Category: Partnerships

How to preserve your cashflow during Covid-19

How to preserve your cashflow during COVID-19 crisis

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How to preserve your cashflow during COVID-19

As the saying goes, turnover is vanity, profit is sanity and cash flow is king. And never has that saying been ever truer. Use this tips sheet to help you preserve your cash flow so you are ready and able to trade again as normal when the restrictions lift.

Tip 1: Know when you are going to run out of cash

It is really easy to get caught up in hysteria and believe that your business is going to go bust. When we recently spoke with an insolvency practitioner, they told us that only 5% of the calls they are receiving at the moment are for businesses that are genuinely insolvent. If you haven’t already, it’s time to look at how long your cash will last if the lockdown restrictions remain. (If you need help with this, then let us know) When you know how long your cash will last you then you can take sensible decisions in regards to your business.

Money bag

Tip 2: Make sure your books are up to date

Book

I know we accountants are always telling you to keep your books up to date. But it now more important than ever to know the true picture of your finances. If you don’t know what you owe and what is owed to you then, you can’t take the right decisions. For those of you still relying on spreadsheets or desktop software for your books, now is the time to go onto the cloud. We, as a firm, can’t easily advise you if we are looking at out of date figures. And the benefit of the cloud is we can see exactly what you can see.

Tip 3: Look to take advantage of all the government financial help which is available right now

The best type of borrowing is the borrowing you don’t have to pay back. And there are grants worth £10k or £25k for most small businesses with premises who pay rates or who get small business rates relief. If you haven’t already claimed your grant from your local authority then give us a call. Once you’ve checked this look at the following to see if your business is eligible:

  • Deferment of VAT payments
  • Coronavirus Job Retention Scheme
  • Paid sick pay
  • Business rates relief
  • Accessing a Coronavirus Business Interruption Loan

Tip 4: Analyse your business costs and pare it back to the bare essentials

Now is the time to examine your overheads. What exactly can you eliminate or cut back on and still be, either able to trade, or be able to trade when the restrictions are lifted?

pound symbol

Tip 5: Do you have an opportunity to reduce your wage bill?

arrows pointing inwards

Wages are often a business’s biggest costs. Which of your employees can you Furlough or make redundant in order to save costs? If you believe you wouldn’t be able to employ your whole team again after the lockdown restrictions are lifted, you may be better off in making them redundant now.

Tip 6: Prioritise actions which are the quickest ways to generate cash

Normally they are in this order:

  • Chase late payers
  • Change your payment terms to get paid quicker with current customers or clients
  • Give long-term customers/clients the opportunity to pay in advance for work (potentially with a discount added?)
  • Bill any customer/client with outstanding work which can be invoiced
  • Focus your sales team on your warm leads
  • Consider what can be your business equivalent of a ‘toilet roll’, i.e. what can you change about the product/service you deliver or how you deliver it which will make it an ‘in-demand’ item?

With all these cash flow tips, we can help you take balanced and rational decisions about what to do to preserve your cash flow in these very difficult trading conditions.

Ice cream

How to keep employees motivated when working virtually

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How to keep employees motivated when working virtually.

Working virtually for a day or two is often a welcome relief from the noise and distractions of the office. But after a while, as sure as the sun rises in the morning, the novelty will wear off. This tip sheet is there to help you keep your team happy, healthy and motivated regardless of whether they are in the office or at home.

Tip 1: Regularly pick up the phone to talk to employees

Imagine you were back in the office. You’d probably now and then circulate around the office and have a natter with your team. Of course, with everyone working virtually, this just isn’t feasible to do. So, make a point of picking up the phone to speak with a team member or two each day, just to see how they are.

Old telephone

Tip 2: Keep an eye out for who has gone quiet

In these uncertain times many people process their fear and uncertainty by going very internal. In other words, they will go quiet and not contribute much to any of the dialogue. If you have one of these members of staff, then make a point of giving them a phone call and asking them explicitly how they are feeling right now. And if your instinct says they are not fine if they say “fine” in response to that question, ask more questions of them.

