), the first £12,300 of

the Company.

gains are exempt for each person in a single tax year.

Tax Issues to Employers The Company will qualify for a deduction from its profits used to calculate corporation tax based on the difference of the market value

be discussed and agreed upon when entering into this scheme, including: ■ Number of and type of shares to be issued under the EMI scheme. ■ The criteria on which options can be exercised. ■ Rights of the shares offered in the scheme. ■ Timescales

of share options exercised and the

Most importantly, the EMI

option price in each financial year

scheme should be designed to

that these are exercised.

maximise the benefit to the company and employees and must be

Sarah Randall Cottons Accountants

Sundry Matters There are various additional qualifying

Sarah spends most of her time

issues associated with an EMI scheme,

working with owner-managed SMEs,

all of which are assumed to have been

across a broad range of industries, both new businesses and those already established. She also specialises in Solicitors’ Accounts Rules work, leading Cottons’ dedicated team, training others and working with a range of solicitors across the country 01604 632116 SRandall@cottonsaccountants.co.uk cottonsaccountants.co.uk

met based on the preliminary work undertaken: ■ Your gross assets must not exceed £30m at the time of EMI options being granted. If part of a group, all assets of the group must be included; ■ You must have fewer than 250 full-time employees;

14 | Issue 13 – Finance | 14

implemented efficiently to improve employee performance.

The Business Bulletin

Is your property portfolio safe from tax? Changes to Mortgage Interest Relief came into effect in 2020 – a year on has much changed?

Landlords have been limited to

For larger portfolios – generally

income tax relief at the basic rate

those of 5 or more properties there

of 20%. They have seen a large

may be a solution.

increase in their taxable profits and a

For the purposes of this article

the increased liability be softened? And the answer? Potentially – yes! Jean and Dave may need to incorporate their property portfolio.

corresponding drop in ‘real’ profits.

let’s use a fictitious family – let

In other words, transfer it into a

Compounded by the removal of

me introduce you to Jean and

limited company – one that they’ve

wear and tear allowances previously

Dave Smith-Jones. They’re in their

set up specifically for this purpose.

10% of any rent receipts could be

60s and have built up a handy

This approach can yield several

offset by this allowance.

property portfolio. The plan is to

potential benefits.

Other Taxes have impacted to – 3% Additional Property Surcharge for Stamp Duty, differing rates for Capital Gains Tax 18% and 28% on property disposal, the watering down of relief

earn regular rental income through their retirement, before passing the portfolio on to their children, Lucy and Mike. The question that’s bothering Jean

1. Jean and Dave will still receive the full benefit of Mortgage Interest Relief. 2. They’ll retain profits in the

against a former private residence

and Dave relates to the legislation

company, thus avoiding

giving rise to further CGT bills.

(outlined above). Can the impact of

unnecessary income tax.

Issue 13 – Finance | 15

The Business Bulletin

3. Expenses for property renovations & repairs are fully relievable against profits.

What about Stamp Duty (SDLT)? Will that still be payable? The legislation around this is not straight forward and references to case law point the way forward. For those clients operating via a partnership no SDLT should arise due to Schedule 15 FA 2003, so long as a number of conditions are met: ■ The partnership comprises family members. ■ The property must be held as partnership property. ■ The properties must not have been transferred into the partnership within the last 3 years. Importantly, the treatment applies equally to Limited Liability Partnerships (LLPs) and it is possible for incorporation to occur only 12 months from the time that properties were transferred into the LLP, if the LLP is able to carry on some form of business for at least another 2 years.

How about Capital Gains Tax (CGT)? There are circumstances under which Jean and Dave might benefit from

criteria, based on proving that the

original purchase price, as CGT only

portfolio is being run as a ‘business’

arises on sale or disposal of shares in

1. How much time do Jean and Dave devote to working on the properties? 2. Do they have any handson involvement in their maintenance or management? 3. How large is the portfolio? But what does this mean in real terms? As an example, and to keep things simple, let’s assume Jean & Dave brought 10 properties 10 years ago for £60,000 each and today the portfolio is now worth £1,200,000, not unrealistic for property values to double in that period. They have owned the properties

of the portfolio to the company. It only becomes due on the sale of the

unchanged as the new company is not a Trading Company but an Investment Company it will still be taxable as part of Jean & Dave’s Estate – although with further planning and the next step in their tax planning strategy this too could be wholly mitigated. It’s clear that incorporating their portfolio may well help Jean and Dave to legitimately avoid being penalised by the new legislation. However, there are a number of ‘ifs’ and ‘buts’ and each case needs to be assessed on its own as tax shouldn’t necessarily be the driver for making this type of decision.

rent paid to a specific bank account set up at outset and they both file their self-assessment tax returns annually declaring all the income and expenses. They retired when they purchased the properties, both regularly collect the rent as cash from their tenants and maintain any repairs themselves – very much a full-time job – “a business”. ■ The stamp Duty for transferring the portfolio to a company would be – £36,000 ■ The Capital Gains Tax liability would be – £168,000

Tim Mullock Adept Asset Solutions The core of what Adept Asset Solutions does is about family. Tim started the company in 2013 to make estate planning local and straightforward. He has been helping people manage their wealth and estates for thirty years and reached the point where he knew

Or would it? Providing all the criteria were met there would be no taxes to pay.

So how do Jean and Dave obtain this

benefit from an uplift under the

As for CGT the properties would Holdover regime and the values would

Case Law defines the way forward here

be rebased at £1,200,000 for any tax

to: Elisabeth Moyne Ramsey v HMRC

calculations for the new company. Any

[2013] & Incorporation Relief under

properties sold would now be taxed

s162 TCGA 1992 are the two principles

at the smaller companies' tax rate of

that come into play for Jean & Dave,

19%. Though Corporation Tax on gains

simply: They need to satisfy certain

above the £1.2m not £600,000 the

16 | Issue 13 – Finance | 16

Tax though remains pretty much

owning 50% of the portfolio with the

company shares.

Holdover Relief?

The position for Inheritance

on a Tenants in Common basis each

‘Holdover Relief’. In these cases, no CGT has to be paid on the transfer

the new company.

he could help people more effectively on his own. When growing up, Tim’s uncle introduced him to the exciting world of stocks and shares. It gave him a passion for helping money grow and why wealth management was critical. He loves knowing his clients have peace of mind, knowing their wealth is protected and will stay in their family for generations to come. 07523 952252 tim@adeptassetsolutions.co.uk adeptassetsolutions.co.uk

The Business Bulletin

Landlords – are your books in order? If you are a property landlord errors in your bookkeeping can make it very difficult to monitor your profits and keep track of expenses, as well as monitoring yields on investments.

Here are some tips to manage your

across their property portfolios. This

has one of the largest tax codes in

books as a landlord and prevent the

gives accountants a mammoth

the world, so preparing even the

possibility of an investigation by HM

task that’s often more expensive

most straightforward tax return can

Revenue and Customs (HMRC) into

and long-winded than it should be

be complicated. There are various

your property income. The costs

for landlords. This leads to higher

deadlines and responsibilities for

associated with an investigation

accountancy fees and the possibility

taxpayers to be aware of. Again this

can be devastating, and even if you

that expenses go unrecorded.

will save both time and money when

are successful in defending yourself against HMRC you cannot recover your costs from the tax authority.

having your year-end accounts and tax

2. Reconcile your books

return completed by your accountants.

Set time aside to reconcile your

1. Update your books on a monthly basis

books. This means checking off your your bank account entries. Regular

3. Don’t send your rental income through a personal bank account

Only a handful of landlords maintain

reconciliation of your books will

Using a personal current account

their books monthly. Consequently,

ensure that everything is inputted

to operate your property portfolio is

when the year-end approaches, they

correctly into your self-assessment

one of the more common mistakes

are left with a mountain of bank

tax return and that no income or

landlords tend to make. We would

statements and expense receipts

losses are unaccounted for. The UK

always advise landlords run their

rental income and expenses against

Issue 13 – Finance | 17

The Business Bulletin

rental income and expenses from an

increase the drain on resources for

account that is separate from your

bookkeeping.

personal living costs. There are lots of low-cost online bank accounts to choose from. They will also categorise expenses and income to assist in the bookkeeping processes. Not doing so requires you or your accountant to spend more time separating business and personal expenses.

