Category: Business Advice

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Should I Become a Limited Company?

Posted on | by Jade Donno

A common dilemma faced by many budding entrepreneurs and freelancers in the UK is: should I become a limited company? This question arises as a natural step in the growth journey of any small business or self-employed professional. But, deciding to incorporate a limited company is a crucial decision that can have far-reaching implications on various aspects of your business. Let’s break this down to help you make an informed decision.

Understanding Limited Companies

Firstly, it’s crucial to understand what becoming a limited company entails. It is a type of business structure where the company is an entity separate from its owners. This means that the company has its own legal identity, distinct from its directors (the people who manage the company) and shareholders (the people who own the company).

In the UK, limited companies can be categorised into private limited companies (Ltd), which cannot offer shares to the public, and public limited companies (plc), which can. For the purpose of this article, we will focus on private limited companies, as these are the most common choice for small businesses and freelancers.

Benefits of Becoming a Limited Company

Limited Liability

The primary advantage of incorporating a limited company is limited liability. In essence, if the company runs into financial trouble, the personal assets of the directors and shareholders are not at risk. The financial liability of the owners is limited to their investment in the company, providing a safety net against unforeseen business issues.

Tax Efficiency

Limited companies often enjoy more favourable tax rates than sole traders or partnerships in the UK. As a director, you can choose to take a combination of salary and dividends, the latter of which is taxed at a lower rate than income tax (dependent on company profits).

Credibility and Perception

Becoming a limited company can boost your business’s credibility. The perception of being a larger, more established entity can be beneficial in negotiating contracts and attracting clients or investors.

Considerations Before Incorporating

While the benefits are enticing, there are some important considerations to bear in mind before deciding, “Yes, I should become a limited company.”

Administrative Responsibilities

Limited companies face more stringent reporting requirements, including submitting annual accounts and reports to Companies House. This can increase your administrative burden and necessitate hiring an accountant.

Privacy

As a limited company, your business’s details, including director names and registered office addresses, become public record. Some business owners may not feel comfortable with this level of exposure.

Difficulty in Withdrawing Money

Unlike sole traders who can withdraw cash from their business without any tax implications, withdrawing money from a limited company is not as straightforward and can be subject to taxes.

Making the Decision

Ultimately, the decision to become a limited company is a personal one that hinges on your business’s specific circumstances. It’s essential to balance the potential benefits against the administrative, financial, and legal implications that come with incorporating.

Take into account factors such as the nature of your business, financial prospects, and tolerance for risk and administrative work. You should also consult with an accountant or business consultant to make sure you understand all the implications.

Should I become a limited company? It’s a question that deserves careful consideration. Done right, it could be the launchpad that takes your business to the next level. But, it’s vital to ensure you’re making the right move for the right reasons. So, take your time, do your research, and make the choice that best suits your business aspirations.

confused person

Top 10 “I didn’t know that” questions answered

Posted on | by Jade Donno | Leave a Comment on Top 10 “I didn’t know that” questions answered

I didn’t know that?

This is a phrase we hear a lot, especially when someone sets up a limited company and especially in January when personal tax returns are due.

Here are our top 10 I didn’t know that questions

1 . I didn’t know that I needed a separate bank account?

  Yes, a limited company is its own entity and funds held in a personal account will be deemed personal income and could attract tax. Therefor you will need to set up a business bank account for your limited company.

2. I didn’t know I had to register to pay myself?

Yes you need to register with HMRC for a PAYE reference and deduct tax and NI on your earnings.  Note single director companies do not get the £5,000 employers NIC relief.

3. I didn’t know I paid tax on dividends?

Yes, you pay tax on dividends and these are declared on your personal tax return.  

4. I didn’t know you had to make a profit to declare dividends?

Yes, dividends are a distribution of profits and not an expense.  You need to prepare a profit and loss account, work our corporation tax payable and then you can declare a dividend.

5. I didn’t know I needed paperwork for the dividend?

Yes, you need a board minute and dividend voucher prepared on the day that you declared the dividend.  Backdating to ‘FIT’ your accounts is illegal.

6. I didn’t know I had to keep accounting records? 

Yes, HMRC require you to keep accounting records and the Companies Act.  We recommend Xero as an accounting software provider.  Giving over a years bank statements and records to prepare is expensive and you will have no idea of dividends you can vote if any.