Tip 3: Set up a group chat for each individual team and encourage a mix of 50/50 work vs non-work stuff

If you were sitting in the office every day you wouldn’t just talk work, so it is the same when your staff are working from home. It may take a while for the conversation to get going on the group chat, so much sure that you take the lead. See something which makes you laugh? Then share this. Getting annoyed by the kids being under your feet at home now? Then share this. Loving the fact that the sun is shining, then share this. Etc (You get the idea…)

Tip 4: Encourage your team to look for the positives

Thumbs Up

Right now, it doesn’t feel like much is positive. However, looking for the positives is a great way to counteract all the doom and gloom, and constant fear in our minds. You will need to lead the ‘being positive’ attitude with your staff. For example, how about on the group chat ask everyone to tell them something good which has happened today. Or share something which made them laugh.

Tip 5: Set up daily team calls

It depends how many staff you have whether you have all employee calls or individual team-based calls, or a mixture of both. If you have young, inexperienced or staff who are struggling working based from home you may like to have 2 of these calls; one in the morning and one after lunch. Ideally, in these calls you want everyone to answer these questions:

  • How am I feeling right now?
  • What am I happy, grateful or positive about?
  • What am I planning to get done today?
  • What help do I need to get this done today?

Tip 6: Encourage your staff to do some exercise and get outside every day

This isn’t the time or place to lecture about the benefits of exercise. But it is a great mood and immune system enhancer, and even more so when the sun is shining and we can get out into nature. (And we all need this right now!) Many of your employees may fall into the trap of working from their desk all day. So, encourage them to think about their own well-being and how they will look after their physical and mental health in this uncertain time.

Trainer

Tip 7: Help your staff structure their day

Calander

It’s really easy when working from home to get sucked into the myriad of distractions available… laundry, Netflix, social media, kids …. Therefore, you may need to have a 1:2:1 with each member of staff to help them think through how they are going to structure their workload, particularly if they now have the kids at home and need to spend time looking after them

Tip 8: Be the strong leader your team need

You need to be there and present for your staff. Now is not the time to hide in a corner and stop talking to people. Your staff are looking to you to keep them calm, positive and motivated. This doesn’t mean bottling up your own fears and vulnerabilities. Actually, this is the time to admit to your staff that you are scared too. Strong teams form when leaders are prepared to admit their vulnerabilities.

Strong arm

Tip 9: Take decisive action

Your team are looking for you to take decisive action and be clear in what you want and need from them. It’s pretty easy to get down and depressed when you don’t know what is expected or required from you. The more direction you can give your team now, the better the morale will be from your staff.

Tip 10: Encourage staff to have a buddy to check in with

Remember that your business is not just you. How about encouraging team members to buddy up and look out for each other?

Tip 11: Remember to praise and thank staff more than normal

We often take our staff for granted. So, now is the time to make sure you are showing how much you appreciate the effort from each member of your team.

Tip 12: Make it easy for staff to speak up in meetings

If you struggle to get your staff to talk in meetings, it is going to be even harder to get them to talk when you and they are working virtually. If this is the case for your business, then start a document which everyone can access virtually and contribute to with agenda items for the meeting. In addition to this, start each remote meeting by asking everyone to answer some basic questions in the chat box, such as “on a scale of 1 – 10, where 1 = very down and 10 = amazingly positive, where are you today”.

Tip 13: Don’t talk about ‘remote workers’, talk about ‘virtual working’ or ‘virtual team members’

The language you use with your team really does matter. Talking about people as remote or workers can really emphasis the distance between your team and contribute to a sense of isolation.

Electrician and number 1

What help is there for the Self-Employed?

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What help is there for the self employed?

It seems that every day the realities of the situation the economy is in just gets worse. I am sure you are like us you are pleased that the government is pumping money into small businesses. But what happens if you are self-employed or trade as a sole trader rather than limited business?

So, included in this blog is a summary of what help is available for you if you are self-employed or worried about your personal financial affairs.  We are monitoring this closely and will be in touch once we know more.

Universal Credit 

Universal Credit is a monthly payment to help with your living costs. It is available for anyone, even if you are self-employed. But as always you need to meet fairly specific criteria; namely you are on a low income or out of work.  If you’re expected to look for and be available for work, then it needs to be identified whether you’re ‘gainfully self- employed’.