4. Keep track of your expense receipts One of the biggest issues landlords experience is misplacing or losing

Landlords should always ensure they have the following files and documentation close at hand: ■ A basic register for all be used to offset against capital gains when a property is sold. ■ A separate file for ongoing and regular income and expenditure. ■ Regular statements

expense receipts. Without a record

from your business bank

of your expenses, it’s impossible

account – making it easy to

to prove your expenditure related

reconcile your income and

to property letting, for example,

expenses.

improvements or alterations on a property in your portfolio. Subsequently, you are unable to claim tax relief on your outgoings, either in your annual accounts or when you come to sell a property. An easy way to save hours of landlord admin is to record your expense paperwork instantly using the Dext app or a similar expense scanning app service. Dext makes it easy to send your expense paperwork instantly to your accountant and ensures you never lose another receipt. This software allows you to send photos of your expense receipts from your smartphone directly to your accountant. You can also automate regular supplier invoices, as

■ A file containing all correspondence from of filing and tax codes.

6. Use bookkeeping software To ensure that you run your business at a profit you should use bookkeeping software to keep up to date with your financial records. Other alternatives are: ■ A ledger or book ■ A Excel spreadsheet; ■ Or software that can do the work for you by linking to your bank account.

5. Keep your files organised Make sure your files, whether paper or electronic, are organised so that your tax reporting is as accurate as possible. Not having the necessary files or information to hand can

18 | Issue 13 – Finance | 18

Paul has spent his entire working life in financial services, first in banking, then as an independent financial adviser and estate planner. Now he is running his own TaxAssist Accountants business in Market Harborough. Paul uses all of his years of experience in running his own businesses and his extensive tax knowledge to help small businesses and personal tax clients pay the right amount of tax and remain compliant. 01858 383159 paulsimpson@taxassist.co.uk taxassist.co.uk/market-harborough

worrying as to whether you have missed or forgotten to write down an

bulk processing. It all helps to create earnings from your property portfolio.

Tax Assist Market Harborough

HMRC, including your proof

well as electronic receipts, ready for a more accurate financial picture of

Paul Simpson

capital expenses, which can

You need to track all income and expenses to see if your property is actually making a profit. The advantage of bookkeeping software is that it holds information about the tenant as well as the property. This is essential for a property portfolio. At the push of a button, you can see expenses and income without

important bill, or whether the rules on claiming a particular expense have changed. Quality bookkeeping software measures your profitability and so reduces accountant fees and satisfies HMRC requirements.

The Business Bulletin

Start-ups – what are your options for finance? As we know, starting a business, certainly for the first time, carries many risks, particularly if you have no prior experience of managing a business. According to the Office for National Statistics [ONS] only 40% of newly formed companies and businesses are still trading after 5 years. In fact, the ONS also reports that in some sectors failures can be as high as 90% within the first year!!

The four most common reasons for new businesses to fail are: ■ Lack of business planning ■ Poor management ■ Insufficient working capital ■ Blowing marketing budgets There is no doubt that raising finance for new start businesses can be the most challenging time to raise funding. It is also true that ‘insufficient investment and/or working capital finance’ is a key factor in many startup failures. It is a sad reality that many new start-up businesses are destined to fail for this reason, but that many could avoid failure if they had only sought help in raising the funding they needed. In a recent survey conducted by Ipsos Mori, on behalf of the British Business Bank, one of the key findings was that ‘The lack of

Issue 13 – Finance | 19

The Business Bulletin

awareness of the true range of finance

They can often offer one

of commercial finance, both

options available was a major limiting

additional benefit, however.

‘traditional’ and new forms,

factor in the development of early-

That is that in addition to

but also knows which are the

stage businesses’.

providing the finance, they will

most reliable providers of such

bring considerable business

finance. They will also be able to

knowledge and experience to

advise not only on who provides

the table.

the best deal in the current

Recent years have seen a significant increase in the number of funders looking to support SME’s; so much so that even professional commercial finance brokers have difficulty keeping

■ Once a new start business has gone through these funding

abreast of the options now available.

stages, there is a reasonable

It is no surprise therefore that if they

chance that it will be able to

are challenged to keep abreast of

demonstrate a steady growth

the finance options, it presents even

pattern. It is at this stage that

greater challenges for those setting up

the more conventional finance

businesses for the first time who often

sources start to become available.

have little, if any, knowledge when it

By this we mean the banks,

comes to accessing finance.

invoice and trade finance and

In plain and simple terms the

asset finance companies. It is at

standard sources of finance for

this point that a good commercial

startups (whilst not in absolutely strict

finance broker will help to sort

chronological order, but close to it) are:

‘the wheat from the chaff’.

■ The founders own resources. This may be, for example, savings, mortgaging of a property or it may be by what is often referred to as “sweat equity” i.e. time spent in and on the business. ■ Then comes friends and family (there is another but we will skip over that!). Whilst this is often a source of readily available finance at low cost it should be remembered that not all new businesses become roaring successes. Indeed, many fail. In

net worth (HNW) individuals prepared to fund the early stages of projects that they find interesting but which they are prepared to take a risk on. In return for this investment

In 2019, according to Gov.UK, there were 672,890 new companies registered in the UK with Companies House. This was the highest number since 2009. In 2020 there were 753003 and the figure looks as though it will continue at this level in 2021 as there were 388240 registered by the end of June.

about start-ups! Bearing in mind the importance of having the right finance, when put together with the sheer number of finance options available today, there are two essential requirements for a new start business when it comes to advice. These are: ■ A good accountant. By this we mean one who not only does

takes the time to learn about and understand your business. A good accountant will help you to carry out serious and accurate forward planning, essential in showing you just how much finance you may need to raise to make a real success of the business. ■ Secondly is a knowledgeable

they will normally be seeking

commercial finance broker. One

a significant equity stake and

who knows not only a great

possibly additional security.

deal about the various forms

20 | Issue 13 – Finance | 20

particular time.

one is most definitely not talking

possibly your VAT, but one who

investor. These are usually high

circumstances and needs at any

capitalists and the like, but then

lead to severe ‘internal’ friction.

through a business angel

of types) suits your business’s

moves into the realms of venture

your end of year figures, and

raising seed capital, normally

type of finance (or combinations

■ Moving on from this, one then

these circumstances this can ■ Next comes the possibility of

circumstances, but also what

Peter Douglas Business Finance Services Having successfully completed a Degree in Business Studies Peter spent over 20 years in Export Sales and Marketing. He then decided to give up the globetrotting life and, with his wife, bought a small business which they ran together. Peter has been involved in running SMEs ever since and set up BFS in 2002 having spent time getting an education in commercial finance. He says “Whilst it is hard work I have never had so much fun as running BFS. Nothing gives more satisfaction than helping SMEs to grow or regain their strength”. 07770 866955 peter@bufinserv.co.uk bufinserv.co.uk

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The Business Bulletin

Are you tax aware? The Government introduced various schemes that have supported some businesses and individuals through the COVID 19 pandemic. The big question on many people’s minds has been “How will this be paid back?”. Some of this became clear in the budget announcements on 3rd March.

One of the biggest announcements

The draft finance bill published on

company with augmented profits of

was the news that the main rate of

11 March provided us with some key

£100,000. As this is in between the

corporation tax will increase from

detail on what is proposed. When

£50,000 and £250,000 rates, marginal

19% to 25% from 1 April 2023.

the rates apply will depend on the

relief will apply

Alongside this announcement was

“augmented profits” of a company

the introduction of a small profits rate

for the relevant accounting period.

of 19% to provide protection to the

Broadly speaking, augmented profits

smallest businesses. This is a return

are taxable profits plus any exempt

to the days of pre-2015 where we

distributions such as dividends.

had two rates of corporation tax and marginal relief to worry about.