7. I didn’t know I paid tax on monies taken from the company? 

Yes, if you have borrowed from your company you will pay tax on your Corporation Tax Return.  This is a holding tax that will be repaid once you are back in funds with the company.

8. I didn’t know my company had to register for VAT? 

Yes, if you exceed £85,000 in a rolling 12 months you must register for VAT and in some cases it is better if you do register for VAT.

9. I didn’t know I couldn’t run my car through the business?  

You can run the car through the business BUT it will be classed as a benefit in kind and you will pay tax on the benefit.  Some cars are much better through a Limited company than others.  Electric cars are a great benefit.

10. I didn’t know it was so complicated? 

This is where a good accountant will help you manage your limited company so that you comply with the companies act, HMRC and help move your business forwards.

 

Take a look at this video:

Boost your productivity

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Why you need to ditch perfectionism and embrace failure!

Everyone wants to be successful, but there’s a difference between working hard and striving for perfection. When we’re too focused on getting everything right, it can harm our productivity levels; and when we’re less productive, it’s easy to feel worn out or exhausted every day. We may also end up stuck in a career rut because we think that “doing more” is the answer when really what we need is just “to do something different.”

If this sounds like you, read on. Here is how ditching perfectionism and embracing failure can help you get back on track again!

Strive for ‘done,’ rather than perfect

While it may sound strange to say that you should be aiming for ‘good enough’ rather than perfect, there is a reason for it.

If you’re experiencing burnout or you’re feeling lost in your work, striving for ‘perfect’ is only going to put more unnecessary pressure on yourself. Studies have shown that perfectionism actually tends to result in less productive work too, so just focus on getting the work done for a while (at least until you’re more in control of your workload).

If you do this, you’ll soon see that your quality of work won’t drop as drastically as you first thought AND you’ll see continued growth and progress again. Why? Because when you ditch perfectionism, you make room for improvement and growth.

Only take on what you can manage

You may think that you have to do it all, but you don’t. At least not all at the same time. When we try to do everything, we end up doing a lot of things badly.

It’s hard to see when we’re overpromising, especially when we have our own ideas of what we should be able to handle, so try to be easier on yourself. If you see ‘not being able to juggle too many balls at once’ as a failure, then reframe it! Your strength maybe time management and prioritisation instead (which still means that you can juggle multiple things, just over a more reasonable period of time).

Start managing your own diary and let clients know when they can expect their work to be done. You’ll find that most clients can wait for their work and you’ll have more time and space to do a better job.

Delegate and learn to say ‘no’

Delegating low-value tasks isn’t a failure (remember, you don’t have to do everything yourself). The same goes for saying ‘no’ once in a while. In fact, it’s encouraged. If these are fears of yours, then it’s time to embrace them.

Knowing how much you can take on and letting go of control are two very difficult things to master. When you do, however, you will see significant changes in your productivity and quality of work.

Silence that inner voice

We all have that negative inner voice that criticises us, and it is this voice that forces us to seek perfection. As we mentioned previously, always striving for perfection decreases productivity, and when we are less productive, we feel like we are failing and our inner voice just keeps piling on. It’s a whole negative spiral.

So what can we do to rectify this?

First, accept that you don’t have to always be working at 110%. And if you’re not, it doesn’t mean that you’re not working hard enough. Everybody works differently and that’s okay, so stop being too hard on yourself.

Secondly, ignore that voice in your head and accept that it is okay to be human. Some days, you won’t be able to work as hard and that’s fine. Not pushing yourself too much on those days will ensure that you avoid burnout and will ensure your productivity in the long run.

And lastly, if you’re afraid of failure or limitations, embrace them anyway. Mistakes and obstacles are the keys to innovation, so these are the moments where you have the opportunity to learn and grow the most.

Customer Research: The Key to Keeping Up With Your Clients’ Needs

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As our businesses grow and evolve, so do the needs of our clients. It is important that our customers always remain at the centre of our companies, otherwise our efforts will be in vain.

A great way of ensuring that your business is always meeting your client’s needs is by constantly updating your customer information!

Throughout this blog, we will discuss it all – from the importance of client information to different research methods and data storage.

