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  1. Are you a cash based business such as a Pub, Cafe or Shop? Do you still take your cash up to the Bank yourself or send a member of staff in your stead? Do you argue with your Bank about the charges they demand for counting notes???

    Have you been attacked on the way to the Bank and had your takings stolen?

    There is a much better way and it has been one of Banking's best kept secrets - until now! Our local NatWest small business manager, Zed, told me recently of a brilliant solution to handling cash in even the smallest of businesses where you have to make regular trips to the Bank. With all the attendant risks with carrying the cash and hanging around in the Bank waiting and then holding up the line whilst your cash is being counted by the clerk.

    Well, in the 21st Century there is a better way that can save a cash based business £000's per year in charges, insurance and time.

    Interested in learning more about this? Ring or email me asap and start 2013 with a money saving opportunity - and no - you do not have to Bank with NatWest - this applies to any business that handles cash regularly.

    Merry Christmas to all UKBL members!

    ~Ray
  2. Recent research shows that 82% of business owners want more support from their accountant to help them beat the recession. All good accountants understand this and have already geared themselves up to be able to deliver it.

    This simple checklist has therefore been independently produced to help you ensure that your accountant gives you all the proactive support and guidance you need to beat the recession.

    All you need to do is this... read through the list and cross out all the points where you are completely satisfied that your accountant is already giving you all the help you need and want. If the score is not 23 out of 23, ask your accountant how they can give you the extra help you need in the areas you have not crossed out.

    How a good accountant can help you to beat the recession:

    General support you should expect...


    1. Diagnostic review and report to identify the key options for strengthening your cashflow

    2. Explore the 20 sources of cash to see which have the most potential for you

    3. Give you a performance measurement and improvement system – and help you summarise everything that really matters on a Balanced Scorecard or One Page Plan – to give you all the information you need to make better decisions and get better results

    4. Help you understand and manage your breakeven point so you are more able to survive falls in demand

    5. Benchmark you against others in your industry to identify the areas where you can most easily improve

    6. Create an initial improvement action plan covering all the key areas listed here

    7. Attend regular meetings with you, and use a BoardView style methodology to help you continually update your action plan in the light of new issues, information and opportunities as they arise

    8. Produce regular cashflow forecasts to ensure your plans can be funded & you do not get into financial difficulties

    9. Give you free access to a library of relevant “Beat the recession” resources eg videos, software, reports etc

    Strengthening your cashflow by making more profitable sales & getting paid more quickly...

    1. Identify which of the 8 key profit drivers has the greatest potential for you

    2. Review the 23 profit strategies that lie behind the 8 profit drivers – prioritise and action them

    3. Identify and manage your profitability by customer and/or product line - so that you can build on your higher profit areas and deal with your lower profit areas

    4. Analyse your sales pipeline – & use sales improvement software such as SSTW to identify how to drive sales up

    5. Evaluate alternative pricing strategies using software such as SSTW – since getting your pricing right is usually the fastest and easiest way to increase the profitability of sales

    6. Review the 43 ways to improve your debtor collection

    Strengthening your business and personal cashflow by using better tax planning to...

    1. Pay no tax on the profits from new products/services/divisions for 5-10 years

    2. Pay as little as 1.9% tax when extracting profits from your company

    3. Cut your corporation tax bills to zero (or close to zero)

    4. Cut your personal income tax bills to zero (or close to zero)

    5. Reclaim much of the income tax you paid in recent years

    6. Halve your stamp duty and capital gains tax bills – and perhaps even eliminate them

    7. Claim your full Tax Credit entitlement (it is surprising how much you can claim with specialist help)

    8. Use IHT and care home fee planning to put extra cash in your bank during your lifetime

    IMPORTANT NOTE: All of these tax planning opportunities are legal – and all are possible in certain circumstances. If your accountants tell you that they are not possible, ask them to clarify exactly what they mean. Is it (A) they are fully aware of the tax strategy being referred to and know for a fact that you do not meet the qualifying criteria, or (B) they are simply not aware of the specific tax strategy being referred to?

    If your accountant cannot help you fully in all of the above 23 key areas, or you want a second opinion for free from a professional accountant who can, please contact me.

    There will be no cost or obligation. And even if you go on to ask us to help you with something, from the list above, you can still stay with your existing accountant for everything they currently do with you if that is your preference.

    Ray Stewart
    t: 0800 047 0731 | e: ray@cbserves.biz | skype: cbserves | m: 07878 831169
  3. The increase in the tax free mileage allowance has been slipped in without much fanfare - so little in fact few people were even aware of it!