The small profits rate of 19% will apply where such profits for the accounting period do not exceed the lower limit of £50,000, with

Accountancy practice, specialising in Xero Cloud-Based Software and have been a Xero certified practice since 2014. Whether your business is new or old it

relief fraction (3/200) ■ U is the upper limit ■ A is the augmented profits

where augmented profits for the

■ In this example the tax liability

So, what about the companies

Bean Counters is a forward thinking

■ F is the standard marginal

■ N is the total taxable profits

limit of £250,000.

Bean Counters

x (U-A) x N/A, where:

the main rate of 25% applying accounting period exceed the upper

Wendy Tate

The marginal relief is calculated as F

whose profits fall between £50,000

would be as follows: ■ 100,000 x 25% = 25,000 ■ Less marginal relief 3/200

and £250,000? For these companies’

x (250,000-100,000) x

tax is calculated at the main rate

100,000/100,000 = (2,250)

then marginal relief applies to reduce the liability. Marginal relief bridges the gap between the lower and upper limits providing a gradual

■ Corporation tax liability = 22,750 The reintroduction of a two-rate

needs efficient accounting services for

increase in the corporation tax rate.

system also means the reintroduction

growth and sustainability, we offer an

There will be an updated calculator

of the concept of associated

on www.gov.uk to enable you to work

companies. Where a company has

out the marginal relief.

one or more associated companies,

outsourced accounting solution tailored to your needs. So speak to us about your bookkeeping, payroll, VAT and compliance needs. 07810 562295 wendy@bean-counters.co.uk bean-counters.co.uk

22 | Issue 13 – Finance | 22

If you did want to take the time to work this out manually, I have included a sample calculation below to show how this will work. In this example the company is a standalone

the upper limit of £250,000 and lower limit of £50,000 are divided by the number of companies. Broadly, speaking two companies are associated where one has control

The Business Bulletin

of the other or where both are under the control of the same person or persons. Taking the example above, let’s say that company A has one associated company, company B. The upper and lower limits would be reduced

September 2020, these rates are: ■ Personal allowance £12,570 0% ■ Basic rate threshold £37,700 20% ■ Higher rate threshold £50,271 40% ■ Additional tax rate £150,001+ 45%

to £125,000 and £25,000 respectively.

in full from all those individuals who made a claim that did not meet the criteria of said grant. If your tax return is amended on or after 31st March which lowers your turnover you must inform HMRC within 90 days. If you feel that you may be affected by this you can

On the same profits of £100,000

Tax on dividends is slightly different

contact HMRC and volunteer to repay

the corporation tax liability would

as detailed below:

the grant, you do not have to inform

therefore increase to £24,625.

There is a little good news

■ First £2,000 (this is in addition to your personal allowance) tax-free

The Government is to temporarily

■ Basic rate (up to £50,270) 7.5%

extend the period in which both

■ Higher rate (£50,271 – £150,000)

incorporated and unincorporated businesses can carry back trading losses from one to three years. This extension is limited to £2m of unused trading losses made in 2020/21 and 2021/22. Associated companies will have to apportion the cap. The repayment of business rates relief by some businesses will be taxdeductible as the original expense would have been an allowable expense to the company concerned. The Government have gone further to help businesses who are looking to make capital investments between now and March 2023 with the introduction of the super deduction. For those items that qualify for first year allowance (FYA) the rate of relief will be 130%. Those items not qualifying for the FYA receive a special rate relief in the first year of 50%. The temporarily increased limit of £1m for annual investment allowance (AIA) will also be extended for another year to December 2021.

So, what is the news for personal tax? The Government announced that

32.5% ■ Additional rate (over £150,000) 38.1% These rates are frozen for now and will remain in force until the 2025/26 tax year. National Insurance limits will remain aligned to the tax thresholds for this period. Taxation on self-employed income support scheme grants or SEISS as it is known, from

them, however, if the eligible amount had reduced by £100 or less. If you do not inform HMRC within the 90-day deadline you may incur a penalty. On a lighter note, the ISA annual subscription limit has remained unchanged at £20,000 with the limit for junior ISA’s also remaining the same at £9,000, this limit also applies to Child Trust Funds. This article by no means covers all the tax changes that are coming into force this year, but is intended to give the reader an overview of the main points that will have an effect on most businesses and individual taxpayers.

April 2021, is to be taxed in the year of receipt. It is important to note that the Government has updated the finance act 2020 to specify that an individual will be subject to a 100% tax charge if they receive a SEISS Grant payment which it later transpires they were not entitled to. This measure will allow HMRC to recover payments

the personal allowance for 2021/22 would increase in line with the CPI (Consumer Prices Index) rate of

Issue 13 – Finance | 23

The Business Bulletin

…what can I get away with?! As an accountant, these are the most common type of questions I get asked by my sole trader clients (the answers below may be different if you run a limited company!).

There are so many tax rules and many

■ Uniforms: HMRC define this

grey areas especially when it comes to

as being “a set of specialised

business expenses!

clothing that is recognisable as

Everyone wants to make sure they are claiming everything they can in order to reduce their tax bill. HMRC like business expenses to be wholly and exclusively for the business so

identifying someone as having a particular occupation”. Such as nurses, police, fire fighters etc ■ Costume: if you are an

for work). Such as suits, shirts, dresses etc This also includes evening wear if you need to attend an awards ceremony.

Training costs

entertainer you can claim

HMRC will look at the existing trade

for your costumes. If you are

and provided the training undertaken

a musician then jeans and

is to update existing skills and

a t-shirt will not count as a

expertise relating to the business then

cover some of the common expenses

costume but if you are a clown

it is usually allowed.

I get asked about.

you can claim your clown outfit!

things with dual-use are usually not able to be claimed for. So I thought it would be useful to

Workwear

■ Branded items: Clothing with your business logo on them.

We all have workwear of some

It needs to be easily visible (so

description so can anything be

not too small) and permanent

claimed for?

(stitched/printed on rather than a removable badge).

high vis vests, helmets, safety

■ An accountant going on a tax update course ■ A hairdresser going on a hair colouring course ■ An electrician learning about

Allowed: ■ Protective clothing: Such as

Examples could include:

Not allowed: ■ Anything that could be seen

new regulations But if it is a course to become

boots, overalls, trousers with

as your everyday clothes (even

newly qualified in something then the

padded knees etc.

if you only wear them only

costs will not be allowable.

24 | Issue 13 – Finance | 24

The Business Bulletin

Examples could include: ■ Driving instructors initial training costs ■ An electrician doing a plumbing course to expand their business Training costs are a very grey area as sometimes they could be argued either way so it is worth keeping hold of course notes as evidence of what the course entailed.

Meals As a general rule, the cost of your food and drink cannot be claimed as a taxdeductible expense. This is on the basis that you must eat to live and so not wholly and exclusively for your business. There are some exceptions: ■ Where the nature of your work is itinerant (e.g. a construction worker who works in a different location each week) ■ Where you make the occasional business trip (e.g. work in Northampton but travel to London for the day and grab some lunch) ■ Where you are on a business trip and required to stay away any

Gifts It’s always nice to show your appreciation to customers and suppliers during the year by sending a gift but are the costs allowable? As a general rule, no tax relief is given on the cost of giving business gifts as they are considered to be entertaining. Examples would include flowers, chocolates, wine and turkeys at Christmas. There is an exception where the gift would be considered to be advertising. To qualify it would need to be one of the following: ■ A free sample of a product provided in its business to

costs make sure they are not excessive as HMRC could disallow that 3-course meal and champagne at a Michelin star restaurant!!

