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Are your business finances due for a spring clean?

For many of our clients January marks the beginning of a new financial year and a great opportunity to get their finances in order. However, irrespective of when your end of year is, it’s worth investing some time clearing out the old, preparing for the new and getting more efficient along the way.

We know that the word tax can strike fear into even the most resilient of people, but it doesn’t have to. With over 12 years’ experience dealing with HMRC on behalf of businesses like yours we have learnt a few things that can get your business in shape for your new financial year.

We have put together a few top tips and helpful nuggets of advice to help put you in the best position for 2020.

Tip #1 – Don’t ignore changes from HMRC or the upcoming Spring Budget

Here are a few things you should know.

  • If you’ve put your 2020 business plans together based on 17% corporation tax rate as was outlined in the last Budget, you may need to revisit this so that your cashflow isn’t affected as corporation tax is now expected to remain at 19%.
  • Keep on top of any tax changes that could have an impact on your business. Even if you don’t know what to do about it now, by knowing where to look for information, you will have a head start. The government website is a good place to start to research any changes that may affect your business and find out what you may be eligible for.
  • As highlighted in the Conservative Party manifesto, the National Minimum Wage is increasing. From April 2020 it will rise to £8.72 for over 25-year olds which may increase your staff costs.
  • To recognise and reward business innovation, it was suggested that the RDEC credit rate would rise to 13% from its current rate of 12%. This will be a bonus for businesses spending on research and business improvements as they will be able to recoup more of their investment.
  • Remember, if your company profit grows to the point of exceeding £1.5m, you will need to start paying corporation tax in quarterly instalments, and electronically. If you forget, you could have a costly bill at the end of the year with interest on top. Find out more about corporation tax quarterly instalment payments in our quick guide.

 

There are likely to be further changes in the Spring Budget on 11th March so keep this date in your diary. Sign up to our newsletter to receive a summary of the key budget takeaways from our tax experts.

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Tip #2 - Cheap isn’t always cheerful – speak to a professional

It sounds cliché, but truly when it comes to business finances, looking for the cheapest option, or asking a friend who works in finance or bookkeeping, can be a false economy. Errors make the financial process take longer than necessary which could have a big impact on the day to day smooth running of your business, potentially at your busiest time of year.

When working with our clients we don’t just look at the figures they provide, we look a little further. We make sure that they have included everything that they need to in order to be compliant and take time to understand their business to identify opportunities to both save and generate money.

Find out how we helped our clients SWAP, with a long-term strategic plan and tax advice.

We have found that MPA are start-up centric and tech-led in how they deliver their services, which has allowed us to free up our time and focus on our core business. Offering long-term strategy planning as well as daily accountancy and tax advice has added real value to our business.

Jeroen Sibia and Dan Silvertown Owners, SWAP

In a nutshell, working with an expert will:

  • Ensure you remain compliant with HMRC, preventing costly mistakes that could incur surcharges or penalties
  • Unlock unconsidered opportunities such as Patent Box or general business tax opportunities such as R&D tax credits. Incentives which could otherwise be missed if you are seeking advice from someone who doesn’t understand the nuances of your business, industry or market

Tip #3 - Don’t leave it to the last minute

Financial planning is an ongoing process not a fix and forget moment in time so it’s important that you don’t bury your head in the sand. If you don’t already have a financial plan or strategy, then a spring clean can be the perfect opportunity to put some robust business processes in place to avoid unpleasant surprises.

  • Remember Brexit has begun, so be sure to review Government advice and act. You may need to put in additional reporting measures if your business buys from or sells to EU businesses https://www.gov.uk/brexit.
  • Keep records relevant, in order and ensure that they satisfy GDPR. A simple spreadsheet could be enough as long as it captures the key data. To remain compliant, you need to keep some tax documents for up to 20 years so store them in a useful, accessible and secure way. Read our Making Tax Digital for Business survival guide for help moving from traditional to digital record keeping.
  • Learn lessons from the previous year. Highlight things that could be holding your business back such as late payments. Put solutions in place so that these won’t put your business at risk.
  • Capture opportunities as you go. Research schemes and funding opportunities that might be available to you. You can also speak to a member of our team to find out more about schemes you may be eligible for.
  • Think ahead. Look at how your business is evolving and keep abreast of changes in legislation that might affect you in the future, rather than just what’s happening at the current moment in time.
  • Entering a new decade is a great time to take stock, take control and explore all the options that are available to you. Don’t delay, seize the day and help your business flourish.

At MPA we are committed to UK innovation, with a vision to release businesses to reach their full potential and thrive. If you want to make sure that you’re prepared for 2020 and are maximising all opportunities, get in touch and speak to one of our advisors.

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Connor Whelan
Author:
Connor Whelan