The UK now has a new PM Rishi Sunak after the shock resignation of the previous PM Liz Truss due the GBP (Sterling) stock market crashing after the announcment of her mini budget just weeks ago. So the new Chancellor Jeremy Hunt announced a raft of reversals listed below that seem to have temporarily reassured the markets and IMF etc. But what are they in a quick short read - well see below: 1. Cut to Corporation tax down to 19% from 25% - cancelled 2. Removal of 45% higher rate tax - cancelled 3. Personal Income tax cut from 20% to 19% - cancelled 4. Alcohol duty freeze - cancelled 5. VAT free shopping for overseas visitors - cancelled 6. National Insurance reverse of 1.25% - retained 7. No stamp duty on first £250,000 - retained 8 First time buyers no stamp duty on first £425,000 - retained 9. IR35 rules reversal - cancelled 10. Removal of bankers bonus cap - retained 11. Freeze on energy bills for 2 years - amended to 6 months only now By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
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The bridge between having a good business idea and implementing such idea into a business model can be wide and daunting. Getting the necessary funding to kick start your business can be a difficult process and different sources of finance may not be appropriate for everyone due to varying circumstances.
Whether you require investment for start-up capital or are looking to expand your business, the cost can be astronomically different depending on a few variables. Here is a list of things to consider when looking for a source of funding for your business: The “Right” Amount There are a few questions that should instantly appear on the forefront of your mind when you are seeking finance.
Doing your homework from the start will help you avoid many future problems. A shortfall in funding may jeopardise your business in its entirety, you may miss out on that explosive launch you was hoping for or realise that a particular project didn’t produce the desired results because you ran out of cash. There’s a subtle understanding in business that goes like this; “you need to spend money to make money”. Making big changes in your business requires money and not everyone has that money in their bank accounts. However, funding must not only be sufficient but efficient as well. There’s no point asking for more than you need, it will just result in more interest and a larger repayment towards the end. Plan out your budget by listing a breakdown of the different components the funding is used for. You may spot areas in which you can forgo and others that you may have missed out. And once you get the funding, you’ll know exactly what to do with it. Timing is Key Timing is essential in many aspects of life and its no different in regards to funding. Having a realistic time horizon to pay off your borrowings can make repayments easier and more manageable. Pacing your repayments can avoid interest payments from siphoning your cash flow. Tip: If your business is performing better than expected, think about repaying back the debt earlier to decrease the amount of interest accumulating. The Correct Choice Here comes the most difficult part when seeking for funds. How do I choose between so many options? Well unluckily for most, they don’t have as much choice as they think they do when it comes to the selection of finance. The most common for small businesses to get funding is through their own savings. This is, by far, the cheapest source of funding and the only opportunity cost associated is that you lose out on the interest on your savings which quite frankly is nothing compared to the potential interest payments you make for other sources of finance. However, a lot of the time, the money is not enough to fuel the business which leads to people opting for the next best choice; a bank loan. This may be the most appropriate option for many individuals seeking funding as terms can be flexible and mutually agreed upon by both parties. Tip: Try browsing through the different types of loans you can apply for, you may believe that there is some standard rate banks tend to charge for certain loans but be very surprised that the conditions of such loans can be as different as night and day. Take every percentage point at face value; there may not be much difference between 7% and 8% but over the long term you’ll end paying back significantly more in aggregate. Borrowing money through a loan or equity share from family and friends can be a good source of financial investment. Loans offered in this fashion tend to have a low interest rate compared to traditional loans and possess more lenient terms. Offering a piece of your business via equity distribution can motivate your family and friends to help grow your business. Be warned though that any business problems don’t end up trickling down to family matters. Also, make sure any loan agreement is in writing just to avoid any legal problems that may arise in the future. Another alternative of funding is through an outside investor. This is usually not a loan but an equity investment. This means that the investor becomes a shareholder in the business and is entitled to a percentage of the business profits (depending on his/her equity share percentage). Furthermore, the investor may have some degree of control in your business. Depending on the investor, this could be advantageous or disadvantageous. The outside investor could bring new ideas and contacts into the business which would help accelerate the growth of the business. On the contrast, the investor could be in disagreement with any business decisions made and hinder the progress of the business. It is up to the business owner to make sure the interests of both parties are aligned. One thing to note is that debts can be paid off but equity is fixed for the lifetime of the business which could result in equity being much more expensive if the business grows rapidly. At Tax Affinity Accountants we provide free tailored advice to help grow our clients business. By Wilson Law at Tax Affinity Accountants. Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered to be small business experts helping and supporting business in the UK. They regularly help new business start up and provide valuable support for new businesses. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. Improve the profitability of your small business
Statistics show that around two-thirds of small businesses failed to make a profit last year or increase their profit at all. However, people do not realise how much a small change can impact a business. Making a series of small changes can increase profitability more than making one big change. Here are some suggestions you can take to increase your profit. Revenue and Costs – The Direct and Indirect In basic terms, revenue minus costs equates to profit. So to increase your profit you can either increase your sales or reduce your costs. Many businesses may have little control over the amount of sales they do but all businesses should have control over their costs. Negotiating prices with suppliers can be a key factor to reducing your direct costs. Many businesses tend to stick with one supplier and not negotiate prices but being aware of market prices can increase your bargaining power and potentially save you a lot of money. Costs that could be regularly reviewed in your business include insurance, utilities, mobile/telephone charges and Internet. Ways to decrease your overheads and indirect costs are less obvious compared to direct costs. A good way to lower your indirect costs is to improve your systems. For example, switching from a paper based system to an electronic system to keep important records and manage documents can help reduce