Entertaining customers and potential customers As a business owner you want to keep your customers happy and one way of doing this is by taking them out for a meal or to watch a football match. Any costs incurred entertaining

After spending the previous 12 years working in a number of Northamptonshire practices, Ruth decided to take the leap and set up her own practice in January 2020. Specialising in looking after individuals and owner-managed businesses her aim is to make accounting and tax less stressful, more affordable and make things as easy for you as possible.

advertise to the public. e.g. A

07805 973447

gin distillery could give away

ruth@canaryaccounting.co.uk

samples of their gin and the

canaryaccounting.co.uk

cost be allowable ■ An item including an advertisement such as a business logo where the value

■ 25-50 hrs = £10 per month

is less than £50. It cannot

■ 51-100 hrs = £18 per month

include food, drink, tobacco or

■ 101hrs+ = £26 per month

exchangeable voucher. e.g. A branded diary or calendar ■ There are different rules when giving gifts to employees so worth double checking if you plan on doing this.

It may be worth calculating both ways to see which would be better for you.

Not sure whether you can include an expense? As you can see from some of the

food and drink can be claimed A point to note is when incurring

Ruth Chettle Canary Accounting

Business Premises A lot of sole traders operate their businesses from home and therefore, want to offset some of the costs. This is ok as long as you calculate

answers above there are many answers that start with “it depends” and no one size fits all answer. If you are unsure it is always worth double-checking with your accountant beforehand or including

the proportion of the costs based on

a note to them when sending in your

the number of rooms used and/or

accounting records.

the amount of time spent working from home. HMRC have some simplified expense rates available which can be used instead on the actual calculation. These rates are based on the number

your customers or potential customers

of business hours worked from home

are not allowed for tax purposes.

each month.

Issue 13 – Finance | 25

The Business Bulletin

What you need to know about your pension Throughout their working life, most people strive to provide for their family and at some point, might like to leave a legacy. Pensions often form a substantial part of the mix and with a large pension, comes the potential for additional tax through the lifetime allowance and equally the potential to help minimise inheritance tax. Two points that we’ll explore further here.

Did you know that inheritance taxes do

taken over the years. Skipping this

Both allow a transfer of the remaining

not as a rule apply to pensions? There

part of the process or having it too

pension fund on death to any

are some circumstances where it can

concise does not give your executors

beneficiary you have nominated. This

be argued they should apply but it is

much ammunition if HMRC ever

can be a spouse, children or charities.

quite rare for these to be proven.

tried to attack them for inheritance

To benefit from the exemption though you do need to have your pensions set up correctly and keep an audit trail of the decisions you have

tax on your pensions on death. Not a very cheery topic for a such a piece of narrative, but I would argue a vital one to understand.

pension operator or trustee to have prior knowledge of to whom you would like your pension fund paying to on death. This better facilitates

It is quite often in tax that if you

the investigation they conduct in the

can demonstrate your case clearly that

event (again why it is a good idea to

over time you took a certain course of

have kept detailed annual notes and

action without the primary objective

an advisor to explain them).

of escaping tax, your executors will win any challenge. Naturally, having an experienced financial planner and investment team in your corner also helps! But back to pensions and taxes on death. If you have chosen to draw an

26 | Issue 13 – Finance | 26

What is important, is for the

The beneficiaries can then hold their inherited pension alongside their own for lifetime allowance purposes, effectively a double allowance. The tax rules on the inheritance of the pension fund, while not inheritance tax, relate to the age of the member on death. 1. Death before age 75 sees the pension fund tested against

income (or not) from your

the original members lifetime

pension in retirement

allowance (if there is an excess

it is quite common

that will be taxed at 25%) and

you will have a either a

allows the beneficiary to draw

Self-Invested Personal

against the inherited pension

Pension or a Small Self-

fund at any age and without

Administered Scheme.

income tax.

The Business Bulletin

2. Death after age 75 has no test against the lifetime allowance of the original member and allows them to draw against the inherited pension fund at any age but subject to their marginal rate of income tax. Accordingly, it is not as straightforward as first thought and there is a great deal of planning the original member can do to minimise

Will I have to pay an LTA tax charge? As often is the case in personal finance, it depends. For example, if you have a DB pension paying £30,000 per year, it will have an LTA value of £600,000 (55.91%). If that’s your only pension, then you’re home & dry from an LTA tax perspective. If you have a DC pension of £600,000, the same applies. Effectively, you can have £1,073,100

these taxes but there is no current

of pensions without paying an LTA

method of passing over the pension

charge. It’s only when you breach that

fund early before death.

value, and an event occurs, that you may have to pay. For example….

Lifetime allowance The lifetime allowance (LTA) is not a cap, but it is the point at which you cease to enjoy some of the tax benefits of a pension scheme. At the time of writing, the LTA is £1,073,100. The Chancellor has also frozen this allowance until the 2025/26 tax year. It applies to all of your pensions, with the exception of the state pension. It is possible that it might apply, particularly if you have a defined benefit (DB – aka final salary) pension

You have £1,200,000 in a pension.

So, what do I need to know? ■ The allowance is £1,073,100. ■ The values of all pensions count, bar the state pension ■ Your pension values are tested against the LTA when you access them, or when you turn 75 ■ Don’t let the tax tail, wag the savings dog That all being said even with the limit it sometimes makes sense to ignore this and continue saving – for example, is your employer

A nice place to be. You could decide

contributing to your pension? Free

to designate £400,000 initially into

money – why give that up, even if

drawdown, giving you a £100,000 tax

there’s a tax to pay one day…

free lump. This utilises 37.27% of the LTA. You could do this again, taking 37.27% of your LTA, meaning you’ve used 74.54%. You then have £273,211 (at today’s LTA value) to utilise your LTA. You’ve received £268,303 of taxfree cash! That’s surely worth thinking about your pension strategy?

alongside a defined contribution

What can I do about it?

(where you have a pot of money).

Well, not too much, unless you had a £1m+ pension pot on 5th April 2016 –

When should I think about it?

if you did, there are options to claim a

I would argue you crack on with

saving into a pension just to save

saving into your pensions to the extent

some LTA tax.

that you can afford. You’ll receive tax relief as you save and it’s only tested at certain events. There is a prescribed list, but most commonly it would be when you first decide to access your pension and then when you reach age 75 – irrespective of how you’ve accessed pensions to date. If you have a DB pension, when you

greater LTA, but again rules apply, and it might not be appropriate to cease

Don’t forget about your ISA allowances (£20,000 per tax year, per adult) and you could consider investing through a General Investment Account (i.e. an account with no specific tax benefits) – remember, each adult has a £2,000 dividend allowance and a £12,300 capital gains tax allowance, meaning there are some

start taking benefits, a calculation is

tax allowances you can utilise, outside

performed to ascertain the effective

of normal pension and ISAs. If you’re

value of the pension you will be

married, why not contribute into your

receiving. This again is measured

spouse’s pension? You both have the

against that £1,073,100 LTA.

same LTA after all…

Neil Wattam Wattam Kirby Mee Neil has worked in various finance and accounting roles since 2004, starting as an auditor, followed by senior positions within FTSE 100 and FTSE 250 companies, including as Finance Director. His experience of working in numerous businesses and sectors, including running a limited company, provides a sound base from which to help clients. Neil is a Chartered Accountant (ICAEW) and holds the Diploma in Regulated Financial Planning (CII). Neil is studying towards Chartered status with the CII. 0116 218 4891 neil@wkmwealth.co.uk wkmwealth.co.uk

Issue 13 – Finance | 27

The Business Bulletin

Spotllight on… 28 | Issue 13 – Finance | 28

The Business Bulletin

Spotllight on…

Spotlight on Wendy Tate Wendy runs Bean Counters, a small bookkeeping and accountancy practice, who work with Xero exclusively. Bean Counters has been going for 7 years and work with a variety of companies looking after their finances.

How did you get into business? What

health experience. My main reason

What was it like going back to

led you to where you are today?

to do it was because the help that

college?

