9 Mar 2023
Missing payroll can be a nightmare for any business owner. Not only do you have to worry about the financial repercussions of not paying your employees, but you may also have to deal with legal consequences, too. However, if you find yourself in this situation, there’s no need to spiral because there are a few things you can do to mitigate the damage.
Missing Payroll
There are a few common reasons why businesses miss payroll. The most common reason is simply that the business doesn’t have enough money to pay their employees this month. This can be due to a slow period or unexpected expenses, or due to poor budgeting.
Businesses also sometimes miss payroll because of a mistake somewhere in the payroll process. This could be due to using outdated software, an error in calculating hours worked, miscalculating taxes, or failing to properly process payroll deductions.
Whatever the reason for missing payroll, it’s important to take action immediately. The longer you wait, the more damage you’ll do to your employees and your business.
Better Budgeting
If you’re missing payroll because you don’t have enough money, then you need to take a close look at your budget. See where you can make cuts in other areas so that you can free up some cash to cover payroll. You may also need to take out a loan or line of credit to cover the shortfall.
You should also take a close look at your budget to see where you can make changes so that you don’t find yourself in this situation again. Ideally, you should have a cash reserve to act as a buffer so that even when an unexpected expense occurs or you have a quiet month, you still have enough funds available to pay your staff on time.
Cash Flow Forecasting
Another tool that can help you avoid missing payroll is cash flow forecasting. This involves estimating how much money will be coming into your business and when, and then using that information to plan your spending. This can help you identify potential problem areas so that you can take steps to avoid them.
Payroll Mistakes
If you’ve missed payroll because of a mistake in the process, then you need to take steps to correct the mistake and prevent it from happening again. Being paid late or incorrectly angers and frustrates employees, so it’s important to take action to make sure that this doesn’t become a regular occurrence. Otherwise, you risk losing good employees.
If you’re using out-of-date software, consider upgrading to something more modern that will automate some of the payroll process and help you to avoid mistakes. If you’re miscalculating hours worked, consider using time tracking software so that you have a more accurate record of employee hours.
It’s also worth considering outsourcing payroll to an accountant who can handle the process for you. This will help you to avoid the hassle and stress of dealing with payroll yourself, which can be a huge help when you’re busy with other aspects of running your business.
Communication
Whatever the reason for missing payroll, it’s important to communicate with your employees. They need to know what’s going on and when they can expect to be paid. Be honest with them about the situation and keep them updated on what’s happening.
If you’re having financial difficulties, let them know and explain what steps you’re taking to rectify the situation. In the wake of a payroll error, transparency is key to maintaining employee trust.
Final Thoughts
Missing payroll can cause a lot of damage to your business and employees, but there are steps you can take to mitigate the damage. Better budgeting, cash flow forecasting, and payroll mistakes can help you avoid missing payroll in the future. Communicating with employees is also key during these difficult times.
If you’re really struggling with payroll, hiring an accountant to advise you and manage your payroll is the easiest and most effective way to ensure that your business can stay afloat. In addition to putting efficient payroll systems in place, they will also help you to budget and forecast your cash flow properly to ensure that you always have enough money to meet your financial obligations.
Book a free consultation here.
8 Mar 2023
A lean business model is an effective way to ensure success and longevity. Given the current state of the economy and business landscape, it is more important now than ever to keep your business lean.
A lean business is one that limits waste, reduces costs and maximises efficiency. This saves not only money, but time, too. It also makes it easier to adapt and pivot when necessary.
Let’s look at how you can keep your business lean for financial success in 2023.
1. Eliminate Waste
The first step to keeping your business lean is to evaluate current practices and look for areas of waste or inefficiency. This includes everything from physical products to process and procedures. Make sure you are only using the necessary resources for your operations, and look for opportunities to streamline operations, such as by automating processes.
2. Automate What You Can
Automation can help reduce labour costs and free up resources for other areas of the business. You can automate everything from payroll to customer service, invoices and even marketing activities. This not only reduces costs, but improves the customer experience and workflow.
3. Outsourcing Over Hiring
One of the most effective ways to keep your business lean is to outsource certain tasks rather than hiring new employees. This eliminates the costs associated with recruitment, training and onboarding new staff, as well as providing you with access to experienced professionals who can deliver high-quality results.