Gainful self-employment means that:

  • your main employment is self-employment
  • you have self-employed earnings
  • your work is organised, developed, regular and in expectation of profit

As you would expect, you must provide evidence about your business and what you are earning through your business.

Money tree in hand

If you’re gainfully self-employed, your Universal Credit payment may be calculated using an assumed level of earnings, called a Minimum Income Floor.  It’s based on what an employed person on minimum wage would expect to earn in similar circumstances. If you earn more than this, then your Universal Credit amount is based on your actual earnings. If you earn less, the Minimum Income Floor is used to work out how much you can get. You may need to look for additional work to top up your income.

To check if you are eligible for Universal credit go to: https://www.gov.uk/self-employment-and-universal-credit

Mortgage Repayment

From 17th March you can ask for up to a three-month repayment deferment on your mortgage to give you some breathing space. This deferment applies to homeowners and buy-to-let landlords, to allow them to pass on the payment reduction or deferment to their tenants. It will not affect your credit score. However, you must agree your repayment deferment with your bank, otherwise you may skip a payment and it will show a default on your credit score. Please speak to your bank if you want to organise a deferment on your mortgage.

House key ring

Talk with your network and get creative

Now is not the time to lie low. Now is the time to get talking to your network. Firstly pick up the phone, otherwise email or message via social media. They may be aware of some opportunities for you to generate some work. Now, is also the time to be creative with your skill set. For example, if you run a hospitality business and can’t work from home, how about offering skype one-to-one cooking classes?

Event cancellations

If you lost money due to an event being cancelled the outline is:

  1. Contact the organiser first
  2. Organisers that postpone events don’t have to refund until they announce the new date
  3. Ask your ticketing platform about refunds
  4. If you are struggling to get a refund then your credit card provider could help with a refund

You might not get all of your money back – but it’s worth fighting for.

Event plan written on notepad

Time to Pay Arrangement

Lastly, a dedicated Helpline has been set up to help businesses & self-employed in financial distress and with outstanding tax liabilities. Call this helpline to be able to agree a bespoke Time to Pay arrangement with HMRC. This is where you agree with HMRC a bespoke payment plan for your outstanding tax liabilities. If you are concerned about being able to pay your tax due to COVID-19, talk to us first as we can help you plan your call to HMRC’s dedicated helpline on 0800 0159 559.

July 2020 payment on account

As announced on Friday you could defer this payment but as it is 22 March, I would keep this option on the back burner as you may still have to pay it in January 2021, it is effectively a loan.

VAT Deferment

VAT on ipad

We do not know enough about this, but again it is a deferred loan that may help you now.  If you are going to take advantage of this “loan” I would take it, put it in the bank and pay it back once business is back as usual, treat it like a quick safety net but it is a loan.

Our Advice

As your accountants we can help you as part of our service (no extra charge at all!) we can help you to plan initially for the next four months by looking at your business online and helping you to forecast.  We can also negotiate with HMRC or the banks for you and anyone else that you want us to, we are here to help.

I would also suggest that you list all of your household bills including leisure time (restaurants, shopping etc) and make decisions about what you are paying for, again we can help.

Once we have done that the next step is to Plan Plan Plan and Plan even more.  We will all get through this together and once we are back to business in full with the right planning and staying on top of your business you will without doubt be stronger and in a great position to thrive.

Don’t let the Christmas period get in the way of the Self-Assessment deadline!

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Don’t let the Christmas period get in the way of the self-assessment deadline!

Christmas is always a busy time of year, but for us it doesn’t stop after the festivities are over. With the Self-Assessment tax return deadline on January 31st, January is our busiest time of year.

A self-assessment tax return is required if you are a sole trader earning over the personal tax allowance, the director of a company who receives dividends, or if you have additional income which is not taxed through PAYE. If you are a client of ours on our Young Business service, Growing Business service, Rapid Growth service, or a sole trader then we take can care of this for you.

Send us your information early to avoid missing the deadline

Our clients on these services have the stress of completing their tax return taken away as we do a calculation to work out how much tax they owe and complete all the HMRC forms on their behalf. Once the tax return is approved by the client, we make sure it is filed with HMRC before the deadline.

