Poor management of the finances of your business can lead to failure. It is crucial that you have proper management of your business finances for success. Research from the Bureau of Labor Statistics showed that 20% of businesses don’t make it to year one. Further to this, only 30% businesses will remain in business after their launch.
The most common reason blamed for business failures is more finance management. Many businesses do not have someone that takes on the role of looking after the finances. Other businesses don’t adhere to best practices and fall behind with managing the cash flow and business finances.
In this blog post we share some top tips to help you keep accurate business records. This is an important part of proper business finance management. Not only will these tips help you manage your business finances properly, but they may also lead to small business growth too.
There is accounting software out there that will help you automate as much of the bookkeeping process as possible. This includes the processing of receipts and digital storing financial records too. This will enable you to document the amount, time, place and business purpose of each transaction, with ease.
Generally speaking, your business records need to include three things. These are receipts, expenses and fixed assets.
The receipts are the income that you receive from your business. These records include the rolls from your tills, any deposit information, your receipts book and all invoices.
You need to keep records of the costs that you incur to run your business. These include things like cancelled cheques, documents reflecting proof of payment or electric funds being transferred. Credit card receipts, account statements, credit card receipts and invoices.
Top Tip: you may want to consider downloading a receipt scammer onto your smart phone. These apps will automatically map the content of the receipt and place it in the defined sections of your chosen accounting software.
Your fixed assets need to be included in record the annual gain or loss when you sell products or services. These include asset documents such as purchase and sales invoices., closing statements and other documents that identify the payee, amount of proof of payment or electric funds. Fixed assets also include credit card receipts, statements and invoices.
If you need advice or support to help keep accurate records for your business, call our team of friendly accountants now. We will be only too happy to help you, and your business.
Buying a business is a really exciting prospect. However, it can be daunting knowing where to start. Not only is it a huge decision, but it’s also a big commitment too. You need to put a lot of thought into buying a business and it’s a decision that certainly shouldn’t be taken lightly.
As accountants in Peterborough, we have helped people just like you buy and sell businesses. Below we have put together a few of the things that you should look out for when buying a business. If possible, we would always recommend that you speak to a professional accountant, like our team, to help ensure you are making the right decision and your finances are in shape for the deal.
It’s important to ensure that you have all the right documents. There are a number of documents that need to be in place before you enter a sale of contract. This will include documents like a head of terms. These will often be drafted by a broker to form the basis of the sales agreement. This means that they need to be correct from the start. It’s a good idea to put a confidentiality agreement in place too. This will enable you to carry out due diligence on the business that you want to buy.
Once the documents are in place, you need to start some in-depth research. Find out why they are selling the business in the first place. Check if there are any issues around the business that could or do raise concerns. It’s important to ensure that the business has the proper contracts in place too. Take the time to check if the business is involved in any disputes and if these may cause issues for you in the future.
This is where it’s a great idea to bring in the professionals. For example, an accountant can check and confirm that the business valuation is accurate and worth what the seller claims. A solicitor can draft a share purchase agreement for you and advise on more complex issues. As the buyer, you will be responsible for preparing this sale purchase agreement. A solicitor will help to ensure that you are both covered legally and that the seller delivers what they promised for the price that was agreed.
To be able to run the business effectively you may require third party approvals or consents. These need to be transferred to you or obtained before the transaction can be completed. One example of this is if the business has a regulator or bank loan charges that may need to be discharged.
Once the sale of the business has been completed, it is your job to ensure it is properly documented. This can be done by lodging transfer documents at Companies House. This will ensure that the shares are transferred to you, as the new owner of the business. There may also be other post-completion formalities that need to be managed. This includes things like stamp duty payments or post completion accounts for example.
If you are considering buying or selling a business, call our team of experienced accountants in Peterborough. We can help ensure the value of the business is realistic and help you with some of the documents and due diligence, alongside your other advisors. Always exciting times whether you are considering buying or selling, to meet your forward financial objectives.
During the pandemic and lockdown, with the coronavirus restrictions, many of us found we were working from home. While this may have meant saving on transport and fuel to get to and from work, costs did add up elsewhere. For example, many households found that their utility bills were rising as a home that was previously empty during the day now needed heating and computers/laptops were running throughout the working day.
If you have been working from home during the pandemic, you may be entitled to a small amount of relief for these additional household costs. This is known as the working from home relief.
HMRC have stated that additional costs such as heating, metered water bills, house insurance, business calls or a new broadband connection could be included in the working from home relief. However, other household costs which remained the same, such as: mortgage interest, council tax or rent, could not be covered by the working from home relief.
How Does The Working From Home Relief Work?
If you have regularly worked from home during the pandemic, then you can claim for each applicable week. There are two ways in which you can do this. It is possible to claim £6 per week, from 6th April 2020. This can be done without any evidence of these extra costs.