You also won’t have to worry about HR management such as pay, benefits or vacation time. Outsourcing can be a great way to remain competitive in the market without breaking the bank. It keeps your business structure agile and allows you to focus on core tasks while granting you greater flexibility and scalability.
4. Be Frugal – Not Cheap
There’s a big difference between being frugal and being cheap.
Being frugal means finding ways to reduce costs without sacrificing quality, while being cheap means compromising on quality in order to save money.
One will benefit your bottom line, while the other can damage your reputation.
When looking for ways to save money, be sure to consider long-term impacts, not just short-term savings. Remember that investing in quality products and services can help save money in the long run by reducing maintenance costs and increasing efficiency.
5. Learn How to Say “No”
“No” is the most powerful word in business, and it’s important to learn how to say it.
Saying no can help you stay on track with your goals and objectives, prevent overspending and help you stay focused on what’s important.
It can also help you establish boundaries with partners and vendors, ensuring that you are only partnering with those who can deliver the results you need without compromising on quality.
It also means that you don’t get side-tracked by projects, requests or ideas that don’t align with your goals or add value to your business.
By learning how to say “no” and sticking to it, you can remain lean and focused on what’s truly important.
6. Know Where Your Profits are Coming From
We know, we know – you’ve probably heard the term “know your numbers” a thousand times by now. But it’s true. Knowing where your profits are coming from is key to understanding what works and what doesn’t in your business.
Look at your sales numbers and customer data to identify which products or services are your most (and least) profitable. This will help you focus on what works and eliminate what doesn’t.
By understanding which products and services are the most profitable, you can then focus on those areas and invest in them – while cutting back on products or services that don’t generate enough revenue.
Summary
By following these tips, you can ensure that your business remains lean and competitive in 2023.
Automate wherever you can, outsource any tasks that are not core to your operations, invest in quality without being cheap, learn how to say “no” and always know where your profits are coming from.
By doing so, you can keep your business lean and ensure that you remain profitable in the years ahead.
The challenge of keeping a business lean can be daunting, but with the right approach and strategy, it can be done. The key is to stay focused, remain strategic and have a long-term vision for success. The rewards are certainly worth it.
Book a free consultation here.
6 Mar 2023
As a small business owner, you will eventually want to scale up.
Scaling your business means growing it to a point where it can support more customers or clients, more employees, and ultimately make revenue.
However, attempting to scale too soon can spell disaster. Trying to scale before your business is ready can cause a loss of customers and employees, as well as serious financial problems.
So how do you know when it’s time to scale?
We’ve listed five key ways to tell whether or not you’re ready to take your business to the next level.
1 – Examine Your Current Business Model
Some business models are more scalable than others. What works for your business while you’re still relatively small might not work when you’re trying to accommodate more employees or satisfy a greater level of demand.
Take a close look at your current business model and ask yourself whether or not it can be adapted to a larger business. If not, you’ll need to come up with a new model that can support your growth.
Generally speaking, businesses that are more scalable have lower overheads and can generate a higher return on investment. The leaner and less labour-intensive your business is, the easier it will be to scale.
2 – Look at Your Customer Base
Another way to tell if you’re ready to scale is by looking at your customer base. Do you have a large enough customer base to support more employees and increased demand?
If your answer is no, then you need to focus on building up your customer base before you try to scale. A business can only grow as fast as its customer base.
It’s also important to consider whether there is the potential for your customer base to grow significantly. If you’re only catering to a small niche market, it might not be possible to scale your business without branching out into new markets.
3 – Make Sure You Have the Right Team in Place
A key part of being ready to scale is having the right team in place. As your business grows, you’ll need more employees to help with the increased workload.
But it’s not just about having more employees. It’s also about having the right employees. Make sure you have a team of people who are passionate about your business and who want to see it succeed.
You’ll also need to ensure that your team is equipped to handle a larger workload. Make sure you have systems and processes in place to help them work more efficiently.
And finally, you need to be sure that your team is able to work together effectively. Strong communication and collaboration are essential for any team, but they become even more important when you’re trying to scale.
4 – Assess Your Financial Situation
Scaling your business will require a significant investment of time and money. Before you take the plunge, you need to assess your financial situation to make sure you can afford it.
Take a close look at your revenue and expenses to see if you have the cash flow to support more employees and increased demand. You might need to invest in new equipment or make other changes to your infrastructure.