As a firm, we try to prepare early by requesting all the information we need to complete your tax return at the end of the tax year on April 5th. This allows us to avoid the rush and get many tax returns in well ahead of the deadline. Our tax return clients will have received an email from us asking them to upload their documents to our secure platform. This platform is fully compliant with GDPR and data protection regulations, so there is no need to worry about your personal information!

We also send regular reminder emails throughout the year to make sure that all our clients don’t forget to send their documents to us on time. It is important to send us this information as early as possible as you can face a penalty from HMRC if you do not get us the required information in time for us to complete and file your tax return.

By sending us all the information we need before Christmas, you can relax over the festive period knowing that your self-assessment will be taken care of!

No one wants a Tax Investigation.

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No one wants a Tax Investigation.

It is true that as business owners we don’t want HMRC asking awkward questions and taking up our precious time by visiting us on a routine (or not!) compliance visit.

This week two of our clients have been subject to compliance visits from HMRC, one for PAYE and CIS, and the other for VAT. Understandably, our clients in both cases were worried by a visit from HMRC and needed our support from start to finish.

PAYE Investigation

In the case of the PAYE compliance, which included CIS, we were able to speak to our client before the meeting, attend the meeting along with our client, and reply to HMRC’s request in order to close the enquiry. We dealt with the issues and questions raised in the meeting successfully and HMRC could see that we had a good handle on our client’s business. They have now closed the case without penalty or further tax charge.  Our client was very happy that we were able to attend and support them at the meeting as it gave them extra peace of mind.

VAT Investigation

The VAT visit was very similar. We briefed our client before the meeting and attended the meeting with the VAT officer. One item was picked up by HMRC and a small adjustment will be made on the next return. In this case HMRC were complimentary about our business set up and the service that we provide our client, especially in understanding the business from the client’s point of view. This client is also really pleased with the service and were reassured by the fact that we were able to attend the meeting and deal with any questions that came up.

We have you covered

We insure ALL of our clients to cover our fees for dealing with HMRC from start to finish in these situations.  We often have clients tell us that they are covered by The Chamber of Commerce or The Federation for Small Businesses, however the cover from both organisations does not allow us to deal with any investigation that may occur, and so our support is limited. It is for this reason that we took the decision to fully cover our clients for no additional charge.

We appreciate that no one wants a Tax Investigation, however if a client does have an investigation it is really important that we are there, as we can help the client to deal with HMRC effectively. In both cases this week HMRC didn’t find anything of significance and both of our clients were very happy with our service. They were especially happy that our fees for assisting with the visits are covered by the insurance policy benefit that we have taken on their behalf and that there was no extra cost to them.

Hands with a house

Thinking of Applying for a Mortgage?

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Are you thinking of getting a mortgage?

This year we have had an abundance of clients applying for mortgages. Applying for a mortgage can be stressful and this is even more true for business owners. Once you have applied everything is suddenly urgent and happens all at once. This can then result in stress, tears and quite possibly a few temper tantrums!

To avoid any strops, here is a list of the best ways you can prepare before applying as a business owner:

  • When you get the lightbulb moment that you want to apply for a mortgage, give us a call or an email. We can then offer you our advice and possibly get you in touch with an appropriate mortgage adviser. It also allows us to plan and prepare to avoid any delays.
  • Mortgage lenders are going to asses your income. They will ask for your SA302/ Tax calculation which will confirm your salary and/or dividends. They will also ask for your company accounts to confirm your salary and net profits after tax but before dividends. Collating this information prior to applying for your mortgage will hopefully make the process run smoother.
  • To even think about applying for a mortgage your business will need to have been trading for at least 12 months but ideally 24 months.
  • The mortgage lender will look into your balance sheet. This will be to check that your assets outweigh your liabilities. If they do not, in the mortgage lenders eyes your company could be in a position that it will not lend against.
  • Some mortgage lenders will average out your salary and/or dividends over the past two years. As a growing business this may not be beneficial. There are some lenders that will just consider your latest year, it is probably best to instruct a mortgage adviser to help choose an appropriate lender.
  • Decreasing profits can be a bit tricky. If your profits are decreasing this also means your income is decreasing. This will result in mortgage lenders asking questions as they will be concerned that this could be a consistent problem. Before applying, it is probably best to be sure you have a strong constant source of income.
  • Mortgage lenders can also ask for an ‘accountants’ certificate’. If asked for we can complete, but there is a charge!
  • If using a mortgage adviser, please give us written permission to talk to them. As due to GDPR we cannot hand over any of your personal data without your permission!