However, if you know that the additional weekly costs are over £6 a week, it is possible to claim for the exact amount of extra costs. To do this, you will need evidence for these figures. This could include bills or receipts.
What Does The Working From Home Relief Mean For You?
The working from home relief will reduce the amount of tax that you have to pay. It’s important to note that the amount of relief you receive will be the based on your tax banding.
For example, if you are on the Basic Tax Rate of 20% you will get a weekly relief of £1.20 for every £6 claimed. For those of the Higher Tax Rate of 40% you will get a £2.40 weekly relief on the £6 claimed per week. Those on the Additional Tax Rate of 45% will get a £2.70 weekly relief on the £6 claimed, for each week it is claimed. Of course, if you need to claim more than £6 a week, the weekly relief will change accordingly.
If you want to know more about the working from home relief and how you can claim for it. Call our team of friendly Peterborough accountants now.
Most businesses aim to see an increase in business activities year on year, but how do you track how you are actually performing? This quickly demonstrates how important accounting is for a business. Timely and accurate accounting is important to businesses, helping the business owner run their business smoothly, and have management over their cash-flow and other key performance indicators.
In this blog post we share just some of the reasons that accounting is important to your business. If you have not yet looked at the accounting solutions of your new business, call our team now. We are your friendly and local accountants in Peterborough, ready to help you understand your business accounting.
Need help with your business accounting? Call our friendly team of accountants in Peterborough now.
Earlier this month the Chancellor for the Exchequer, Rishi Sunak, presented the 2021 budget. It looked at tax and spending budgets for the year ahead. The 2021 budget also included support for the financial burdens of the pandemic.
But, how does the 2021 budget affect your business? That’s what we look at in this blog post.
Coronavirus Business Support
If you’re not sure how the 2021 budget affects your business or finances, contact our team of friendly accountants in Peterborough. We will discuss anything you need to be aware of and recommend any grants you could be legible for too.
When you become a limited company, you need a registered address for your business. In this blog post we look at what a registered address needs to be. We also look at where you need to display your company address, as a legal requirement.
The Elements Of A Registered Address
There are three elements that make up your registered address as a limited company. Firstly, your company number. This is the number you are given when you register at Companies House. Secondly, your address. This is your registered business address for your limited company. And finally, the place. By this we mean England and Wales, Scotland or Northern Ireland, if you are a UK limited company.
Your registered office address is the address that is used for all correspondence from Companies House and HMRC. It is also the address used for serving any legal notices and similar. That statutory registers and records are also kept there for inspection.
How To Stay Compliant With Your Limited Company Registered Address
While this all may sound relatively straightforward, there are things you need to do to stay compliant with your limited company registered address. We have listed some of these below for you. However, if you do have concerns about the registered address for your limited company, give us a call.
As your local Peterborough accountant, we can provide you with the registered address your limited company needs. This will ensure that all your statutory documents are dealt with promptly and professionally. By using our address, it also protects the confidentiality of your home address.
You may have already received an email from HMRC about the fifth SEISS grant that will be available to apply for later this month. You may feel that business is on the up, but could this extra bit of money could really help the business? Maybe business is down, but not as badly as it was? So, should you apply for the fifth SEISS grant?
The criteria to be eligible for this grant is pretty much the same as the fourth grant. Your self-employed profits, for 2019 / 2020 need to be lower than £50,000 and they cannot exceed 50% of your total income. Alternatively, the same £50,000 and 50% tests can be applied against your average profits and total income over the four fiscal years up until 2019 / 2020.
You don’t need to have applied for the previous four grants to be able to apply for the fifth SEISS grant. However, you will be required to confirm that your business has continued to be negatively adversely affected by Covid-19.
The amount that you can claim with the grant, depends on how much your turnover has been affected by. If business has been affected and reduced your sales by more than 30% then the grant will be 80% of the average profits of the business. However, this is capped at £7,500.
If your business has been affected negatively by less than 30% then the grant will cover 30% of your average profits. This will be capped at £2,850.
If you are not sure if you should apply for the fifth SEISS grant, then why not call our team of local accountants. Applying for this grant should only be done if you have noticed that business has been significantly down on previous months or years.
It is important to note that acceptance of this grant could make applying for a mortgage or other funding harder in the future and do not overlook that the SEISS grants that you have applied for will also be included in your next accounts and will be part of your taxable income. HMRC may seek a repayment of all or part of the SEISS grants if they assess that you did not meet eligibility at the time you claim each tranche of funding, and may therefore need to be repaid at a later date.
Here at AK Bookkeeping we are here to help you. If you are self-employed and not sure if you should apply for the fifth and final grant, let’s have a chat. We can talk through the pros and cons of applying for the grant and look at other finance options too.
For more information contact our friendly accountants now; we are here to help.
Good control of your cash flow is essential for the successful growth of your business. It’s important, as a business owner, that you understand how much cash is going in and out of your business. However, it is also important that you make improvements where you can that will help improve your cash flow.
