Growing your business 2020
www.hazlewoods.co.uk
CONTENTS GROWING YOUR BUSINESS
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CASHFLOW
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VAT
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RESOURCES IT 4 Premises 4 Equipment 4 REMUNERATION PLANNING
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RECORD KEEPING AND REPORTING Efficient record keeping Cloud accounting Short of time? MARKETING RISK MANAGEMENT AND CONTINGENCY PLANNING
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RESEARCH AND DEVELOPMENT What are R&D Tax Credits? Who can claim?
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GROWING YOUR BUSINESS The next steps for growing your business are set out below, to give you food for thought as you continue your business journey. In light of the impact COVID-19 is having on businesses of all shapes and sizes, we have also set out some advice to strengthen your business against future threats.
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CASHFLOW The cashflow forecast is the place to start here. You can identify from a well prepared cashflow the following: > working capital requirements, both short and long-term > a best and worst-case scenario, to assess where your pinch points
are most likely to be, and where funding requirements may be at their greatest > assess the impact of seasonality on your business > assess the impact of short-term cessation in operations on your business > the timing and funding required to the purchase fixed assets, via cash,
loan, operating lease or hire purchase > overheads > your personal cash requirements, as the business owners
By assessing your cash requirements, you can then look at your options for funding, each of which has its own benefits and drawbacks. Examples of these would be: > bank loan > bank overdraft > start-up loans > other lending providers > family and friends
Please note, some lenders may require personal guarantees. ADAM SHEARING Manager 01242 680000 adam.shearing@hazlewoods.co.uk
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VAT If your business breaches the ÂŁ85,000 turnover threshold, or you choose to register voluntarily, your business will be required to file VAT returns. VAT is usually payable quarterly; however can be setup monthly (if you are regularly in a refund position) or annually. Quarterly VAT returns are due for filing one month and seven days after the quarter. For example, a company operating on calendar quarters for VAT would be required to file and pay VAT to HMRC by 7 May, 7 August, 7 November and 7 February. Businesses with turnover below the invoice accounting threshold of ÂŁ1.35 million should be eligible to operate cash accounting for VAT. This means that your business only pays VAT on sales invoices/reclaims VAT on purchases when the invoice has been paid. This can aid cashflow, as the business only falls liable to VAT once the money has been received from its customers. As your business grows, the switch from cash to invoice accounting can have an impact on cashflow, so is an area to be aware of. JULIAN MILLINCHAMP Indirect Tax Director 01242 237661 julian.millinchamp@hazlewoods.co.uk
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RESOURCES Resources covers many factors, including: IT: thinking about hardware and software needs, as well as a comms system. PREMISES: you should consider whether premises are needed, and if so, to what extent. Are you or your staff able to work from home? What hardware would be needed to facilitate this? You should also consider charging a rent to the company/business for working from home. EQUIPMENT: will this be purchased or leased? There are varying tax impacts of each, which we can assist with as regards to the options available. Areas to consider when employing a workforce: > HMRC registration > HR > Contracts of employment > Auto-enrolment > Company culture > Reward packages
Payroll can easily be outsourced to Hazlewoods. Please contact our payroll team for further information. CHERYL BAKER Payroll Associate Director 01242 680000 cheryl.baker@hazlewoods.co.uk
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REMUNERATION PLANNING Now that your business is growing, it is time to think of the most tax efficient way to extract funds. This may be in the form of the following: > salary; > dividends; or > interest on your loan account – funds you have injected into the company
Other considerations are the need to register for self-assessment, filing an income tax return, and company pension contributions. Talk to us to explore this further. EMMA BOUTCHER Associate Director 01242 237661 emma.boutcher@hazlewoods.co.uk
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RECORD KEEPING AND REPORTING The traditional image of six years’ worth of accounting records being kept in boxes in the back of a cupboard seems unappealing; however, it doesn’t need to be this way. Modern technology now allows for records to be kept electronically. EFFICIENT RECORD KEEPING Record keeping is often only thought of as being a statutory requirement; however, effective and up to date record keeping allows businesses to: > manage finances; > review performance throughout the year; > review key performance indicators; and > provide monthly reports showing the financial performance of the
business CLOUD ACCOUNTING One way of managing records efficiently is through the use of cloud accounting. Some of the advantages of cloud systems are: > easy to use (built for non-accountants!); > allow for up to date information and live reporting; > allows accountant access, meaning less collation of records required at
the year end; > reduces need for paper records; and > integration of apps which can be linked into the main software, such as
stock management and cash flow forecasting.