I’d been working for a marketing

he received; it put him back on his

company for 13 years, and the management team were put at risk of redundancy two years running. I didn't really like the job anyway. It was very target driven. This will sound really funny now, but I didn't want my job to be all about the numbers; all about the bottom line! I'd actually gone to university and done a training course in Northampton to become a psychotherapeutic counsellor. I was just finishing that training when the second redundancy round came along. Although I wasn't made

feet and enabled him to carry on. I thought to do a job like that, to give that something back, would be an amazing thing to do. I was just coming to the end of that training, I qualified, and then got sent off to college to do my ATT. I do find that a therapeutic background helps. Clients do talk to me an awful lot. Then they say they don't know what made them tell me all of that. It has enabled me to be a listening ear and to have more of an understanding of people. I think it's

It was really strange. It was a day release course. I was going back to college at the age of 45 and there are all these 16-17 year-olds running around. So it did feel quite odd. However, it was nice to go back into education and do something that I never thought I'd do. You never quite know where life's going to take you do you? You’ve mentioned AAT a couple of times, for those that don’t know what is it?

stood me in good stead even though

AAT provide qualifications starting

I'm not actually doing it as a job.

from bookkeeping level. It is the AAT

redundant, I just couldn't take the risk anymore of being somewhere that was so volatile. I moved to do an admin job and finished that training. Then this new company offered to send me to college to do my AAT qualification. So, a different journey began and my work did become all about the numbers! So you didn't decide to pursue the therapeutic side then - it was the numbers?

I do find that a therapeutic background helps. Clients do talk to me an awful lot

I mainly did it because I wanted to support my husband who had gone through quite a traumatic mental

Issue 13 – Finance | 29

The Business Bulletin

Association of Accounting Technicians.

Spotllight on…

It provides qualifications right up to licenced accountant. You can go through various levels to complete that training, then you can get your licence from them and start your own practice. There are local branches and I chair the Northampton branch for my sins! I've been doing that for the last three years. The previous chair had stepped down because her life was taking a different direction. They asked me to step up, so I did. We haven't done

This will sound really funny now, but I didn’t want my job to be all about the numbers!

any events in the last year because of COVID. But we normally run CPD events and get-togethers. Probably

When I had a look through their

thing I came across was an account

direct debits, they were actually

where the previous bookkeeper didn't

still paying 300 pounds a month to

really know what they were doing.

Sage. They hadn't used Sage in over

As a result, the bank was £250,000

a year! That's an awful lot of money

out from where it should have been.

they're spending that they really

That took quite a lot of sorting out.

didn't need to. I come across that

I do come across some real horror

a fair bit where people have signed

stories. People think that software is

up for these things that go out by

easy, and it is easy if you know what

direct debit – maybe a nice piece of

you're doing. It's so easy to just click on

I'm surprised that what people don't

software that they might use and

things and then you've created a real

do is review their direct debits. I took

then they don't use it. Or they start

reconciliation issue because things

over a client who had been using

using it and they stop, but they don't

then don't balance.

Xero for a year but using it badly.

cancel the direct debits. The other

eight to ten per year. We’ve even managed to get HMRC to come and visit us and talk to us about VAT issues. I help to arrange all of those events. What are some of the things that you've been quite shocked or surprised that clients have done or not done?

One client had everything with the same nominal code. You couldn't produce the profit and loss report

Some people think that they can do their own books because the software looks easy to use. It is but you have to have an understanding of how it works.

because everything was in the same nominal code. It is scary stuff. If you don't know, you don't know. I couldn't go and wire a house, I leave that to the electricians. I leave the plumbing to the plumbers. Some people think that they can do their own books because the software looks easy to use. It is but you have to have an understanding of how it works. There are a lot of accountants and bookkeepers out there - what makes you different from anybody else offering a similar service? I specialise in Xero only, so that is one thing. The other thing is I talk to people in language that they understand. I didn't want my business to be named after me or come across

30 | Issue 13 – Finance | 30

Friday morning Zooms where we go through all that lovely boring stuff that really isn't to us. Nobody else wants to read this stuff other than somebody else doing what you do. I found somebody to actually collaborate with and do that study with. That was my biggest challenge - actually keeping on top of all of the new stuff going on. Now I think I've got that licked. Tell me about “Bookkeeping in a box” Bookkeeping in a box came about because I was talking to the lovely Margot Clarke. We had a one-to-one following a networking meeting. She was saying how she had to put together all this compliance stuff, which we all have to do. There are procedures that have to be in place in order to be compliant with our professional licences. It's up to you to make all of these documents. Over the years, I have produced a lot of documents. At first, I thought it was a bit of a faff, because it is only me, so what am I doing it for? However, I have a business continuity plan. If anything were to happen to me, my husband could hand my procedures manual to the person that is my continuity partner, and they could pick up the mantle and make sure that all the deadlines are met for my clients. as stuffy or unapproachable. I wanted

months is teamed up with another

it to be fun and so people are able

accountant; believe it or not, she's in

to come and talk to me and ask me

Wales. I met her once at a conference

what they think is the stupid question.

and every Friday morning at 7.30 we

But it isn't a stupid question. At the

have an hour on Zoom to keep each

end of the day, it's about the client

other up to date on the finance world.

is not about me. So it's being clientcentred really.

So I've overcome that by having

Margot was saying she hadn't managed to find the time to produce these documents. So I said “Well, I've got them. Why don't I blank my stuff out and send you the copies, and you can use them.” So I did that! She did pay me for them. She told me what I

somebody to team up with who

charged was far too cheap. I thought

has a similar challenge and we help

if she needs these documents, other

each other. I found her through AAT

people may do too? I created some

because she she's also works with

blank documents, highlighting places

Working on my own and making sure

them; she's also a branch leader. There

where people need to put their

that I'm up to date with everything

was an AAT branch conference about

details in the various places. I tried to

CPD wise. All the tax things, it all

two years ago that we both ended

make it as simple as I can, and started

changes so quickly, it changes every

up at. We just got talking and we've

this thing called “bookkeeping in a

year in the budget or the finance

become friends. I speak to her two or

box”. You can buy all those documents

act. So what I've done in the last 18

three times a week. But we have our

and to get you started so you haven't

What has been the biggest challenge you have faced?

Issue 13 – Finance | 31

Spotllight on…

The Business Bulletin

got to spend hours and hours

What is your one top tip for any

producing them yourself.

small business owner?

It’s aimed at anybody doing

Watch the interview

Be aware of your numbers. Don’t go

something similar; starting in business

it alone. Start networking. There are

This is an extract of a video

as a bookkeeper or an accountant?

other business owners out there who

interview – to watch the

Some of these procedures are

are single business owners who are

full session, visit: https://

just ones that I've come across. I

also going to learn the networking

www.youtube.com/

had a client change their address.

is key. Networking has been key for

watch?v=4u4jziNegJU

There's a whole procedure for how

me for the collaboration, the support

many different places this person's

and everything else I've received. It's

address appears: their VAT record, on

been massive. And…you're not alone.

Company's House…there are quite a

There were other people out there,

few different places to go and look to

and everybody wants to support each

make sure their addresses changed

other. So just go out there, get the

correctly. As I go along, I'm creating

support and join a network that works

more and more of these and there's

for you.

some template letters and all sorts of documents in there that I use. All of them are now available to other similar businesses – a massive time saver.

The Business Bulletin

Are you using the right finance tools for your business? The pace of change in the accountancy software landscape is rapid. A high-level look at the Xero App Marketplace shows over 700 apps that you can plug into Xero to help manage the finances of your business.