Why is gathering customer information so important?

Customer information is important for a myriad of reasons. It helps us understand our client’s needs, which products or services generate the most income and, most importantly, how to improve our customer experience.

By leveraging this information we can refine our marketing strategies, keep up with our competitors, offer personalised services and improve customer loyalty by a staggering 64%!

Do consumers actually care about the customer experience?

Believe it or not, 80% of consumers claim that the customer experience is ‘just as important’ as the quality of products and services you provide. Overlooking customer research simply isn’t an option! After all, who’s more qualified to teach you how to deliver the best customer service than your clientele?

What client information should you collect?

More is more in this instance. So instead of spending hours specifying all the information you need, we’re going to outline the four types of data you should collect to gain a detailed understanding of your audience:

Identity Data

Identity Data is used to identify specific clients and customers. Some of the information you would need to collect would include:

  • Names
  • Physical addresses
  • Email addresses
  • Mobile numbers

This information will allow you to contact customers, ask for their insight and send them marketing materials – with their consent.

Descriptive Data

Descriptive data asks for more personal information about your clients so you can gain a greater insight into your audience and the demographics you’re reaching. For example, you may ask about their:

  • Age
  • Gender
  • Career or education
  • Marital or familial status
Qualitative Data

Now, this is where we get into the really good stuff. Qualitative data teaches you all about your customer’s beliefs, behaviours and motivations in relation to their consumer habits. This is your opportunity to ask specific questions like:

  • What do you enjoy about our product/services?
  • How could we improve our customer service?
  • Why did you choose our company over our competitors?
  • Would you recommend us to a friend or family member?
  • How can we bring you additional value?
Quantitative Data

Collecting quantitative data is a great way to understand how your customers interact with your business. Its primary function is to track marketing trends and consumer patterns. For example, some of the analytics you could track include:

  • How often customers visit your website
  • The value of each transaction
  • How often they engage with your social media

How should you collect and store your client information?

There are several ways you can go about collecting customer information. Our top recommendations include:

  • Feedback surveys
  • Interacting on social media
  • Website tracking
  • Subscription services

We also strongly suggest investing in a CRM system. Some CRM systems focus solely on storing your client information, whilst others also offer sales and marketing automation to help put your research into practice. Whether you opt for the former or the latter, an effective CRM system can help you:

  • Streamline your communications
  • Optimise your marketing strategies
  • Improve customer retention
  • Increase profits

Keep up with your customers’ needs!

If you want to optimise your services, keep up with competitors and continue fulfilling your clients’ needs, you must invest your time and resources into your customer research.

Loyal clients are the basis of every successful business, so don’t underestimate the importance of understanding your audience! Instead start valuing their insight as much as you value their business.

13 Ways an Accountant Can Help a Small Business Owner

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There are two huge mistakes that many start-ups or small business owners make. The first one is trying to manage their own accounting system. This is often done incorrectly which can hurt the business in the long-term. The second mistake is assuming that an accountant is only good for managing accounts and filing Tax or VAT returns.
An accountant is a financial guru and an all-around business advisor all in one. Accountants are an incredibly valuable member of any small business team as they can offer a lot more than just accounting to small business owners. Here are 13 ways accountants can help:

1) They can help you go from business idea to start up

They will give you advice on what you need to create the foundation for a successful business e.g. determining the best business structure, creating your business plan, opening a business bank account etc.

2) They can assist with the financial analysis in your business plan

They can also help with loan applications and forecasting.

3) They analyse your finances to determine where your business’ money is going

They can then advise you on where to make improvements in your processes and cash flow so your business can scale and grow.

4) They will explain your financial data so you can make financial decisions with confidence

A good accountant will break it down so you understand the ins and outs of your business at all times.

5) They close out your books and create end-of-year financial reports

With your reports, an accountant will recommend changes to budgets or forecasts.

6) They compile and submit your taxes and financial reports to HMRC and Companies House

As well as submitting, they can also calculate VAT, provide advice on estimated tax payments, and provide guidance.

7) They make sure that your accounting procedures comply with government regulations.

Legislation changes all the time. An accountant keeps up to date with these so they can check your company’s tax position and keep you compliant.

8) They oversee your company payroll and payment process

They can help you streamline your business processes to work smarter, not harder.

