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Accountants are often seen as guardians of tax and compliance. However, their expertise extends far beyond these areas.

They can act as problem solvers, assisting with a range of tasks that can set the stage for a smooth and profitable business operation. Here are eight ways your accountant can help your business flourish:

Assisting with business formation 

Launching a new business is never straightforward, and there can be bumps in the road that may not become apparent until it is too late.

The structure of your business, whether it is as a sole trader, partnership, or company, comes with unique tax obligations, paperwork, and, potentially, personal liabilities.

An accountant can guide you in choosing the most suitable structure for your business, potentially saving you significant time and money.

Guiding business acquisitions or sales 

If you are considering selling your business or acquiring a new one, consulting with your accountant should be your first step.

Accountants can assist with business valuations, develop exit strategies, and compile the necessary financial reports and documents to ensure you make informed decisions.

They can also help minimise costs and protect you from entering into deals that will not benefit you in the long run.

Improving cash flow 

Inadequate cash flow management is a common cause of business failure. Your accountant can help by conducting a comprehensive business analysis, rebalancing your budget and debts, optimising your cash flow, and building cash flow forecasts.

By helping you understand your financial obligations and adjusting the way funds are used in the business, you can avoid disrupting relationships with suppliers and staff, ensuring your business operates as smoothly as possible.

Streamlining business operations 

Decisions that may seem straightforward can become critical when they involve financial considerations.

Accountants can assist with decisions such as whether to buy or lease equipment, where to rent office space, and how to evaluate supplier terms and conditions.

They can help price your products to maximise profit and reach a broader customer base. Accountants can also identify underperforming areas in the business and suggest potential expansion opportunities.

Implementing cloud software 

Your accountant can help automate many of your business’s monthly bookkeeping tasks and establish an invoicing system that provides a clear overview of paid and unpaid invoices using the latest cloud accounting packages.

This intelligent software, such as Xero, Sage or QuickBooks, can even send reminder emails to clients about unpaid invoices, saving you time and helping you stay on top of your finances.

Networking 

Effective accountants build relationships with other successful businesses. If you are seeking suppliers or investors, your accountant may be able to connect you with the right people.

Securing funding 

At some point in the life of a successful business, additional financing may be necessary.

Whether it is securing a loan to navigate challenging times or attracting investors for essential expansion, obtaining this funding will require well-structured and clear financials.

Your accountant can help you structure your investment proposals and loan applications in a way that appeals to investors, showcasing your business and increasing the likelihood of your funding efforts succeeding.

Managing inventory 

Daily inventory management can be challenging. However, your financial records can provide your accountant with valuable insights into your stock room operations.

Your accountant can analyse trends over time and suggest necessary changes to ensure peak operational efficiency.

The role of an accountant can extend far beyond just assisting with taxes.

By helping you in every aspect of your business, your accountant can help you sidestep various challenges and contribute to the creation of a successful, efficient, and streamlined business.

If you would like to know more about how we can help your business flourish, please contact us today. 

The High-Income Child Benefit Charge (HICBC) is a tax that affects households where at least one person with parental responsibility has a taxable income exceeding £50,000.

This charge applies regardless of who in the household receives the child benefit, and it is payable by the household’s highest earner.

The highest earner may have to pay back some or all of the child benefit received during each tax year.

The current scenario 

The HICBC has been a source of confusion for taxpayers since its introduction in 2013.

Under the current rules, the highest earner in a household affected by the HICBC must register for Self-Assessment and submit tax returns every year to pay the charge.

This requirement can be perplexing for people with otherwise simple, straightforward tax affairs via PAYE, who may be unaware that they need to file a separate personal tax return because of the HICBC.

Proposed changes

The Government, recognising the complexities of the current system, has announced plans to simplify the process for customers liable to the HICBC.

The proposed changes, as outlined in a recent legislation day documentation, include deducting the HICBC directly from salaries via the PAYE system.

This move aims to eliminate the need for those affected by the HICBC to register for Self-Assessment, thereby reducing administrative burdens for taxpayers and HMRC alike.

However, the specifics of how this new system would work in practice or the notification process for taxpayers are yet to be disclosed.

Advice for handling the HICBC

While further details on the proposed changes are still to come to light, it is crucial for taxpayers to understand their obligations under the current system.

If you, your partner, or anyone else in your household, earns over £50,000 and you are receiving child benefit, the highest earner will be liable for the HICBC.

You must, therefore, continue to register for Self-Assessment and submit a tax return each year to pay the charge.

The proposed changes to the HICBC system aim to simplify the process for taxpayers.

However, until these changes are implemented, it is essential to understand your current obligations and seek professional advice if needed.