    Our ever generous government, following hot on the heels of the magnanimous 1p per litre cut in the fuel duty on Budget day last month, have finally increased the mileage allowance that employees are allowed to be paid tax free by their employers.

    Don't get too excited. The change only relates to the first 10,000 miles and from 6th April 2011 the rate has increased from 40p/mile to a staggering 45p/mile. The rates for more than 10,000 miles in a tax year remains at 25p/mile.

    I am being a bit scarcastic because a 12.5% increase after so many years only takes us back to the pre 2002 Authorised Mileage Rate of, yes you guessed it, 45p per mile.

    All of this at a time when fuel costs have rocketed by nearly 30% in the last 12 months alone.

    Nice one Dave!

    ~Ray
  4. Have you ever wondered what amount you should set aside for marketing each year to grow your business?

    How do you know what the optimum amount is? As an accountant, I'm often asked this question by startup and small business owners.

    So what's the answer? Whilst many business owners are looking for an answer such as £5000 or 10% of sales, I think this completely misses the point.

    I believe the answer is...

    You should not put a limit on your marketing budget

    Let me explain. Whenever you undertake any marketing activity, you need to know whether you make a profit or not on that activity. The only way to do that is to measure the results of the marketing.

    To do this you need to undertake direct response marketing as opposed to purely brand marketing. For small business especially it is crucial to ensure money spent on marketing is not wasted. The best way to do this is to record the results of any marketing activity, whether that be direct sales letters, advertising, telemarketing, email marketing, pay per click campaigns, seminars or whatever.

    As a minimum, you need to know...

    • The cost of the marketing activity
    • The sales generated from that marketing activity
    • The profit made from those sales

    And if you make more from the marketing than it costs you, it makes sense to continue spending on that marketing activity until it stops making you a profit. You'll of course know when this is because you are measuring your results.

    By testing on a small scale to start with, you'll never lose too much money if it doesn't work, but when it does work, if you gradually increase your spend on this particular activity, you should continue to do so until it no longer makes you a profit. It doesn't matter how much you spend, as long as you make a profit, it makes sense to continue to invest in the marketing.

    And don't stop at just one marketing activity. Test another marketing activity and if that makes a profit continue with that in the same way. Eventually, the aim is to have multiple marketing activities. This is the key to exponential business growth. Not being reliant on one activity, means you continue to grow even when one stops working.

    In calculating the profit made from any sale, you should consider the lifetime value from the new customers that you gain. The profit on the first sale may be £100 but if you measure your activities you will know how many repeat sales you get from your average customer and the profit on those. Over the lifetime of this customer you may make £500 profit from them.

    Hopefully, this marketing activity costs you less that £100. However, even if this marketing activity cost £100, that will create a £400 profit for you over the lifetime of the customer. Whilst your competitors may consider that the marketing has not made any profit because they only look at the first sale, because you measure everything, you know it actually makes you £400 profit. So they stop, whilst you continue and they don't understand why!

    The only other consideration is that you have to manage the cashflow in all of this to ensure you have enough funding before the income comes in.

    And who better to help you manage the cashflow or secure funding than an accountant!

    For help and assistance with this or for any of your accountancy and tax needs, please give me a call. I'm very happy to visit you without charge for a consultation to discuss how we could help you further.

    Ray Stewart

    Coalville Business Services Limited
    26 Swallow Dale
    Thringstone
    Leics
    LE67 8LY

    Tel: 0800 047 0731
  5. It has happened again - an all too familiar story. I have been introduced to a lovely couple, similar in age to myself, and asked to help them out of a mess.

    These trusting people had been clients of another local firm of accountants for several years and firmly believed they were being given a full professional service. However, even they realized something was wrong when the accountants messed them about last year and sent them not one, nor two, but three bills for work done amounting to quadruple their previous charge. The couple were in a dilemma. Do we stick with these accountants and try to argue about the fees or change accountants - if so to whom and will they be any different? The stress built over christmas and the wife, who was in charge of the books, fell into a depression and so even the regular paperwork was left. It was a really horrible position for them and when they started getting tax demands for ridiculous sums, they realized the filing deadline had passed in January 2009 and now they were in a real mess.

    They finally talked about their problems with a friend who was already a client of mine. He immediately suggested they ring me and start to pick themselves up and get sorted.

    The full horror of the breakdown of the accountant/client relationship became clear when I went through their bookkeeping. I really could not believe the quality of work I saw when I went through the accounts for year ended 31st March 2007. Things had been missed, loans and a major business bank account had not been included, accruals for their own accounts fee and the PAYE/NIC due at the year end but not paid until after had been overlooked. Instead of talking to the couple and asking them why the books for the year ended 31st March 2008 had not been delivered for the accounts and Self Assessment to be prepared, the accountants did nothing and allowed a huge estimated tax demand to be issued, remain unchallenged and then denied all knowledge of it when I challenged them. A real professional service - not.