All of these things cost money, and just because your business is turning a profit doesn’t necessarily mean that you have the cash available to make these investments.
It’s also important to consider how you will finance your growth. Do you have the savings to cover the costs? Or will you need to take out a loan?
5 – Carefully Weigh Up the Pros and Cons
Finally, it’s important to have a realistic understanding of the pros and cons of scaling your business.
Scaling can be a great way to accelerate the growth of your business, but it’s not without its risks. Make sure you carefully weigh up the pros and cons before you make a decision.
The bottom line is that there is no one-size-fits-all answer to the question of whether or not you should scale your business. It depends on your specific situation and goals. But if you’re thoughtful and strategic about it, scaling can be a great way to take your business to the next level.
Final Thoughts
Scaling your business is a big decision. There’s no right or wrong answer, but there are some things you need to consider before you make a decision. It also may be the case that you’re not ready to scale right now, but that doesn’t mean you never will be.
Book a free consultation here, to discuss your needs and see whether it’s the right time to scale your business.
3 Mar 2023
At the start of a new tax year, it is important to know what changes will be made to taxes starting in April 2023. This will help you plan your business and personal finances for the coming months. We’ve made a list of the most important changes that businesses need to know about, along with some tips to help you stay on track.
Here’s a quick look at the tax changes for April 2023
- Individual Taxation, higher-income people would pay more in taxes.
- Dividend allowance lowering
- until April 2028, national insurance rates are locked.
- Corporate tax rate increases in business VAT
- reduced capital gains tax exemption amount per year.
- Frozen Norms for inheritance taxes
Individual Taxation
Higher Income people will pay more in Taxes
Starting on April 6, 2023, the income tax additional rate threshold (ART) will drop from £150,000 to £125,140. As soon as their income exceeds £125,140, more taxpayers will be subject to the higher rate of 45% of income tax.
Taxpayers in England, Wales, and Northern Ireland will be subject to the new threshold.
From April 2023, higher earnings in Scotland will also be subject to increased taxes. The top rate tax band in Scotland will similarly decrease, from £150,000 to £125,140, as stated in the Scottish Budget. After their income exceeds £125,140, Scottish taxpayers will likewise be subject to the highest rate of income tax beginning in April 2023.
The highest and higher rates of income tax in Scotland will each increase by 1p starting in April 2023. For Scottish taxpayers, the higher rate will rise to 42%, and the top rate will rise to 47%. The higher and additional rates will continue to be 40% and 45% for the remainder of the UK.
Consider tax-efficient pension saving as tax advice.
Two tax pitfalls await higher-rate taxpayers starting in April 2023:
You pay the additional rate of income tax, which is 45% (47% in Scotland) when your income surpasses £125,140.
Moreover, you are subject to an effective tax rate of about 60% if your income is between £100,000 and £125,140. This is because your personal allowance decreases by £1 for every £2 your income surpasses the £100,000 tax band.
Making charitable contributions and personal pension contributions may allow you to lower your tax exposure. You might also need to consult a licensed pension adviser for investing advice.
Reduced Dividend Allowed
Every year, people are given a dividend allowance, which means they only pay tax on dividend income that exceeds it.
From April 2023 through April 2024, the dividend limit will decrease from £2,000 to £1,000 and then to £500 in April 2024. Your income tax bracket determines how much tax you’ll pay on dividends beyond the dividend allowance.
Starting in April 2023, the following rates will be in effect:
Taxpayers at a basic rate of 8.75%
Taxpayers at the higher rate are contributing 33.75%.
Taxpayers at a higher rate, 39.35%
Make sure your compensation method is tax-efficient, according to tax advice.
Due to the decreased allowance, those who get dividend investment income and business owners who distribute profits will now pay greater taxes.
Stagnant Tax Rates
Taxpayers with low incomes will also have to pay more in taxes as a result of inflation due to the freezing of several tax breaks until 2028. Since the income tax personal exemption of £12,570 is frozen until 2028, basic rate taxpayers will be impacted since more of your income will effectively be taxed.
Does moving assets make your tax situation better?
You can avoid paying taxes by giving your spouse or civil partner any income-producing property you own in part or in full. Typically, for this to work, your gift must be an unconditional one made to your husband or civil partner, from whom you haven’t separated. Always seek professional guidance so that your unique circumstances can be examined before acting.
