Marriage Allowance

As we are in the middle of wedding season, it’s worth reminding everyone about marriage allowance. This extra bit of tax relief could be especially helpful to people now during the cost of living crisis.

What is marriage allowance?

Marriage allowance lets you transfer 10% of your unused personal tax allowance to your husband, wife, or civil partner. This will then reduce their tax bill by that amount. It could be worth up to £252 a year!

Am I eligible?

To be eligible to marriage allowance you need to be;

  • Married or in a civil partnership
  • one partner earning below the personal tax threshold of £12,570 per year
  • The other partner earning below the higher rate tax threshold of £50,000 per year

Unfortunately you can’t claim marriage allowance if you are only co-habiting and not married or in a civil partnership.

How do I claim marriage allowance?

If you are a client of ours, mention that you would like to apply for marriage allowance when we complete your tax return. We can then help you sort this out.

You can also apply yourself by phoning the income tax helpline on 0300 200 3300 or by applying online. You will need your partner’s national insurance number for the claim.

There are some online firms that will charge you a commission for claiming through them, our advice is to stay away from these and to either claim yourself by contacting HMRC or through your accountant. We do not charge our clients extra for this. This will ensure you get 100% of what you are owed!

Can I backdate my claim?

When applying for marriage allowance you can backdate your claim to 5th April 2018! So if you have been eligible for marriage allowance since then, these tax years will be included in your claim and you could receive more money back.

If you are married and not already taking advantage of the marriage allowance then what are you waiting for! Make sure you apply to receive your tax refund.

1 Accounts Piggy Bank on books

The Ultimate Guide to the Different Types of Business Financing

The Ultimate Guide to the Different Types of Business Financing

Small business loans are being approved at an unusually high rate, making this the perfect time to increase your company’s cash flow via business financing. There are different kinds of business loans available, and it’s important to know the differences between them in order to make a fully informed decision.

This article will cover some of the most common types of small business loans, such as term loans, and help you understand the benefits and disadvantages of each. From there, you’ll be able to find the perfect financing option for your company’s short and long-term goals.

1 Accounts finance laptop piggy bank

Business Term Loans

Business term loans are one of the most common varieties, giving borrowers a fixed sum of money to be paid back over a given term. You’ll need to meet certain requirements to receive a business loan depending on your location and lender.

Business term loans don’t require any collateral, and they can be used for any business-related purpose. Your interest rate will be based on a variety of factors related to your company, including financial health, monthly or yearly revenue, and your business credit score.

Small Business Administration Loans

SBA loans are backed in part by the government, allowing lenders to charge lower interest rates and have assurance that they’ll receive payment. Depending on the size of your loan, the maximum interest rate for an SBA loan ranges from 7.75% to 10.25%.

Like business term loans, Small Business Administration loans work for essentially any business purpose. it’s important to note that you’ll need a strong credit history to qualify for and receive an SBA loan.

Business Line of Credit

Unlike a conventional loan, a business line of credit works more like a personal credit card. You’ll be able to use your new line of credit at any time up to your credit limit, and you can continue to withdraw again once you’re caught up with your existing payments.

It’s generally easier to qualify for a business line of credit than for a more traditional form of business financing, but there are some other factors to consider. Missed payments carry a heavy penalty, for example, and lenders may ask for collateral.

Invoice Factoring

Invoice factoring is a quick way to free up cash flow for your business, and it’s especially effective for companies dealing with late payments. It involves selling off unpaid invoices to a factoring company who then takes on the responsibility for collecting the cash.

Depending on the terms you arrange for your own invoice factoring, you may receive an advance of anywhere from 60 to 100 percent of the total value. It’s important to note that unlike the other items on this list, the amount you can gain from invoice factoring is limited by your current pending invoices.

Equipment Financing

You can use any kind of business loan to finance more equipment, but equipment financing makes this process much cheaper by using the equipment itself as the loan’s collateral. You’ll get a significantly lower interest rate with equipment financing, even if your business has a poor credit score.

In general, you can use equipment financing to take out a loan of any amount up to the cost of the equipment you’re receiving. This equipment is yours to use as soon as you sign onto the loan, making it an immediate solution for companies with growing equipment needs.

The main downside of equipment financing is its attachment to the equipment itself. If you use this method to acquire a piece of equipment which becomes obsolete quickly, you’ll still be on the hook for the loan without a way to get that money back. Only use equipment financing if you’re confident in the equipment’s viability and longevity.

Merchant Cash Advance

Merchant cash advances are another great option for companies who don’t have the credit score necessary to receive other kinds of financing. A merchant cash advance gives you cash up front which is repaid as a percentage of what you spend on your credit card.

This method of repayment gives merchant cash advances a flexible time period for repayment, so you won’t have to worry about making payments on time each month. That said, interest rates are typically higher than those available with other kinds of financing.

Depending on the specific lender, you should be able to find merchant cash advance opportunities with borrowing limits as high as $250,000. Expect to pay the loan off in roughly six to eighteen months.

Business financing is a crucial aspect of achieving short-term growth and long-term stability for any small business, and there are several options available to immediately increase your cash flow. With more than a few choices, this is a great place to start if you’re looking for a way to help your company expand.

You are not a bank

1 Accounts – You are not a bank

You Are Not A Bank

As a small business, credit control can be a nightmare. Paul will tell you that when he first started running his traditional accountancy practice (Paul Donno & Co) he was pulling his hair out when he would do work, invoice the client and then not get paid. Unlike buying a product, paying for a service seems to have less urgency when it comes to paying. It used to take Paul on average just over 90 days for collection on 10 day accounts.

There is a group we belong to called the 2020 Group. One of the founders, a guy called Gordon Gilcrest spent some time with Paul to help his overcome this problem, he sat him down and said to him:

“Paul, you are not a bank. If people want a loan, they can go to the bank and they can pay interest on it. You are not a bank; you have credit terms, stick to the credit terms. If you give 14 days’ credit that gives them the right to pay within 14 days, not over days and pay you 50-60 days later”

This advice has stuck with Paul, and he re-evaluated his approach as a result. He spoke to the clients who were taking a long time to pay and advised them that they needed to change their ways. He also parted ways with a couple of companies.

When starting 1 Accounts Paul did not want these problems again. We set up Go cardless and have automatic direct debits taken every month. The direct debit is automatically set up when the proposal is signed. This saves time, money and chasing.

Here is our advice to you if you are struggling with credit control:

  • Look at your trading terms and ask yourself why you are offering credit, and if you do offer credit, want are your terms? Work out on average how quickly your customers are paying.
  • If you are lending money long term, that is for banks to do and not you!
  • Look at all types of money collection and do not put barriers in the way. Take credit cards, offer direct debit, provide alternative funding to customers
  • Remember ‘Turnover for vanity, profit for sanity but cash is reality’
  • It is no good tying up your money in stock that takes ages to turn over, measure stock turnover and don’t lock up your cash.
  • Don’t give extended credit, and if you do chase it hard, you have already paid for the goods sold or staff to provide services.
  • Without cash, you cannot make rational business decisions to move forwards.