    Anyway, these matters are now being resolved and the couple are very thankful they listened to their friend and found a new accountant.

    There is a moral to this post. Even if you have had the same accountant for years, you should be able to trust them to always act in your best interests, but they don't always - they do mostly but they (we) are human too - not machines and not infalible. So, be in touch with your accountant 3 or 4 times a year and keep your relationship current. Talk about tax planning, business trends, bookkeeping issues, grants, banks, VAT worries, planning your will - in fact about anything relating to your business that you want to ask advice about.

    The truth is that accountants, both good and bad, deal with lots of different businesses and so have a unique overview of trends, marketing ideas that work, current issues affecting local businesses as well as their own areas of accounts and tax. They are a huge mine of information and the more regularly you talk, the more useful they can be. Don't worry about the cost - any accountant worth his/her salt will always repay your investment in them at least 3 fold or more.

    I love to talk - ask anyone I deal with - but if you find your accountant reluctant to chat candidly with you about any issue - perhaps you should look for one that will. If you feel for any reason whatsoever that your relationship with your accountant is breaking down, don't wait, or bury your head in the sand, grip the tax demand or their bill and talk to them immediately to find out what is going on. Failure to act, as the couple above found out to their cost, can be an expensive mistake.

    You can always call me for a no-obligation chat on 0800 047 0731 if you are at all worried.

    ~Ray
  6. The government are at it again. Tinkering with deadlines for no real reason other than trying to trip people up and rake in some penalties - which have also gone up as well.

    The Companies Act 2006 is now in force.

    The deadline for filing Limited Company accounts has been reduced from 10 months after the year end to 9 months after the year end. This new law starts for accounting periods commencing on or after 6th April 2008 so that means (for our own year end of the 31st May 2009) that our accounts now have to be at Companies House by 31st January 2010. This change means the corporation tax payment date and statutory filing date for each private company is now about the same. Our own corporation tax will be due on the 1st February as normal, just one day after the new deadline. Public companies have even less time as their accounts are now due just 6 months after the year end.

    There is still talk of changing the Self Assessment filing deadline from 31st January to 30th November but so far that hasn't happened - but I am sure it will next year.

    The late filing penalty at Companies House can now reach up to £1,500. A huge amount. And despite the changes, Companies House still don't have the facility of receiving accounts electronically so make sure you send them by post well before the deadline and check on the internet that they have been received and filed in time.

    Other recent changes brought in with the Companies Act 2006 are:-
    • that a 16 year old can be a company director
    • you no longer have to have a company secretary
    • you no longer have to hold an AGM
    • you no longer need a unanimous vote for resolutions
    • you no longer need a court order to make capital reductions
    Lots of changes then to catch the unaware director and huge penalties to punish you with should you fall foul of any one of them.

    Some changes are good though. If you register for filing forms on-line on the Companies House website, they will no longer accept paper forms from your company. This is hoped to stop the tide of company identity theft that is rife at the moment by unscrupulous people fraudulently filing change of director and registered office forms. Don't delay with this one - register today!

    Also, from the 1st October 2009 director's addresses are protected from disclosure. Each director can have a service address for public record and their home address. If you don't change your service address online after 1st October 2009 then Companies House will assume the service address and your private address are the same - so make a diary note and file a service address on the 1st October 2009 if you want to keep your private address away from prying eyes!

    ~Ray
  7. I was researching pension information for a client recently who is about to retire and I found some really disturbing facts out about when we are going to be allowed to retire and draw a state pension.

    I knew some changes were afoot but I did not know they had actually been decided. It could be just me. After all I have not bought a newspaper in a long time as I do not believe in killing trees for paper to print stuff that is already yesterdays news when it is read. But I was very surprised to learn that the retirement age is moving.
    It has long been a concern that the government, with its incompetent handling of our economy, will not have enough in the coffers for my own pension when I hit 65 in 13 years time. It seems the government are now thinking the same thing and have therefore decided to move our pension ages.

    Currently, the state pension age is 65 for men and 60 for women. In 2010 (next year) the state pension age for women will gradually increase so that by 2020 it will be 65. They work this out by stating that women born between 6th April 1950 and 5th April 1955 will have a state pension age between 60 and 65 (no doubt they will clarify exactly what age for what dates at some point in the next month or two) and those born after 6th April 1955 will retire at 65.