TOP TIP – Plan Plan Plan. We can not stress this enough, even if it is a five year plan let us know as soon as possible so we can help you get your mortgage rather than fighting fire.  Decisions over tax saving or getting your mortgage need to be made at least 12 months in advance in many cases.

 

Tax Building Blocks

Making Tax Digital – Are You Ready?

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Making Tax Digital – Are You Ready?

July 2019 marks the period that you have to submit your VAT returns using HMRC’s new Making Tax Digital (MTD) regime. Already Accountants, VAT registered businesses and HMRC are struggling to cope.

Take a look at Accounting Web’s report on how HMRC’s systems were already struggling in May – Read report here

If you have not addressed MTD you need to do this NOW!

Your accountant should have been in touch to make sure your systems allows you to send HMRC compatible VAT returns. You may have been offered a bridging software to read from Excel (or other non-compliant accounting products) to then transfer to HMRC. In our opinion this is a sticky plaster over an open wound and not a long term solution. You have probably been given this type of software because your accountant does not understand or is overstretched.

Our recommendation is that you use Xero or SageOne to manage your businesses finances. Both pieces of software are fully compatible with MTD. 1 Accounts are Making Tax Digital certified and can help you transfer your business over to software that will not only be compliant but save you heaps of time to.

You should make sure your accountant can help you through the process of transitioning you to online software, registering you for MTD and maintaining your VAT returns. HMRC have some guidance on their website we recommend reading – Read article here.

If your VAT return (period ending 30th June 2019) is not filed by the 7th of August 2019 you may get a fine from HMRC. It is unknown to us if HMRC’s systems will be able to cope with this months filings. Our advice would be don’t leave it till the last minute.

 

should I employ a business coach?

Should business employ a business coach?

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Should Business’ Employ a business coach? – Absolutely!

A note from Paul

Over the years I have seen many people that say they are business coaches and I really would not trust them to deliver, especially those that are part of a franchise and just follow set procedures.

A business coach should understand your business, understand you and work to empower you to put your business in the direction that it wants to go.

Our first coach

My first encounter of a coach was about 20 years ago and the lady Gabriel Blackman-Shepperd was a life coach, she helped me to understand issue facing me at the time and my vision of the future, interestingly some of my vision at that time remains today.  Gabriel understood me and worked really hard to focus me.

Coming to present day I have used three business coaches, all of whom have had a significant impact on my business.

Tough Times 

Starting 1 Accounts Online was at a really difficult time, coming off of a terrible experience in my business career & my youngest daughter becoming confined to a wheel chair; I had lost a bit of the original spark I had and needed some guidance on where we were going.

The government had a great scheme in place where they funded a coach and I took on the services of Dominic Bowles who really helped me and my wife Jenni.

Dominic worked hard on the ethos of our business and his advise will always be part of our business regardless of changes.

Dominic helped us get personal and business goals which we smashed!  We also learnt  that family values are so important to Jenni and me and that this had to come through our business as well, something we had lost sight of over the previous couple of years!

Dominic has been back a few times since and we really value his input.

Pricing change

When we first started our Online business we had a specific business model that we identified would not work in the long term and this was based on price.  Price was OK to start with as it was only Jenni and me working from home but to move the business forwards I needed to really understand my pricing.

I signed up to a program with Mark Wickersham who is well known in our industry and via webinars and reading I started to understand pricing, my market place and the real psychology behind price.  This time spent with Mark was really important to us.

Once I had what I wanted I stopped the coaching and I think it is really important to know when you have gained what you need from your coach, but do not be afraid to return to brush up on your knowledge.

Skip to the present 

Our latest coach Heather Townsend has been a really interesting partnership.  I first met Heather at the Practice Excellence Awards where we won best New Practice in the UK, as you can imagine I was on top of the world and thought I knew everything.  Heather said that she would love to work with us and could really help us, at the time I really doubted that!