To reduce their tax liability, basic rate taxpayers may also be able to transfer £1,260 of their unused personal allowance to their spouse or civil partner. Only in cases where neither of you is a higher-rate taxpayer does this apply.
Until April 2028, National Insurance Rates are Locked
After last year’s rollercoaster, when the National Insurance Contribution (NIC) rates were altered in the middle of the year, they should be steady starting in April 2023. Both the Class 2 Lower Profits Threshold and the NIC Primary Threshold for employees will be frozen until April 2028.
Companies typically begin deducting 13.25% of Class 1 Secondary NICs from employee salaries of around £9,100. Moreover, this cut-off will stand until April 2028.
Can you claim the Employment Allowance? This is tax advice.
As qualifying enterprises can claim the Employment Allowance to lower their employer’s annual National Insurance bill by up to £5,000, you should check if this can be claimed.
In general, if you are a business and your employers’ Class 1 National Insurance liabilities were less than £100,000 in the prior tax year, you may be eligible to claim Employment Allowance. There are certain exclusions, the most significant of which is that you cannot make a claim if your business has just one employee who is paid more than the Class 1 National Insurance secondary threshold and who also serves as a director of the business.
Business Taxes Increase in the Corporate Tax Rate
The increase in corporate tax beginning in April 2023 will be the single biggest tax increase faced by UK firms.
The following rates will rise:
Where profits surpass £250,000, the primary corporation tax rate will rise to 25%.
Where profits are £50,000 or less, a new 19% “small profits rate” of corporation tax will be in effect.
Businesses with profits between £50,000 and £250,000 are eligible for marginal relief, which reduces their effective tax rate to 26.5% for profits in the margin (those between the upper and lower limits).
According to the number of companies that are related for tax purposes, the upper and lower tax limitations are decreased. Businesses will join forces if one controls the other or if both are controlled by the same party.
VAT
Beginning on April 1, 2024, the VAT registration and deregistration criteria will likewise be locked at £85,000 and £83,000, respectively, for an additional two years.
Reduced Capital Gains Tax Exemption Amount Per Year
The average person’s exemption from capital gains tax (CGT) will drop from £12,300 to £6,000 in April 2023 and then again to just £3,000 in April 2024. Anybody selling assets that are subject to CGT must account for any potential additional tax that results from the reduction in the allowance.
Use tax-efficient investing options as a tax-saving strategy.
It’s possible that you’ll have to pay CGT on any gains you make over the allowance if you hold qualifying investments outside of an ISA. The time is now to think about starting future savings in an ISA and possibly moving some investments there as well. Moving investments into an ISA, can count as a taxable event for CGT purposes, so you should assess your status before acting.
You should seek independent investment advice from a qualified financial adviser.
Freezing Thresholds for Inheritance Taxes
The £325,000 nil-rate band for inheritance tax (IHT) will remain unchanged until April 2028. The dwelling nil-rate band will also be locked at £175,000 in addition. A £2 million cap will be placed on the residence nil-rate band taper.
Consider an IHT review as tax advice.
Discuss your needs during a free consultation, available to book here.
20 Feb 2023
Cloud accounting software is becoming more and more popular, with many companies deciding to switch over. This type of software can really speed up and streamline your processes and give you a greater insight into your finances. In this article, we’re going to look at some of the ways that cloud accounting software can save you time and money.
1) Automated Invoicing
Cloud accounting software enables you to automate much of your invoicing process. This means you can get invoices out faster, which helps to improve your cash flow. You’ll also have a digital record of all the information on an invoice, so it’s easier to keep track of who has paid and who hasn’t. Furthermore, your software will be able to calculate and add late fees for you and send automatic reminders to clients who are yet to cough up.
2) Better Cash Flow Management
Managing cash flow is a vital part of running any business, but it can be difficult when you’re only using spreadsheets. With cloud accounting software, you’ll have access to much better tools for monitoring and assessing your company’s financial health. You’ll also save time because the automated invoicing features mentioned above mean you won’t have to waste hours chasing late-paying clients.
3) Expense Tracking
Another time saving feature of cloud accounting software is expense tracking. This feature enables you to keep track of all your expenses and log them into the system automatically. You can then compare your budget against your actual spending at any time so that you can see where money has been spent or saved.