9) They can help you streamline your business processes to work smarter, not harder

They can provide advice on the type of accounting software that’s suitable for your business, how to track your expenses, and also invoicing and payroll. More time means more earning potential!

10) They can identify risks in financial transactions to prevent fraud

Many business owners want to identify investment opportunities too. An accountant can provide advice on this and check whether an investment is solid.

11) They can help you identify areas for growth in your business as well as ways to save money

By looking at cash flow patterns, inventory management, your pricing, business financing.

12) They will work with you to create a business budget and stay on track

Every business owner needs a budget to support their business goals. An accountant can actively help with this.

13) They can advise you on all the big things

Reports, taxes, audits, business strategy, you name it and they can probably help you with it. Need advice on property or equipment leasing and purchase? Need guidance or resources to assist with scaling the business? Guess who can help – Accountants!

Accountants are key to business success, wherever you are on your business journey

These are just some of the ways that accountants can work with you to support your business. Whether you’re launching a start-up, you’re a small business owner who needs help with running the business day-to-day or you’re wanting to really scale your business, an accountant can provide essential advice and guidance, every step of the way.

Why we love Xero!

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It’s no secret that we love Xero! It is the accounting software that we recommend to absolutely all of our clients. This is because we truly believe that it offers better features and useability than its competitors. Here are just some of the reasons why we love Xero!

1) Easy to use

Xero has made its interface very user-friendly and we find it easy to use on our end as well. This also makes it easy for us to teach you how to use it, to make sure that you get the best out of it and make sure your data is always accurate and up to date! We offer Xero training sessions to all of our clients at the onboarding stage so we can make sure you start off with it well, especially if you have never used it before.  Multiple users can be added who can all access the software at the same time.  You can also have different access levels for different team members so individuals can access or be restricted from certain parts of the software as appropriate.

2) Up to date reports

Using Xero means you will be able to access up-to-date reports that make it easy to understand how your business is doing. These are also able to be tailored to your specific needs for your company.

3) Cloud accounting

As with the majority of the other products that we love, Xero is cloud based! This means there is no need to save your documents to your PC and your data is backed up automatically and securely so you will never lose it. This also means that it can be accessed anywhere at any time, either via the web browser or the app.

4) Automatically brings in bank feeds

Xero can be set up so that it automatically brings in bank feeds from your business bank accounts and credit cards so your transactions are automatically bought into the software daily.  This limits the need for manual entries and means your figures are up to date in real time. This makes it easy for our bookkeepers as well as we won’t have to ask you for statements!

For a list of available bank feeds please see here.

We can help you set up your bank feed if you need, please just get in touch.

5) Integrations with other software

Xero also has over 1000 different apps, add-ons and integrations with software such as Dext, GoCardless, Stripe, Vend, Square, PayPal and more. Many of these apps can be set up to automate time-consuming tasks to make your admin easier!

If you need any help with setting up apps and integrations with Xero please get in touch.

6) Ahead of the crowd

Xero is typically always one step ahead of its closest competitors.  This can be in terms of reporting or keeping up with change in statutory requirements and legislation such as Making Tax Digital, Domestic Reverse Charge and even the Covid Furlough Scheme. It is constantly evolving and adding new features, particularly based on customer feedback on what features users would like to see implemented or ways existing features can be improved.

If you would like to find out more about Xero, transfer over from your existing software or try a free trial or demo please contact us so we can discuss!

7 ways to have the right mindset for growth during a recession

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A fixed mindset is thinking that the recession means business stops and clients don’t want to spend money.
A growth mindset is using this recession as an opportunity to adapt and do things differently.
You bees the second mindset if you want to grow your firm doing the recession.
The only thing holding you and your firm back from growing right now is you. To help you move your practice forward, both now during the pandemic and during any future recessions, here are 7 mindset shifts you need to make.

1) Make peace with your reality

Suffering is what happens when you resist what is already happening. The sooner you confront the current reality and accept it, the quicker you can move past it.

2) Hold yourself accountable

If you want to grow, you need to think of the acronym R.O.A.D. You need to take Responsibility for the choices you’ve made, you need to take Ownership of where you want to go, you need to start taking Action, and you need to be Decisive. When making your strategy plan, be 100% accountable for putting it into action.