your administration costs and minimises the chances for errors. It may be good business practice to review your systems on an annual basis and to seek input from staff from future improvements. Marketing and visibility It can be a very difficult task for small businesses to get their name out and having a small marketing budget doesn’t help either. One thing to keep in mind is not the size of the budget but the effectiveness of your marketing. Understanding your target audience is vital to promoting the awareness of your business. For example, as a local fish and chips shop located near a high school, you can offer a meal deal for students. The sales promotion will help attract one of your key target audiences and possibly increase the reputation of your shop through word of mouth. Also, make sure your advertisements are tailored towards your target audience. Hearing back from 10% of 200 people is better than 1% out of 1000 people. Certifications and accreditations can help put you ahead of your competitors. With the Internet being such a huge platform for communication, it is definitely to your advantage to go online. Try setting up a user friendly company website or use social media sites to increase the awareness of your business. It is a cheap and effective way of promoting your business to prospective customers. Managing your Cash Flow Interests on loans may seem insignificant at one point in time but it quickly accumulates to realisable figures that can put a dent on your profitability. Try keeping a reserve of cash that can be used to cover your current liabilities i.e. short-term loans and interests on long term loans. Having a healthy cash flow can reduce the problems you face if a short-term commitment arises. Key Performance Indicators Analysing key indicators can give light to areas of improvement for a business. Common indicators include actual sales figures against forecasts, costs against budgets, gross profit margin and staff costs. Get advice from your accountant to ensure you’re monitoring the right indicators for your business as staff tends to work towards them whether they are critical to the business or not. The Real Gems of your business In particular to small businesses, every staff member has the opportunity to spread your company’s message. Everyone needs to contribute: whether that is networking on the web, promoting sale offers or greeting customers with a smile, every small thing matters. Get them to be as motivated as you are by encouraging self-development. Reward employees who make an effort to represent the business in and out of work. By Wilson Law at Tax Affinity. Tax Affinity Accountants are considered in the market to be experts in Tax and Accountancy in the UK. Based in Kingston upon Thames they have clients right across the UK as well as Europe, Middle East and North America. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. Making the Most of the New 7-Day-Switch Scheme for Banking
The long running perception of the UK banking sector as an oligopolistic market- one which is dominated by the four largest banks- may be challenged by the new 7-Day-Switch scheme which should substantially reduce barriers to switching your current account. According to the Office of Fair Trading, Britain’s four top banks- Lloyds banking Group, Barclays, RBS and HSBC- control around 75% of the current account market and have thus been able to offer sub standard current account deals to customers due to a lack of competition. The Government’s new 7-Day-switch scheme, which began on 16th September, does exactly what is says on the tin. Whereas customers have previously waited up to a month to switch bank accounts, under the new shake up of the banking sector, high-street banks have promised to switch current accounts within seven days. They will transfer across all payments into and out of customers’ accounts, thus reducing the perceived hassle of switching accounts. How the scheme may benefit you: With reduced barriers to switching your current accounts, it may be very sensible to start looking at some of the other offers around at present. A spokesperson from the Money Advice Service suggested it was “not uncommon to save £500 or £600 by switching your bank.” Summarised below are some of the best offers out there in the market at the moment: Cashback and Package Deals · Santander, 123 Account- One of the few accounts that offers interest on your money. It offers 1% on balances from £1000, 2% on balances from £2000, and 3% on those between £3000 and £20000. It also offers you cashback on household bills payable by direct debit (1% on water, council tax and mortgage payments; 2% on gas/electricity bills; and 3% on mobile phone and broadband). However, you will have to pay a £2 monthly fee and ensure a minimum monthly funding of £500 into the account. · Nationwide, FlexAccount- A packaged deal offering you worldwide family travel insurance, mobile phone insurance, breakdown cover and warranty cover for your appliances. You also get 3% interest on balances up to £2500 and a 3 month free overdraft, although there is a monthly fee of £10. Fee-free Deals · First Direct, 1st Account- Offers you £125 for switching plus a fee-free account provided you pay at least £1000 into the account each month. Further benefits include a fee-free overdraft up to £250 and excellent customer service (£100 cashback if you decide to leave within 6 months). · Halifax, Reward Current Account- You get £100 cashback when you switch plus £5 a month reward, provided you pay in at least £750 per month and pay out at least 2 direct debits. Business Current Accounts If you run your own business it will also be of benefit to compare the market for the best business account deals. Some of the key features include fee-free banking, interest on balances that remain in credit, and overdraft facilities. Some recommended business accounts are outlined below: · NatWest, Start-up Business account- Offers 2 years free banking with a £500 fee-free overdraft, provided your business is less than 12 months old with a turnover of less than £1 million. · Lloyds TSB, StartUp Account- 18 months free banking as long as your account remains in credit. You can also get consultation support from a relationship manager. · Santander, Business Start-Up Current Account- 12 months free banking and 0.25% interest on balances. Summary The key to finding the best deal for yourself is to ascertain exactly what benefits you most seek. If you often dip into your overdraft then it will be advantageous to look at accounts offering fee-free overdrafts. Alternatively, if you always remain in credit then you can start to shop around for higher interest rates and other perks from package deals. As a business owner you should also shop around to get the best deals and maximise the money you retain in your business. Very few current account deals are offering interest at present and thus your money is losing value in this inflationary climate. Therefore, it is certainly worth assessing your options in order to maximise the benefits you can receive. Furthermore, as the new 7-Day-Switch scheme begins to take effect, banks should start to offer more attractive and innovative packages to entice customers away from competitors. It is therefore worth keeping a beady eye on new offers as they enter the market. By Tom Hoadley at Tax Affinity Accountants. Tax Affinity based in Kingston upon Thames are expert accountants and tax advisers with client across the UK and abroad. For more information or a free initial consultation visit www.taxaffinity.com. Please feel free to comment and share this article with your friends. Follow us on twitter @Tax_Affinity for more money saving tips. |
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