If you are unsure about your tax obligations or how to handle the HICBC please contact us today.

The Government recently named over 200 companies for failing to pay the national minimum wage (NMW).

The list includes firms of all sizes and various sectors. Some notable brands include WH Smith, Argos, and Marks & Spencer.

Those named were found to have failed to pay their workers almost £5 million and were told to reimburse more than 63,000 workers, and together pay £7 million in fines to HM Revenue & Customs (HMRC).

Common breaches

The most common breaches appear to be either unintentional or have already been resolved.

Two-fifths (39 per cent) of the firms were on the list for deducting pay from workers’ wages and failing to pay workers correctly for their working time. Another 21 per cent were on the list for paying the incorrect apprenticeship rate.

In previous years, other high-profile names such as Pret A Manger, John Lewis, and The Body Shop have also appeared on the Government’s list as a result of minimum wage underpayments.

The biggest violations at the time included:

• 37 per cent of the firms failing to correctly deduct pay from wages for things such as uniforms and expenses
• 29 per cent failing to pay working time, such as mandatory training, trial shifts, and travel time
• 16 per cent failing to pay apprentices the correct rate.

Additional factors

In addition to the above, there are several other factors that contribute to companies failing to pay the NMW.

This includes companies incorrectly classifying their workers, and registering them as self-employed instead of employees, which can lead to underpayment.

Salary sacrifice schemes can also lead to NMW violations. HMRC considers post-sacrifice pay as what counts for NMW.

If an employee sacrifices part of their salary for benefits, such as childcare or a cycle-to-work scheme, the employer must look at their pay after deductions to ensure it still meets the NMW.

Some companies fail to pay workers for the time spent travelling between jobs, which is a common reason for not meeting the legal minimum wage.

Deducting money from pay for things like uniforms, tools, or other employee benefits schemes can also reduce take-home pay and lead to NMW violations.

There are also instances when employers fail to pay for overtime, meaning workers are not paid for all the time they have worked.

Additionally, some companies fail to correctly update workers’ pay to the correct rate of NMW or NLW due to annual rate rises or significant birthdays when their rate changes.

Unintentional errors

Most of the major brands have claimed that the errors were unintentional. For instance, WH Smith misinterpreted rules around uniforms, having asked staff to wear specific-coloured trousers, skirts, and shoes without reimbursing them for it.

Marks & Spencer pointed to an unintentional technical issue from four years ago that resulted in a pay dispute for temporary employees.

Sainsbury’s, which owns Argos, was informed that a payroll error that was discovered in 2018 had affected some Argos store colleagues and drivers and dated back to 2012, before Sainsbury’s acquired Argos.

How to avoid similar mistakes

The majority of the time, employers do not know they are violating the NMW since they are not keeping adequate records.

It is important for employers to understand how statutory wage regulations apply to their workers.

Time spent on call at the workplace, travelling for work, or attending work-related conferences and training courses all count as working time for the regulations; however, some employers fail to include this time when calculating wages.

Employers also need to have the proper systems in place to raise staff members’ wages as they age, but failing to do so could result in employers finding themselves on the receiving end of an employment tribunal claim and receiving substantial penalties.

If you would like assistance to ensure your business is keeping up to date with NMW, please contact us today. 

New research from wealth management firm Evelyn Partners has revealed that the majority of business owners with companies that earn more than £5 million annually are preparing for an exit.

With 65 per cent of UK business owners contemplating the sale of their company, and almost half intending to do so within the next year, the reasons behind these accelerated plans vary.

The primary motivator seems to be the looming General Election within the next 15 months, which has instilled concerns about a potential change in Government and consequential alterations to taxation. This political uncertainty has prompted a quarter of business owners to fast forward their exit plans.

Another significant reason for considering the sale of a business is the difficulty of accessing long-term capital and investment. Increasingly strict conditions for financing have pushed one in four to contemplate selling.

The complications surrounding post-Brexit trade arrangements and the effects of high inflation have also pushed many business owners to sell.

With inflation driving up the cost of labour, energy, and materials, about 23 per cent of business owners have chosen to sell their businesses for this reason.

Personal finance challenges also factor into this trend, as business owners look to liquidate the equity in their businesses.

However, about 36 per cent have chosen to delay their exit plans in hopes of obtaining a better price for their business.

The preferred exit strategy for these businesses is selling to private equity. In fact, 20 per cent of business owners are looking to sell to private equity, with 11 per cent of them aiming to sell a minority stake, while nine per cent are planning to sell a majority stake.

Employee ownership trusts are also gaining popularity, with 18 per cent of business owners considering this route.

Are you a business owner who has considered an exit strategy? Please contact us today to find out how we can assist you.

To find out more, please click here.