Issue 13 – Finance | 33

The Business Bulletin

This in itself presents a challenge

■ Mobile app. Cashflow is the

With the advancement in data

because it can be hard to differentiate

lifeblood of every business

capture in these tools there should

between what is essential to help

so getting paid quickly is

be no need to ever key a purchase

you run your finances, what is a nice

vital. Getting an invoice

invoice or receipt manually any longer.

to have and what is simply a shiny

raised promptly after a job is

new toy that will cost £30 per month

completed is a key part of this.

for a subscription and then never be

With a mobile app an invoice

logged onto.

can be raised as soon as a job

HMRC is also embracing this change and has recognised it as an opportunity to obtain more regular information, and payment, from taxpayers. Making Tax Digital for income tax lands in April 2023 and this significantly widens the net of taxpayers who will be required to maintain digital records for all business income and expenses.

is finished. Some of our clients have an invoiced raised, sent and paid before they have left the customer’s property after completing a job! Invoicing on the go also significantly lessens the risk that you will forget to raise an invoice. ■ The ability to automate some

Cashflow forecasting In case we needed it, the Covid pandemic has reminded us all that cashflow forecasting is of paramount importance for any business. Many businesses fail due to lack of cashflow. This can be due to a variety of reasons, overtrading, slow paying customers, or a simple lack of visibility of when cashflow troughs will occur. Most businesses will start off with an Excel or Google spreadsheet.

credit control functions. Sadly,

The modelling capabilities of these

not all customers will pay

key tools that can help you manage

spreadsheets can facilitate some very

on time and will need to be

your business finances.

complex forecasts. However, before

chased and chased to make

you know where you are, you are on

payment of an invoice. Having

version 6 of the spreadsheet and there

Cloud accountancy software

cloud accountancy software

are so many assumptions entered into

that can send automatic

the sheet that you cannot remember

reminders after an invoice is a

Xero and Quickbooks are the main

which assumption is which!

certain number of days overdue

players in the cloud accountancy

gives the busy business owner

space, having made huge inroads into

one less job to worry about.

This article will explore some of the

the Sage customer base over the past decade. There are also many other

Cashflow forecasting tools such as Float, Fathom or Fluidly can sync with the leading cloud accountancy software providers to enable actual results to be brought in as a base for

very reputable cloud accountancy

Receipt capture

software providers out there. Some

Some bank accounts and most

will then enable many scenarios to

of the leading cloud accountancy

be created and stored to show, for

software providers will enable a

example, the impact of 10% sales

receipt to be uploaded and attached

growth or the working out the break-

to an invoice that has been entered

even point for the business. As with

into the accounts. This is preferable

all finance processes, they need to

to maintaining large collections of

be easy to complete and without

paper files.

the need for lots of manual handling

of these providers also offer their software free of charge at a basic entry level.

A cloud accountancy package must have: ■ The facility to set up a bank

However, the real power in the

the cashflow forecast. All these tools

as this lessens the chances that the forecast will be kept up to date.

feed to automatically import

receipt capture space comes with

bank transactions on a

tools like Receipt Bank (now Dext),

daily basis. Downloading

HubDoc (free for subscribers to the

Mileage Tracking

bank statements from the

Xero business edition) and Autoentry.

When using a personal car for

bank website and loading

With these tools they go above and

business mileage, 45p per mile for the

them into your accountancy

beyond simply storing a receipt and

first 10,000 miles and 25p thereafter

software is an unnecessarily

they will gather the relevant details

can be claimed from the business.

time-consuming task. Having

from the invoice and, subject to

These payments are tax-free and

the daily bank feed enables

setting up the correct rules in the

are also free of any benefit in kind

transactions to be reconciled

software, will directly post the invoice

implications, providing that the limits

on a regular basis.

into the cloud accountancy software.

above are adhered to.

34 | Issue 13 – Finance | 34

The Business Bulletin

However, accurate records must be

These are some of the key areas

kept of the business mileage that has

where technology can be used to

been claimed. Often a handwritten

significantly improve the speed and

notebook of mileage is maintained

accuracy with which the finances of a

but we often find that this can have

business can be maintained.

gaps or can often be forgotten altogether. Remembering 12 months of business miles then becomes an impossible task at tax return time. For the price of a weekly cup of

If robust cashflow forecasts and insightful performance reports are to

bookkeeping and basic accounting records can be reconciled and

TripCatcher will give access to an

maintained very quickly and easily.

of buttons, all mileage will be electronically recorded and can be uploaded to the user’s accountancy software ready to make an expense claim.

Zinc Books

key decisions from, it is vital that the

coffee, a subscription to MileIQ or app where at the click of a couple

Matthew Goude

be produced for a business to make

If you feel like there is a finance task that takes too long to do in your business, speak to your accountant or bookkeeper as there is probably an app that can automate it.

Matthew is a chartered accountant and tax advisor based in Northampton. By taking the time to understand client’s short and long term objectives, Matt is able to provide solutions and advice to help meet those objectives. Zincbooks has invested heavily in the latest accounting software in order to make clients’ lives easier and to give them time back. 07498 202281 info@zincbooks.co.uk zincbooks.co.uk

Is Your Business Ready? We live in changing times New business practices Ever changing technologies New and changing markets

Is your business ready to face these and other challenges? At QRB we offer a range of training and coaching services for you and your teams to adapt and adopt to your changing environment We help your people plan, monitor and adapt changes to your business to help you achieve better, smarter and more structured ways of working

PRINCE2 PRINCE2 Agile AgilePM

Change Management ITIL4 Service Management

Put your teams through a real working simulation so they can practice their new skills in safe environments and embed their new knowledge and learning. All our consultants are experienced practitioners in their field. Bringing real life examples to embellish the core material and facilitate the learning of the group.

The Business Bulletin

The power of package pricing Someone shows an interest in your services and asks you for a price. Fantastic! They tell you what they want and off you go to work on a proposal. Stop! Before you go any further, there are several things to bear in mind if you’re to get as close to the right price as possible and make a sale.

The problems with pricing With no universal price list to guide you, it’s incredibly difficult to work out how much to charge. You could have a look at your competitors’ prices but, as they’re in the same boat, their price may be far from “right”. Offering one single price point is therefore a risk.

This is because: ■ you have no idea what the customer’s budget is or how much they’re willing to spend ■ you and your customer are looking at the price from two very different standpoints – you based on the amount of work involved and the customer on the end result ■ services are intangible so you’re relying on the customer’s perception of what you’re worth. Very difficult to

Margot Clarke Clarke Consultancy Margot provides business support to a variety of companies across a wide range of industry sectors. With an international background, she is highly experienced in helping business owners understand what’s really going on in their business. If you’re struggling to understand your numbers, Margot’s thorough approach to accounting allows you to control your cash flow and manage your figures, so you can meet your business objectives. 07711 011368 margot@margotclarke.co.uk margotclarke.co.uk

36 | Issue 13 – Finance | 36

assess perception when you can’t see it through their eyes ■ no two customers place the same value on the same service so a price that’s right for one customer isn’t necessarily right for another ■ no two customers require the same level of effort, and you won’t know what that level is until you start working with them

really want. Or you could end up spending more time than you can afford and having to turn away a better paying customer. Offering only one price point is a gamble and you can guarantee it will always be the wrong price. When someone asks for a price, they’ll have a number they’re prepared and willing to pay. The probability of it being the same as your price is pretty much zero. If it’s lower it means your price could be too high, and they won’t buy so you’ll lose out. If it’s higher then they may well buy from you, but you’ll have left money on the table and lost out on better profits and better cashflow.

The principles of packaging Packages are there to offer multiple price points. They’re ideal for both products and services but work particularly well for the service sector. The aim is to bundle several services into a single combined unit. Where

■ keeping the price low to clinch

the customer has the option of buying

the deal could mean having

each service individually it’s important

to cut corners and not give

to ensure that the combined price of

the client the results they

the package is less than the total of

The Business Bulletin

the individual services. The “features”

them scale as their business

educates the customer in

of each package should be based

grows.

what you do. No matter

on the pain points and needs of the customer because customers are focused on the end result and not on how you get them there. There’s no limit to the number of packages you could offer but for most businesses the magic number is three. Any more than that and the decision can become too difficult, and they’ll walk away.