3) Don’t compare yourself to others

Some businesses are struggling, others are thriving. Don’t compare yourself to either. Every business owner, firm, and situation is different, so don’t disrupt your focus with doubt.

4) Prioritise delivering value

Concentrate on delivering exceptional service to your current clients. How can you offer extra value during this time? This will make you invaluable and it will ensure that you stand out from your competitors.

5) Focus on your strengths, not your ‘failures’

What work are you good at? What do you love to do the most? Which clients are your favourites to work with? Being positive during this time is essential, so focus on what you love and reflect on your principles and values. Rediscovering why you do what you do is very powerful when it comes to self-motivation and drive.

6) Fail fast and achieve quickly

Inaction is the worst thing you can do, not trying something and failing. During a time of such change, don’t procrastinate and don’t be a perfectionist. Take action, fail fast, learn from your mistakes, and concentrate on getting there first (not doing it perfectly and getting there last).

7) Be grateful and become self-aware

Practice gratitude every day by thinking about what you are grateful for both now and in your future. Also, take time to reflect and to rediscover your purpose. If you’re confident and happy, you will attract similar clients.

Adapt AND adopt

We have all had to adapt to some degree during the pandemic, for example, being forced to adapt to working from home. Changes such as these are necessary to our ‘survival’ during this time.
With that being said, however, it is the accountants who have both adapted and adopted changes of their own, who have thrived. These are the individuals who make quick and effective decisions, who take responsibility for changing their situation, and who take action.
Anyone can grow their firm during a recession, they just have to have the right mindset.

Starting your own business after redundancy

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Facing redundancy can be incredibly challenging, but it could also be the perfect time to start a brand new career based on your interests, your lifestyle and your aspirations.
Does this sound too good to be true?
With these five steps, we can help you transform your redundancy package into your very own startup:

1) Take advantage of your notice period

Typically, you’ll need to work a notice period. Instead of worrying about what comes next, use this time to start planning your new venture!
Dive into research, enrol in training and network as much as possible. The sooner you can start, the better! After all, wouldn’t you prefer to plan for your future whilst you’re still on the payroll?

2) Develop a business plan

Success is all about strategy, so it is important to develop a business plan.
Every business plan will look slightly different, but the main areas you want to focus on are the:

  • Executive summary – create a brief overview of your business detailing what services you offer and what you intend to achieve.
  • Management bio – this is your opportunity to introduce yourself, your values and your professional experience.
  • Marketing plan – identify your target audience, USP and market competitors before explaining how you intend to attract your desired audience.
  • Financial plan – because you’re just starting out, your financial plan will be primarily made up of projections (sales projections, expensive projections, cash flow projections etc.). Make sure you’re thorough with your research if you intend to achieve accurate estimates.

Your business plan will become the blueprint for your company, so the more information you can include, the better – particularly if you want to attract investors!

3) Address any legalities

To establish a legitimate business, you need to fulfil certain legal requirements. Now, these requirements may vary depending on your business model and industry, so it’s always worth checking whether you need to obtain a specific type of permit or insurance.
You can find these answers by visiting the government website or checking with your relevant industry bodies.
It is also worth hiring an accountant early on to advise you on the financial aspect of your business.

4) Open a business bank account

This next point is directed specifically to our sole traders. Although you don’t have to open a business account, we strongly suggest you do. It will make your bookkeeping 10x easier! So unless you want to waste your time separating your expenses and risk receiving a penalty, you should seriously consider setting up a business bank account.
If you are starting a limited company this is also something you will need to do, however it is essential rather than it just being strongly advised.

5) Set yourself boundaries

Starting a business is an exciting endeavour. However, it can become all-consuming. So for our final point we wanted to discuss the importance of setting yourself boundaries and practising self-care.
Firstly, give yourself some grace. Redundancy is incredibly difficult to navigate, so try not to be too hard on yourself – especially during those early days.
And secondly, start as you mean to go on. Give yourself lunch breaks, take time off and allow yourself opportunities to relax. Only then can you avoid burnout and achieve sustainable growth.