    Then, it all changes again for both men and women.

    In between 2024 and 2046, the state pension age will increase for everyone from 65 to 68. The first increase from 65 to 66 will happen between April 2024 and April 2026 (again exact details are not clear yet). The second increase from 66 to 67 will happen between April 2034 and April 2036. The third change (I hesitate to say the final change with this government) from 67 to 68 will happen between April 2044 and April 2046.

    These changes are already law having been enacted in the Pensions Act 2007. Why have they been allowed to slip through unnoticed and unfought?

    What further changes does our un-elected leader have in store that he isn’t telling?

    Personally, I dread to think.

    The faster we have an election and get someone in charge who actually has the mandate of the country behind them, the better.

    If you have any questions or concerns about these changes, I am going to break tradition by asking you to direct them to your local MP rather than answering them myself. I sincerely hope you have an MP that is planning to stand again at the next election representing you, unlike me, whose MP has made it widely known he is retiring and just pacing himself until the election is called (read “don’t really care about anything or anyone any more” into that).

    ~Ray
  8. It's not everyday we have a son who graduates from Oxford! He is now a fully fledged graduate with BA (Oxon) after his name.

    [​IMG]

    Despite the rain that absolutely poured down at regular intervals during the day, the ceremonies started with a drinks reception at Somerville College. We then moved into Hall for lunch, which was delicious and had a good chat with Chris's linguistics tutor who joined us to eat.

    We then made our way to the Sheldonian - a curious old building designed specifically for ceremonies. We were packed in like sardines and in the most uncomfortable seats in the world, sat patiently waiting for 2.30pm.

    It had been explained to us that the whole thing was steeped in tradition over the last 800 years and was therefore conducted in Latin.

    Us poor mortals who didn't have the benefits of a classical education hadn't got a clue what was going on but eventually it was the turn of the BA graduates to be called up by college. The Dean of Somerville grasped Chris's hand and stood shaking it whilst he went through his latin speech. They then filed out to be given their graduate gowns and then came back in to be congratulated by the officials and clapped to exhaustion by us proud parents.

    What a day. We managed to find some dry weather to get some photos of our clever lad in all his official finery.

    Now that Oxford has done all it can for Chris, what hope is there for the 2009 graduates? The recession is still holding recruitment to minimal levels. By the time things pick up there will be a new batch of graduates coming through next year. The 2009 graduates are in danger of becoming the forgotten year. Such a shame as Chris and his peers are a group of seriously talented young minds and I can't bear the thought that they are going to be let down by the government.

    Chris is luckier than most because he can walk into a job with me and I am proud to have him. But I do not want to limit his potential or stifle his development as accountancy has never been a strong pull for him - despite having (like me) a natural flair for figures and business.

    I have been encouraging him to develop his own website Quality French Translation by Oxford Graduate to showcase his language talents. Have a look and see if you can use some of his skill in your business interests on the continent. We have some ideas on developing some work in France for him as he loves French and has a real aptitude with it. Time will tell how we get on with that one!

    I will finish now with a call to employers not to overlook this years graduates from all the universities. The last thing we want as a country is to let these fine young minds not achieve every scrap of potential they are capable of. If you have the chance - employ one and pass on the skills we have all learned in business to the next generation.

    I wish them all good luck and every success for the future.

    ~Ray
  9. This is the third tax saving tip article in the series and this tip deals with working from home and what household expenses you can rightfully claim against business profits.

    Any business person that works even partially at home in the evenings/weekends can properly claim an allowance against their business for “Use of home as office”. The questions arise when the amount of the claim is considered.

    As when anything to do with tax is discussed the answer is not straightforward, and is dependent on the degree of useage - and this can be looked at in two ways:-

    1. A small amount of work is undertaken - for example, in the evenings organizing the next day’s meetings, or catching up with the bookkeeping once a week. This is covered by a blanket allowance of £5 per week as a level at which the Tax Office will not question too much. This £5/week essentially covers light, heat, space used, disruption to family life and is not specifically aimed at covering actual extra electricity used for example.
    2. A large amount of work is done at home all the time - for example the business is based at home and doesn’t have a seperate office. This level of use justifies apportionment of electricity and gas bills between business and private use, extra refreshments used and cleaning of the office space.
    More and more businesses are choosing to work at home and so a little more thought needs to be given to justify the level of business use of various services to be charged against profits. Well, gas and electricity are easy to fathom. Just compare the increase in your bills from before the office was established. If you can’t do that, come up with a considered aguement looking at extra useage during the day with lights/heating on, computers on, kettles/coffee machines in constant use - things like that and discuss these arguements with your accountant - or me directly to see if you are charging as much as can be justified.

