Small Business Saturday Blog
10 Top Money Tips for Small Businesses
Thursday, February 01, 2018 at 09:37
Money is always a hot topic for Small Businesses so we spoke to Shohaib from Integrity Accounting and gained his top tips to help all types of business with their finances in 2018.
Top Tip No. 1 – Choose the right company Structure
Choosing the right company structure is a really importantdecision required before the business commences trading. Company structures in Sole Trader,Partnerships, Limited Liability Partnership, Community Interest Companies andLimited Companies, to name but a few. Focusing on Sole traders and Limited Companies, our recommendation isthat if you plan on operating the business for the long term, then setup as alimited company. If you want simpleraccounting and to manage the returns for the business yourself, then setup as asole trader.
Top Tip No. 2 – Plan, plan and plan again
The better you can plan for your business, the better thebusiness will be prepared for peak and troughs in trading. We recommend that business owners take atleast 1 or 2 days per month, working on the business to review the past monthsperformance and to plan ahead for the next year or 18 months. Please get in touch with us if you’d like afree cash flow spreadsheet to see when the business will have surplus cash orwhen there are likely to be pressures on cash.
Top Tip No. 3 – Cloud Accounting
In recent years, accounting software has evolvedsignificantly, and this evolution has enable business owners to maintain theirbookkeeping records quickly and efficiently. Cloud accounting also enables you to give access to professional trustedadvisor, like us at Integrity Accountancy, real time access to your accountingrecords enabling business owners to access really good advice for theirbusiness. Plus cloud accounting softwarecheap and effective, with monthly payments reducing the need for a biginvestment in your accounting software.
Top Tip No. 4 – Meet Deadlines
When you run a business, always ensure that you submit annualaccounts, corporation tax return and self-assessment tax returns before theirdeadlines. Also, if you owe tax, payyour tax before it comes due. This willensure that you are up to date with a key creditor for all businesses, HMRC.
Top Tip No. 5 – Utilise Allowances
There are so many allowances available to business owners andbusinesses of all shapes and sizes, and these include the following:
Income Tax Allowance - £11,500
Dividend Allowance -£5,000
Mileage Allowance - 45p 1st 10,000 miles, 25pafterwards
Marriage Allowance – Partner earns less £11,500, save up to£230
Annual Investment Allowance – up to £200,000 invested inassets
R&D Tax Credits – reduce corporation tax by £130 on topof every £100 of qualifying costs
For many allowances, there are rules as to who they areavailable to and how they are used so always get professional advice if thereis anything that you are unsure of.
Top Tip No. 6 – Claim for Travel & Subsistence
If you incur costs relating to travel and subsistence whilstworking for your business, make sure that you claim these periodically (ideallymonthly) from your business. These costscan include Air, Train, bus, and taxi fares, parking, the London congestioncharge and tolls, subsistence expenses e.g. lunch while out, hotel and meals,if you need to stay away from home and mileage when using your own vehicle. Again, always get advice from an accountantto ensure that you are entitles to claim these costs.
Top Tip No. 7 – HMRC Workshops
HMRC does give some things away for free and their workshopsare fantastic for business owners. Thereworkshops cover topics such as:
• employer online filing andrunning a payroll
• becoming self-employed andself assessment for self-employed people
• Construction Industry Scheme
• setting up a limited company
• introduction to VAT
• introduction tointernational trade
They also have free payroll software to allowbusiness to manage their own payroll and report their details directly to HMRCthemselves.
Top Tip No. 8 – Budget for Tax
If you are a profitable business then you are almostcertainly likely to have a tax liability, whether it is income tax and NI,corporation tax or VAT. So budget forthe tax that you will owe to ensure that you have funds set aside for theseliabilities. For most business werecommend setting aside between 20% and 30% of turnover in a separate businessdeposit account for when there is tax to pay.
Top Tip No. 9 – Claim Costs of working from Home
If you do work for your business from home, you can offsetthe costs of running your home against your business if you have a designatedspace in your home that you use solely for business purposes. There are a couple of method, the Flat RateMethod (simple) and the Costs Method (more detailed). The flat rate method enables you to be paidcosts based on the number for hours that you work at home:
25-50 hours:£10 permonth
51-100 hours: £18per month
101 hours +: £26 per month
Top Tip No. 10 – Get a Good Accountant
Getting a good accountant for you and your business should beseen as being an investment in your business, and as with any investment, thisshould reap benefits for your business. When it comes to choosing an account, you should consider the following:
- · Ask yourself if location matters
- · Choose a certified or chartered accountant
- · Look for an accountant with relevant expertise
- · Talk to government and business associations
- · Tap into your social networks
- · Make use of your connections online
- · Decide how the accounting work will be divided
- · Get someone who’s proactive about saving you money
- · Find out what software the accountant uses
- · Do background checks
- · Learn to use and trust your intuition
If you’d like any further details,please contact us using the details below.
About the Author
Shohaib Shafiq ACMA CGMA is the principalaccountant at Integrity Accountancy Services Limited. Integrity Accountancy specialise in workingwith SME’s that want accountants that do more than just tax returns. They work as a businesses trusted adviser,working to add value to their clients, by providing a proactive accountancy service.
Facebook: @IntegrityAccountancyServices
Twitter: @IntegAccount
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