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SHORT OF TIME? If you feel you do not have the time to invest in keeping records up to date, we have a team at Hazlewoods who specialise in bookkeeping and management accounting. We can keep your accounting records up to date and also provide management information throughout the year, tailored in a format which is the most useful for you. If you would like to learn more about the advantages efficient record keeping can bring, would like help choosing the right accounting package or are interested in finding out more about the services we offer, please feel free to get in touch. RHIANNON HOOPER Director 01242 680000 rhiannon.hooper@hazlewoods.co.uk
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MARKETING As your business has grown, your marketing may have evolved with it so an important next step will be taking control by conducting an audit and setting clear goals. To grow more, you will need to increase your revenue and attract new customers, attract returning customers and/or get existing customers to spend more. No matter on the size of your business, whether you do the marketing yourself, use an agency or hire in resource, then these top five steps will help your growing business: 1. Set or refresh goals - think where you want the business to be in five years’ time? For example, it could be to enter a new market, gain more repeat custom or have grown by X%. These goals then need to be drilled down into marketing objectives and tactics, such as the objective to develop more brand awareness and the tactic to achieve this could be to start Google advertising. 2. Know your customers – who, what, where and when. Write down: who they are; if they fit into groups (segments); what do they buy from you and importantly what could they buy from you; where do they interact and purchase from you; when do they do this; and how often. This might entail doing more research into the type of customers you have or wish to have. 3. Review your ‘shop window’ – for many businesses this is now online, for example your website, social media, online reviews etc. Look at all the places online or offline that you are visible. Make sure these are aligned to how you want people to see your brand e.g. tone of voice on the website, imagery and logo. Ask contacts for opinions too as it is all about interpretation. Often, as soon as you sit back and do this exercise you spot a lot of opportunity to develop or change areas. Simply start by looking at your business through a search engine and the same can be conducted for the business leaders too for their ‘personal brands’.
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4. Set out activity – once you know the direction you want to go in, you understand your customers, who you are targeting and have reviewed what needs work on your brand, then the next step is to join them all together in a manageable plan. A breakdown of monthly activity, such as refreshing the website or regular PR, will help you stay on track and establish costs that will be incurred too. At this point, you may be looking to get more support or training and a good place to start could be through your Local Enterprise Partnership’s resources, such as a Growth Hub. 5. Settings KPIs – now you have an activity plan you can get to work and set key performance indicators (KPI) to measure your progress. For example, if you did work to your website then your KPI may be to see website traffic increase by 30%. Again, reviewing these monthly will help inform what is working, what is not and help develop new ideas. All these tips lend themselves to a marketing plan, with many formats freely available online. However, if you are short on time and resource, starting with getting these basics right will help you set out a path to grow. It is so important that people can find your business and the image (brand) you create stays current, so do revisit this cycle on a yearly basis. EMMA SHORROCK Marketing Manager 01242 680000 emma.shorrock@hazlewoods.co.uk
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RISK MANAGEMENT AND CONTINGENCY PLANNING GDPR is one of the more recent legislative areas a business needs to comply with alongside such things as: > insurances; > contract reviews; > security – virtual and physical; > the impact of negative feedback/customer reviews and their effects on
your reputation; and > the risk of you offering falling behind the curve
More recent times have highlighted the need for disaster planning and ensuring that you have a cash buffer. Consider how well your business could cope with a sudden change in trading conditions or environment, or a loss of a major customer? Scenario planning and adapting cash flow forecasts will give some insight into this. ADAM SHEARING Manager 01242 680000 adam.shearing@hazlewoods.co.uk
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RESEARCH AND DEVELOPMENT Research and Development (R&D) tax credits are a valuable government subsidy that can significantly reduce your company’s tax bill, and even get you some cash back. WHAT ARE R&D TAX CREDITS? R&D tax credits are a means of encouraging companies to innovate through a financial reward for developing new technologies to substantially improve products, processes, devices, materials and/or services. R&D tax credits are not just for technology companies and it is worth considering some of the following questions to understand whether your company may qualify: > Does your company have a particular specialism? > Has your company improved its efficiency/profitability? > Is your business subject to regulatory changes? > Has your company looked at new techniques or adaptation of new
technologies
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WHO CAN CLAIM? All companies, large and small, can claim if they undertake qualifying work even if they do not pay corporation tax because they are unprofitable. Small- and medium-sized companies (mainly those with fewer than 500 staff), can generally claim a credit worth 25% to 33% of their eligible R&D expenditure, while for larger companies the credit is usually worth around 10% of the expenditure. Speak to us if you would like further information on R&D. JEMMA VAUGHAN Associate Director 01242 680000 jemma.vaughan@hazlewoods.co.uk
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For further information please contact: Cheltenham: 01242 237661 Staverton: 01242 680000 We strongly recommend you take professional advice before making decisions on matters discussed here. No responsibility for any loss to any person acting as a result of the material can be accepted by us. Hazlewoods LLP is a Limited Liability Partnership registered in England and Wales with number OC311817. Registered office Staverton Court, Staverton, Cheltenham, Glos, GL51 0UX. A list of LLP partners is available forinspection at each office Hazlewoods LLP is registered to carry on audit work in the UK and regulated for a range of investment business activities by the Institute of Chartered Accountants in England & Wales.
www.hazlewoods.co.uk @Hazlewoods