    I never suggest people fall into the trap of apportionment based on floor area. If you start saying that about 1/6 of your house is used for business so 1/6th of all bills are business - the Tax Office say that 1/6 of your home is no longer a personal asset exempt from capital gains tax and when you sell it they will look for 1/6 of the profit to be taxed.

    Also, for most businesses, a floor plan apportionment doesn’t give nearly enough weight to the extra electricity in particular that working from home can use and so you lose out. Don’t use this then!

    As far as other expenses are concerned, they are usually much easier to keep track of. Installation and costs of running a business phone line for example, refreshments, extra cleaning etc..

    The moral to this tip then is to claim as much for working at home as you and your accountant can justify. This is one area looked at during investigations so having your methods all set out beforehand knocks the question flat as soon as HMRC raise it. Why do they look at this? simply because businesses are generally unprepared to answer specifically and quickly exactly how the claim is formulated leaving themselves open to the claim being challenged and ultimately disallowed.

    Be different - be prepared!

    Ray Stewart
  10. In this tax saving tip I will be looking at employing members of your family.

    It is not generally known that every single person in the UK is entitled to an annual tax free allowance of £6,035 regardless of age or income. The tax saving tip today focuses on ensuring that you utilize fully this tax free band for all the members of your family - where possible. Once again, this is one of those use it or lose it allowances.

    Quite often, a spouse is a key factor in the success of a small business but they are not always recognized as such for tax purposes. You are legally entitled to employ your spouse and pay them at least the statutory minimum wage, £5.73/hour currently, for all the work they do for your business. This could be answering the telephone, dealing with mail, organizing your diary, ordering materials - any number of valuable jobs that will ensure the smooth running of your business.

    You will need to have a formal contract of employment setting out working hours and duties but that’s it. As long as this is formally documented (and this is where most small businesses fall down), and you actually pay the salary each week or month, you will have the full deduction of the salary against your business profits and your spouse pays no tax up to the £6,035 limit.

    Obviously things are a little different if your spouse already has a job and uses their tax free allowance - article this is aimed at unpaid spouses, or those whose part-time earnings do not fully utilize the allowance.

    I will now go a little against convention here. I know it is unfashionable to think about pensions and “when we get to 65″ but I believe you should pay your spouse a little more than the tax free minimum each year, so that they actually pay some National Insurance.

    There is a very good reason for this and it is to do with the state pension. In order to qualify for a full, independent state pension, you have to accrue 39 qualifying years of National Insurance contributions. In order for a year to be a qualifying year, you must have made some National Insurance contributions.

    So my advice is, as long as you can justify the salary for the amount of work they do, pay your spouse around £7,000 per annum. Yes, they will pay a little tax and NI, but all of it will be deductible against your business profits, but each year you do this for will be a qualifying year for pension purposes.

    It is cheaper to do this than to find out when you get to 65 that you have too many gap years and have to pay several £’000 to make up the missing contributions and not get any tax relief for them against your business profits.

    This applies not just to your spouse, but to your children as well. Any child from 13 upwards can be employed by your business and earn money tax free to them and tax deductible against your profits. Just make sure you adhere to the employment regulations and don’t overwork them!

    Ray Stewart
  11. Welcome to the first in a series of posts detailing tax saving tips.

    This first post is about using, or losing, your annual capital gains tax allowance. Presently standing at £9,200 the annual cgt allowance is one of those that you will lose if don’t fully utilize it each year.

    Yes, even in these difficult recessionary times, there are people who own assets generating capital profits. These assets can quite legally be manipulated to force a chargeable gain to be realized and use the annual exemption to the full. Why would you want to do this - well, a 40% tax payer who lets the annual cgt allowance slip away unused is actually wasting £3,680 in hard cash tax savings.

    The easiest assets to use to ensure all of this tax free allowance is used are shares.

    The simple method is to sell enough shares from your portfolio to realize a capital gain as close to the annual exemption as possible. Your spouse can then rebuy the same shares a few days later.

    That’s it. The result of this bed and breakfasting as the professionals call it, is to realize the gain tax free and yet, as a couple, you still keep the same portfolio of shares.

    A few years back people used to sell some shares around the end of the tax year (5th April) and then buy them back themselves early in the new tax year for a similar effect. However, the tax rules no longer allow this. A different individual (spouse) can legally buy them, but you cannot buy back your own shares without invoking rules that will cancel out your tax saving.

    I acknowledge there will be some dealing costs with this tip, but they are negligable compared to the potential tax saving available.

    ~Ray Stewart