4) Centralised Information
One of the best things about cloud accounting software is that it gives you a centralised view on all your accounts. This is really helpful, especially for companies who have branches in different cities or countries around the world. All this information will be available to employees wherever they are and whenever they need it, meaning everyone can work more efficiently and make fewer mistakes.
5) Real-Time Reporting
Another great benefit of cloud accounting software is real-time reporting. This means that you’ll be able to access your reports and information whenever you need it, so if something crops up or a decision needs to be made quickly, it’s right there at your fingertips. This enables you to make sage and snappy decisions about the future of your business.
6) Accessibility
Another benefit of cloud accounting software is accessibility. Thanks to cloud technology, you’ll be able to access all your accounts wherever and whenever you need to. Most major cloud accounting providers have mobile apps that enable employees to log expenses or update information whilst on the go.
7) Cloud Security
Finally, cloud accounting software provides you with more security than traditional desktop software does. All of your data is encrypted and backed up regularly so if something happens to one version of a file, there are always back-ups available which can be restored in mere minutes. You’ll have peace of mind knowing that your important data is safe and secure. Data breaches can cost businesses thousands – or even millions – of dollars, so this is a real advantage.
Conclusion
There are numerous benefits of cloud accounting software, and they impact your entire business. This technology gives you greater financial visibility and thus empowers you to take well-informed steps towards a stronger and more profitable business. Whether your business is well-established or just getting started, it will definitely benefit from the use of cloud accounting software.
Discuss your needs during a free consultation, available to book here.
17 Feb 2023
Bookkeeping is essential for tracking and understanding your business’s financial performance. It helps you better understand where your money is coming from and where it’s going, and empowers you to make informed decisions that will help your business succeed. It also helps you stay compliant with tax laws, manage budgets, and make better decisions about how to allocate resources.
Let’s take a deeper dive into how bookkeeping can be beneficial for your business.
1. Better Budgeting
Bookkeeping can help you create and manage accurate budgets. It allows you to assess how much money is coming in from customers, expenses, and other sources, and gives you a better understanding of where your business stands financially. With this information, you can create more effective budget plans that will help you jettison your business to success.
2. Accurate Financial Reports
Bookkeeping allows you to easily generate accurate financial reports that give you a better understanding of your business’s financial performance. This information can then be used to make more informed decisions about how to allocate resources, spot financial trends, and identify areas where you can save money.
3. Tax Compliance and Savings
Bookkeeping helps you ensure that you are in compliance with tax laws by providing accurate financial information. This allows you to avoid costly mistakes and potential penalties from the IRS and other regulatory agencies. Additionally, bookkeeping can help you save money by enabling you to take advantage of deductions and other tax benefits that apply to your specific business.
4. Cash Flow Management
Bookkeeping also helps you manage your cash flow more effectively. With accurate records of expenses and income, you can better plan for cash flow needs and avoid potential problems such as overdrafts or insufficient funds. This will help you make sure that your business has the money it needs to succeed.
5. Confidence
One key benefit of bookkeeping is that it can give you peace of mind. Knowing exactly where your business stands financially will give you the confidence to take risks and make decisions that will help your business grow and succeed.
6. Setting Targets and Goals
It’s difficult to set specific goals when you have no idea what your numbers are, but bookkeeping can help you identify your current financial performance and help you come up with realistic targets to strive towards. You’ll also be able to accurately measure your progress along the way because you’ll have the data you need to track your progress.
7. Organised Records
Unorganised records are a ticking time bomb. Bookkeeping helps your business by keeping records organised and up to date, enabling you to quickly access the financial information you need when you need it. This makes it easier to answer questions, identify trends, and make decisions that will help your business succeed.
If you let your records become too chaotic, you can be sure that your business won’t reach its potential. That’s why bookkeeping is so essential to the success of any business. With accurate and up-to-date financial information, you’ll be able to make better decisions and take advantage of every opportunity that comes your way.
Final Thoughts
As you can see, bookkeeping is an essential component of a successful business. It can help you stay compliant, manage budgets, and make better decisions. With accurate financial records, you’ll be able to take your business to the next level.
If you need help getting your bookkeeping in order, consider working with a professional bookkeeper or accountant to ensure accuracy and consistent record-keeping. With the right help and strategies in place, you can be sure that your business will be on its way to success.
Book a free consultation here, to discuss your needs, learn about our bookkeeping services and more.