The power of packages There are many advantages to offering packages: ■ It gives customers more choice

■ We all like to compare prices to make sure we’re not paying over the odds and means they’ll

■ It encourages the upsell as customers are made aware

other rather than compare you

of the higher value packages

to your competitors.

they can move up to and the

■ The customer’s response will move from a simple yes or no to a “which one” ■ You’re far more likely to be within the customer’s budget ■ With carefully constructed packages, customers are less focused on price and more on value and will often pay more than the price they initially

control of the buying process.

had in mind

pricing structure that’ll help

customers will have no idea

compare the packages to each

and makes them feel more in ■ It offers them a well-built

how obvious it is to you, your

■ Outlining the “features” or scope of each package

other services you sell ■ Bundling the right features together gives a better result thereby increasing customer satisfaction ■ Outlining the scope of each package helps avoid “scope creep” and better manages customer expectation leading to less customer dissatisfaction More sales, more upsells and more happy customers means more profit and more cashflow. What’s not to like?

Issue 13 – Finance | 37

The Business Bulletin

Pricing the packages It’s important to ask the customer the right questions to get a feel for the scope of work involved but you’re really aiming to price the packages based on how much value the end result brings to them not on the individual “features” or the time spent. As you expect most people to opt for the middle package you should build that one first and base the

You’d expect 80% of customers to

price to a customer and you’ll have a

go for your middle package with the

50/50 chance they’ll buy. Offer them

other 20% going for the cheapest

three prices and you’ll have a 90-100%

and most expensive. If too many

chance they’ll buy. Are you ready to

customers are going for your most

package your services?

expensive package, then you’re too cheap and need to put your prices up. If, however, too many are going for your cheapest then you need to review your marketing!

“features” round the pain points or

And finally…

needs of the customer. You then

Just as prices should never be set in

buffer that package with a cheaper option and a more expensive option for all the reasons listed above. Once you’ve set your prices you need to constantly monitor them.

stone neither should your packages. The “features” in each package will change from one customer to another but the basics behind them will remain the same. Offer one single

Like what you have seen? Spread the love and share!

The Business Bulletin

What’s the point of a mortgage broker? Why when the internet provides limitless amounts of information and advice available at your fingertips would anyone still choose to use a mortgage broker? Add in the advent of comparison sites, and surely anyone internet savvy can find their own mortgage.

In many ways, the internet’s biggest

This is where a mortgage broker

What is a mortgage broker?

benefit – its pervasiveness – is also its

comes in. Combining up to date

greatest drawback. With so much

knowledge and experience of the

information out there it’s almost

mortgage market, mortgage brokers

A mortgage broker is a financial

impossible to know which of it is

are the right people to cut through

advisor who specialises in giving

reputable or accurate, and which of

the confusion and find the most

advice about mortgages. Mortgage

it applies to you. This is especially the

appropriate deal for you. We’ll take a

brokers are specifically trained and

case if you’re looking for a specialist

look at the edge a mortgage broker

qualified in giving this advice, and

mortgage either because of your

can give you, as well as discussing what

like all financial advisors in the UK,

personal circumstances or because of

you should look for in a broker and

have to be regulated by the Financial

the peculiarities of the property you

what to ask them before you decide to

Conduct Authority (FCA). A mortgage

want to buy.

give them your business.

broker works on your behalf to

Issue 13 – Finance | 39

The Business Bulletin

source the most appropriate

products is broad enough to be

reducing the time spent going back

mortgage for circumstances. They

representative of products from across

and forth with new requests for

essentially act as a middleman

the market. In addition, the range of

information. And, mortgage brokers

between you, the borrower, and the

products offered should be reviewed

usually have dedicated contacts in

lender, the bank or building society

regularly, and shouldn’t materially

each mortgage lender, meaning they

that lends you the money.

disadvantage any customer. The firm

have a direct route to help progress

should ensure that its selection of

your mortgage application.

What is an independent mortgage broker? Some mortgage brokers only work with a small number, or panel, of lenders. This clearly limits the number of mortgage deals that they can search when they are looking for a

mortgage products is kept up to date. When you are looking for a mortgage broker, using wholeof-market brokers increases the likelihood of your broker finding the most suitable deal for you.

They will consider your wider mortgage needs A mortgage broker won’t just advise you about your mortgage. They will also look at any related life insurance, payment protection and even

Whole-of-market brokers on the

Mortgage brokers match lenders to your situation

other hand have access to a much

Mortgage brokers have an intimate

based on your new mortgage

wider range of lenders, giving them

knowledge of which lenders are

arrangements to make sure you are

more options. In addition, some also

happy to provide mortgages for

fully protected in the event of:

have access to direct offers from

specific types of circumstances

lenders that may not be advertised

and situations. For example, some

more widely.

mortgage lenders will not accept

deal for you.

The Financial Conduct Authority states that a firm shouldn’t call itself an independent mortgage adviser unless the firm’s product range across the market is ‘unlimited’. The FCA advises any firm that wishes to be considered independent should ensure that its selection of

properties that have a thatched roof or are of an unusual construction type, others may not accept settled CCJs and some will have different criteria if you are self-employed or still in a probationary period at work. A mortgage broker can also help if you need to buy a property more quickly than a traditional mortgage process would allow or if you are looking to build a new home or development. If you are a buy-to-let landlord then a mortgage broker can help find those lenders that accept portfolios of certain sizes and houses

Mark Chapman Cathedral Independent Financial Planning Mark has over 30 years experience as a financial adviser. He offers independent financial advice to individuals and corporate businesses; whilst providing a friendly, efficient and professional service. 07780 610363 markchapman@cathedral-ifa.co.uk cathedral-ifa.co.uk

of multiple occupancy.

They make it easier to find and complete a mortgage Finding and then completing a mortgage is a stressful process. A mortgage broker can take away much of the administration and handling of the lender away from you. For example, they will know exactly what each lender will require from you at the beginning of your application,

40 | Issue 13 – Finance | 40

buildings and contents cover you have. They will recommend insurance

■ Death ■ Critical illness (such as cancer, heart attack or stroke) ■ Redundancy

What are mortgage broker fees? Mortgage brokers may charge you a fee for their mortgage advice or they may offer their advice for free and instead earn their income from commission paid to them by the mortgage lender. They may also earn income from commission on mortgage protection and insurance products. Mortgage brokers can charge their fees in different ways: ■ Fixed fee – this is usually a single fee that is fixed for the totality of their mortgage advice to you. ■ Hourly rate – this is a variable charge, meaning the more hours you use the more you will be charged. ■ Percentage fee – this is

The Business Bulletin

where the mortgage adviser

Mortgage brokers are also required

receives a percentage of the

to provide you with a key facts

total mortgage loan from

document about their services that

the mortgage lender as a

details any fees or commission they

commission. The broker must

charge or earn.

disclose this percentage fee to you including the percentage rate. You may or may not also be charged a separate direct fee from the mortgage adviser. ■ Combination of fees – a combination of different fee types shown above. ■ No fee – the mortgage adviser may choose to not charge you a direct fee. In these cases, they almost certainly will receive a percentage

You’re protected if the mortgage advice was incorrect When you receive mortgage advice, your mortgage broker has a duty of care to you. They must recommend a suitable mortgage and be able to justify why the mortgage they have chosen is right for you. If their advice is not up to scratch, you can complain and be compensated.

as commission from the mortgage lender.

Advertise for as little as £59

(20% discount when block booking 3 ads)

The Business Bulletin

Ask the experts Do you have a burning question that you would like the answer to? Or maybe you’re looking for some advice to help your business? In each edition some questions will be shared and answered by some of The Business Bulletin experts.