Six months ago we joined Heathers Millionaire Accountants program and it is really only today that I have seen real value in the process.  Heather no doubt will tell people that I am a really difficult person to recognise my achievements as my growth is never enough, she constantly reminds me that 62% growth last year is really good and yes I suppose it is.

Sitting back today reflecting on Heathers input to our business has been enormous.  With Growth comes pain and my real pain was systems and lack of robust systems to grow with us.  We started setting up Karbon four months ago and Jade (our practice manager and my daughter) has worked relentlessly in getting this right for us.  Karbon have also been a great partner in improving the software.

We have also changed our Tax and Accounting software to TaxCalc and the monthly saving has been over £800 per month, more than covering Heathers fees.

We have introduced daily team meetings, led by Jade and weekly full meetings led by Jade as well, these meetings have really helped to Gel the team together and our apprentices are now flying and having an important and significant impact on our business and our clients businesses.

We are also instigating our monthly management meeting with three of us focusing on driving the business forwards.

I also spend Wednesdays working from home and specifically working on the business, as a business owner this is so important to the business.

All of the above has been so positive on the team, our client service and the bottom line that we are looking forward to Heather and her team working hard to reach the goal we both promised our selves at the start of the process.

Top Tip – 

Chose your coach wisely, give them at least six months to prove themselves and re-evaluate what they deliver to your business.  Heather may not want to be but she is stuck with us for at least another six months and more than likely beyond!

 

What is MTD?

What Is Making Tax Digital?

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What is MTD?

Fact: 

All of our clients are Making Tax Digital (MTD) compliant because they use the latest online accounting software provided by the market leaders – Sage and Xero.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative which aims to transform the administration of tax to create a simpler, more effective and efficient tax regime that makes it easier for taxpayers to get their tax right.  (Let’s not forget to mention the estimated additional revenue of £610 million for HMRC as a result of the reduction in tax errors!)

Businesses that meet the criteria will be required to file their tax online, make online payments and keep digital records.

Quite simply, Making Tax Digital (MTD) is all about managing your accounts online.

Who is affected?

On 1st April 2019, all UK businesses that are VAT registered and operating above the £85,000 VAT threshold will be required to keep their records digitally and to submit VAT returns to HMRC using MTD compliant software.

Other areas of MTD, such as income tax and corporation tax, have been put on hold until 2020, at the earliest.

What do I need to do now?

If you are not VAT registered then you do not need to do anything at the moment. Just keep an eye on your turnover and if you think you are nearing the threshold give us a call on 01440 844 986. You should also be mindful of announcements from HMRC as to when income tax and corporation tax will be covered by MTD.

If you are already using MTD compliant accounting software then you do not need to take any further action.

If you are not using an MTD compliant accounting software, such as Xero or Sage Business Cloud, and you are above the £85,000 VAT threshold it’s time to call 1 Accounts!

Ditch the dinosaurs…

Many “traditional” accountants are panicking because they have not embraced the digital revolution. They have chosen to continue with desktop based systems, time sheets and outdated processes.  With the deadline for MTD looming they are now in danger of extinction!

This is the advice from the ICAEW (Institute of Chartered Accountants in England and Wales) for their members:-

Preparing your practice for MTD

Agents will need to take steps to prepare both their own practices and their clients for the disruption that Making Tax Digital and digitalisation will cause to the market for accounting and tax services.

 

Pick the pioneers…

1 Accounts was established in 2013 with the sole focus of moving businesses from the traditional accountancy model to online accounting with all its time and money saving benefits. The team at 1 Accounts are experts in cloud accounting, they did their learning on the “digitalisation of accounting services” years ago and have the accolades to prove it –  Sage UK’s Top Online Accountants, 2020 Innovation Awards 2016 most ‘Innovative Practice’ and a Xero Gold Champion Partner with a Making Tax Digital Ready classification.

The dinosaurs will be charging their clients for the privilege of learning about the “new ways” and converting clients from desk based systems to online systems. Just think – if they are operating time sheets, every hour has to be accounted for! Do you want to pay for them to catch up?