When life hands you lemons, make lemonade


No one wants to be made redundant – but that doesn’t mean it has to be all doom and gloom. Instead, this could be the start of your exciting adventure into entrepreneurship! So take the chance, pursue your passion and totally transform your career. You may just find redundancy works in your favour.

4 ways your accountant and bookkeeper can help you run your construction business more efficiently

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Are you struggling with your bookkeeping? You’re not alone.

Bookkeeping in the construction industry is incredibly complex! So we wanted to share some of the ways an accountant can save you a shed load of stress whilst also improving the efficiency of your business!

Here are 4 ways your accountant can help you run your construction business more efficiently:

1) Make your business paperless

There are many benefits to running a paperless business. It’s better for the environment, it saves you so much time, and you can rest assured knowing all your documents are stored safely on the cloud.

However, if digitising your documents fills you with dread, you can always ask your accountant to do it for you! They will set you up with all the relevant software such as Dext, so you can control any admin task from your phone or computer.

Not to mention, going digital will also ensure your business remains up to date with the latest MTD legislation.

2) Outsource your bookkeeping

Bookkeeping is a long and arduous task for any business – but that challenge is only amplified for those in the construction industry. Monitoring job costings, biddings and progress billing on top of the usual accounts payable and receivable is a daunting task indeed.

So why not let the experts handle it? Their knowledge and expertise will ensure your books are always accurate and compliant with the latest tax rules. So, you can stop stressing over spreadsheets and start focusing on what you do best!

3) Organise digital payments

Another way your accountant can improve the efficiency of your business is by organising digital payments! They can provide you with a card machine to accept on-site payments, supply software like Xero to create online quotes and invoices, or even facilitate P2P programmes like Paypal.

But what are the benefits?

Firstly, digital payments are more convenient, so (in some cases) this can help you win more work. They can also significantly improve your cash flow whilst allowing you to receive real-time updates on your finances.

As a result, you’re able to gain a greater understanding of your finances, make more informed business decisions, and still save time!

4) Offer financial advice

Who better to offer you financial advice than your very own accountant? After all, they will understand your books better than anybody – so take advantage of their expertise!

Your accountant can provide invaluable insight into your finances, create accurate reports and forecasts, and use this information to advise you on future investments and business strategies.

So what are you waiting for? Ask your accountant for financial advice and start boosting your business!

Let the experts look after your books!

There are so many benefits to hiring an accountant and bookkeeper. But perhaps the most significant benefit is how much time they can save you!

Instead of stressing over spreadsheets or second-guessing your calculations, you can use this time to focus on what you do best. So save yourself the hassle and start playing to your strengths – we promise the ROI will be second to none.

Hiring an accountant could save your business!

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A lot of new businesses fail. A lot of old businesses fail. A lot of previously successful businesses fail. Why? Usually, it comes down to issues around finances.

If you’re starting a new business, or if you’ve been in business for years and are trying to grow your team and scale your company, hiring an accountant can help. Here’s how.

1) They help you become more tax-efficient

Tax isn’t easy. Legislation changes all the time and any delays or mistakes could be costly. With an accountant filing your taxes for you, you can have the peace of mind that it is all being done correctly and on time. Not only that, but it saves you a lot of time and resources AND it saves you money. Accountants can reduce your tax burden by identifying opportunities for deductions, and they can help you avoid any government fines.

2) They mitigate the risk of financial mistakes

Accountants know how to identify financial risks and avoid them before they become major problems. What this means for you is that you’ll never spend money you don’t have, you will save money in all the areas you can, and you’ll be more aware and better equipped to stick to a proper budget. Fewer to no financial mistakes means minimal losses and more profit!

3) They actively help you to grow your business

If you get an accountant on board in the early stages of your business, they will help you to develop a plan for growing your business in the right way. Not only that, but they will also ensure that your finances are handled correctly from the beginning so that it doesn’t take over everything else in the future. As your business grows, they will start to provide advice in other areas such as budgeting and financing; payroll and recruitment, cashflow forecasting and investments, and business strategy. They will work with you to ensure you have the financial capabilities and processes needed to work towards your business goals.

Survive and thrive!

Most new businesses fail because of financial issues, so don’t make the same mistake. Hire an accountant as early as possible and get the guidance and expertise needed to take your business to the next level. They will not only help you save money, but they can help you make money as your business grows too.