We have put together five improvements for your business cash flow below. Have a look at our ideas and give them a go. See how much they can help you improve your cash flow, if even in the short term.
Everyone makes mistakes, however even the smallest mistake on an invoice can be used as an excuse by a client to delay payment of the invoice. Make sure that your invoices are sent on time and double check that they are correct, so your clients have to pay on time.
It’s possible to cut down the amount of time you spend waiting for payment, by offering an incentive. A discount as small as 1% or 2% for clients that pay within 2 days of receiving the invoice increases the chances of speedier payments and money in your business account sooner.
Look at the assets in your business. Are they all being used? Do you have a large printer with all the bells and whistles that is just not being used? Then why keep it where it takes up space and gathers dust? There could be another business down the road that are willing to pay good money to take it off your hands.
Many business owners are scared to chase for money they are owed for outstanding invoices, for fear of causing client upset. Make sure you put time aside to chase your debts regularly. But make sure you keep it friendly and polite too. That way you’ll get paid and keep the client.
Ask clients when they expect to pay your invoice. Then use this information to manage your own credit control function. For example, if a client pays all invoices on 30 day terms, there is no point chasing for payment after 7 days. It also means you can work your invoices around the time they do their payment runs.
If you are concerned about the cash flow of your business, then please call our team of accountants in Peterborough, where we can discuss your requirements and suggest suitable recommendations for your business.
Have you been thinking of going limited for your business? It’s easy to set up a limited company with Companies House and the cost is minimal too. The limited liability and lower tax could make a huge difference to your business too. However, there are things you need to know before you go limited.
If you’re the sort of person that hates rules and regulations and you’re not working with a trusted accountant, then going limited may not be the best option for you. Below we have listed some of the main things you need to before you go limited with your business.
A Separate Company
When you become limited your company is separate from the owners or shareholders. This means that if your company goes bust the shareholders will just lose whatever their shares cost them. However, as a sole trader, shareholders are personally liable for the debts of the business. When someone lends a limited company money, they will be likely to ask for a personal guarantee from the directors, so their money is safe.
Separate Bank Account
As a limited company the company will need its own bank account as it’s classed as a legal ‘person’. The company’s money is not your money. To get money out of the company it would be classed as dividends. However, dividends are only payable from net profit after corporation tax. As a limited company owner, you will not be able to take money from the bank account anytime as you would a sole trader, whether you have made profit or not.
A director runs a limited company on behalf of the shareholders. You may earn a salary from the company and then dividends on top of this, if you are a shareholder. You are entitled to any expenses, as long as they are genuine business expenses. If you take money out of the company that is not a refund on expenses, salary or dividends this is classed as a director’s loan.
Things To Do
Every year you must file a confirmation statement that states any changes in capital, shareholders or persons of significant control. You must file accounts no later than 9 months after year end. A corporation tax return must be submitted to HMRC. If you have an accountant, you will find their fees are higher for your business as a limited company than a sole trader. This is because more work needs to be completed.
If you do not have an accountancy background and do not have a reliable accountant in Peterborough to turn to, it may not be right to become a limited company. However, if you are keen to go limited for your business, then call our team for advice specific to your circumstances. We can help set up a limited company and work with you through all the financial and legal regulations.
Additional help for the self employed across the UK has been announced. These will be the 4th and 5th SEISS grant. The financial support from these grants will be available until September 2021. They follow the first three SEISS grants that came into place to offer additional financial help and support for self employed people across England and some parts of the UK.
The fourth SEISS grant will be available from 22nd April 2021. It will cover a three-month period from 1st February until 30th April this year. As with the previous self-employed income support schemes, the fourth grant will be worth up to 80% of three months’ average trading profits. This will be paid out in a single instalment, up to the value of £7,500.
A fifth grant will then cover 1st May until 30th September 2021. However, this final SEISS grant will work slightly differently. The grant amount available depends on the loss of income. If you are self-employed and your turnover has fallen by at least 30% you can still apply for the grant for up to 80% of profits. Again, this is up to the value of £7,500.
However, and this is where the change comes in, if your income has fallen by less than 80% but more than 30% you can apply for a grant of 30% of your trading profits. You can claim up to the value of £2,850. The claims for the 5th SEISS grant will open in July and be available until September.
It was reported that around 600,000 people missed out on previous SEISS grants. This was because they had recently started working for themselves. As they had not filed a tax return, there was no way to prove their income status. Therefore, these people were unable to apply for the SEISS grant.
Those that have filed a 2019/20 tax return via self-assessment on or before the extended deadline of 2nd March 2021 will be eligible for the 4th and 5th SEISS grants.
If you need financial help for your business, whether you are self-employed or not, call our team. As local accountants in Peterborough we can check if you are eligible for a grant through the self-employed income support scheme. We will also see if there are any other grants or funding that you are eligible for.