Q. What is a balance sheet? How is it beneficial to me and how do I use it? A. A balance sheet, also known as a statement of financial position, is a financial statement that gives a snapshot of the financial balances of an organisation at a specific point in time. The purpose of a balance sheet is to give interested parties that could be potential lenders as well as directors and shareholders information on the company’s financial position. A balance sheet contains what the company owns in the way of physical assets, the bank balances, what liabilities it has as well as what money is owed to it Liabilities are split into two categories: ■ Current liabilities - these are defined as the short-term financial obligations that are due within one year or within a normal operating cycle. ■ Non-current liabilities - these are defined as liabilities that are not expected to be settled within one year or a normal operating cycle for example loans.

here would be bank balances (if

corporation tax it will have to pay

these would appear as a current

when due and allow them to

liability) and money owed to the

plan accordingly to take steps to

business from its sales activity.

reduce this liability or put money

■ Non-current assets - defined as long term investments are those

2. Identify which parts of the business are profitable and which

converted into cash in the current

are not, thus allowing a business

period, examples of this would

owner to allocate resources more

include property, vehicles and

effectively. This will greatly assist

other plant and machinery.

in planning for the future growth

Wendy Tate Bean Counters Q. What is a profit and loss statement?

categories:

And how do I use it effectively for my business?

easily be realised or converted

A. A well-structured and accurate P&L

into cash within a year included

will allow a business owner to

42 | Issue 13 – Finance | 42

aside to pay for it.

that are not expected to be

Similarly, assets are divided into two ■ Current assets - those that can

1. Calculate the potential

in the black of course, otherwise

of the business. 3. Identify a break-even point for the business to allow them to price their goods and services more accurately and in line with the market. James Blacklaws JB Commercial Finance

The Business Bulletin

owner covers themselves plus any

Contributing experts

essential employees/directors for critical illness cover, life insurance, and a form of income protection depending on their value to the business. James Blacklaws JB Commercial Finance A. Leaving aside the necessary general

James Tarry

Wendy Tate

Scottsdale Moneywise

Bean Counters

insurances (public liability, insurance of business assets etc) a good starting point is what protection have you given up in your move to self-employment? Larger employers offer sick pay schemes and death-in-service benefits, these can be obtained for less than you may think, especially ‘relevant life’ cover which is a business expense when paid via a

James Blacklaws

Margot Clarke

JB Commercial Finance

Margot Clarke

limited company. The pandemic should help a focus on health covers, not just sick pay (income protection) but also the less

Q. What should be included in a set of

for a job carried out in June you’d use

management accounts?

management accounting to pull that

A. Management accounts help businesses to manage their finances and their operations effectively and make informed decisions leading to effective business growth. Like the statutory year end accounts, they include the Profit & Loss and the Balance Sheet. However the difference is that whilst the statutory accounts look back in time, management accounts look forwards into the future. They’re typically prepared on a monthly/quarterly basis and include other reports such as budgets, forecasts

invoice out of the July figures and show it in the June figures. This gives a true picture of the activity during that particular month and allows you to

of key employees can be covered by key person protection, and shareholder protection (which makes funds available to buy out a shareholder) should not be ignored.

previous year(s). It’s vital for any business,

James Tarry Scottsdale Moneywise

serious about growth, to be looking at the management accounts on a monthly basis. Margot Clarke Margot Clarke Q. What business insurances should I have in place? What is essential and what is recommended?

key performance indicators that are

A. It’s essential (and a legal

pertinent to your business and sector.

requirement) for a business to have

By comparing them month on month

a comprehensive business insurance

you can see if your business is growing

package depending on their individual

in line with your expectations and react

requirements. these usually include

to any issues as and when they occur.

buildings cover, contents cover, and

appropriate to identify income and

critical or serious illness cover. The loss

compare it with the same month in the

and cashflow statements plus any

For some businesses it’s even

common private medical insurance,

Public Liabilities insurance. It is also likely that business

expenses according to the month

interruption insurance would be seen

in which they occur. For example, if

as an essential addition to any policy. I

you send a client an invoice in July

would always recommend a business

Got a question? If you have a question – then email us and these experts will set about answering it for you. It can be on any business topic you like, be it finance, sales, marketing, operations, resources, strategy or personal development. If you would like a more immediate response, then raise your question on the “Ask The Experts” forum.

Issue 13 – Finance | 43

The Business Bulletin

SME Survey Summary No survey in this edition, just a reflection on what has been covered in previous issues and a summary of the outcomes. (Clicking on the question will take you to the edition that features the full survey results).

What impact does the current climate have on the turnover and profit for small businesses?

What marketing channel works best for you?

The survey asked questions about historic and future

were networking (58.2%), social media (14.3%) and website

turnover. Comparing the data from the results of the 2 surveys, surprisingly less businesses were expected to

The top 3 channels for those that took part in the survey (11%); with all other options being less than 2.2%. Clearly networking seems to give the most “bang for your buck”!

shrink over the next 12 months than did in the previous year. 1 in 5 shrank historically, but only 1 in 8 are expecting to going forward. And a similar percentage to the most recent survey (73.1% versus 76.6%), around 3 out of 4 businesses either growing their profit or staying the

What factors are hampering your sales? The biggest contributor is the current climate and

same. A positive sign!

the pandemic affecting the sales of 39.3% of the 61

What has the biggest impact on your cashflow?

business has in some way been impacted by the

Lack of sales was by far the main issue. It is unclear

on their sales performance. This seems to point to the

whether this is due to the pandemic being faced at the

resilience of small business owners to adapt and respond

time of undertaking the survey or whether this would

to whatever is thrown at them!

respondents. This makes sense as pretty much every lockdowns that the UK has been facing. Having said that, reassuringly 34.4% had not experienced an impact

apply under “normal” business conditions. Followed by debt, overheads and staff.

Did you take advantage of any of the Government schemes to support small businesses during COVID-19?

What are your predictions for sales over the next 12 months? The vast majority of those surveyed (85.2%) predicting sales growth going forward. Only 5% were expecting no growth or a decline in sales. 9.8% were uncertain

The Bounce Back Loan (BBL) was popular with 65.7% of

which is understandable as they may not undertake

those eligible taking advantage of this low-cost option for

sales forecasting and their industry sector maybe

funding. With 80% of those who took advantage using it

unpredictable; particularly if impacted directly by

to bolster cashflow.

the pandemic.

44 | Issue 13 – Finance | 44

The Business Bulletin

What is you biggest operational challenge?

Do you have a coach for your business?

The top 3 challenges facing those small businesses that

kind of external influence. This is great news that over half

completed the survey were business processes (24.1%), sales systems and dealing with COVID-19 equal second

The survey showed that 55.6% of businesses had some see the advantage of someone to help guide the business forward. This then begged the question: what made you

(9.3%), then government “red tape” (7.4%).

choose them?

Do you outsource services to support your business?

were (respondents could choose more than one option):

Interestingly, as you can see below, the top reasons

Accounting was the service that was most outsourced by businesses; followed by website. 6 people who responded to the survey didn’t outsource anything and 29 had no intention of outsourcing further.

■ Personality (64%) ■ Experience (54%) ■ Methodology (32%) ■ Reputation (26%)

Is having a business plan important? 87.2% thought it was important to have a business plan (which is good news). However 1 in 10 felt that it wasn’t important. Unfortunately the survey didn’t ask

Hopefully you have found this summary useful. Do you have an idea for a survey? Let us know.

a supplemental question as to why those people felt it wasn’t important – may be a question for a future survey?

Get involved To take part in the next survey – Is social media important to your business? – visit here: https://forms.gle/jS5a9i6iunKHAY7z6. The results will be shared in the next edition of this magazine.

Issue 13 – Finance | 45

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The Business Bulletin Issue #13 - Focus On Finance

Articles inside

Start-ups – what are your options for finance?

Ask the experts

SME survey

What’s the point of a mortgage broker?

The power of package pricing

Are you using the right finance tools for your business?

What you need to know about your pension

Landlords – are your books in order?

Expenses… what can I get away with?

Is your property portfolio safe from tax?

Are you tax aware?

How can an Enterprise Management Incentive scheme benefit my business?

Beware the elephant traps

So, why should I purchase my own commercial premises?