Profit boost from small business landlord funding loans
The start of a new tax year is the optimal time to assess your business finances, and put in place the systems that will ensure stability for another year.
Brian Palmer, Tax Policy Adviser at the Association of Accounting Technicians, and Emily Coltman, Chief Accountant to FreeAgent, both recommend taking the time to assess your accounting system.
Whether you've outgrown Excel spreadsheets and you're ready to invest in some Sage accounting software, or you want to bring in full or part-time qualified accounting staff to ensure your business is tax efficient, the start of the tax year is the best time to do so. It'll make next year's financial reports much smoother.
If you haven't already explored tax changes for extra advantages and obligations coming into effect in FY 2015/16, it's wise to do so as soon as possible. They may affect how you choose to invest or save in the year ahead.
You can find a full list of tax thresholds on one page at Gov.uk, but SmallBusiness.co.uk flags several changes in particular that employers should be aware of:
- Personal tax allowance has increased to £10,600
- The Employee National Insurance (NI) threshold is now £155/week
- Employees under 21 now have an NI threshold of £815/week
- Class 2 NI hasn't been abolished yet, it's been increased to £2.80/week
- The VAT registration threshold is now £82,000 per year
Last year, a BACS Payments study found that SMEs were stuck with an average of £38,186 of unpaid invoices. Now we're in a new tax year, and past the point of usefully writing off debts, the most productive course of action is a debt management strategy.
Addressing how to approach debtors, creating letters and clear timelines with which to deal with outstanding debts is an excellent way to take control. You may also want to create alternative payment plans you can offer to customers and clients who are struggling financially.
As with your accounts, it may be more cost effective to bring in experts who can recoup your debts while retaining your business values. If you believe such a service could benefit you, contact a Dukes Bailiffs advisor today.
Since the advent of the financial crisis in 2008, regulation has been touted as an effective remedy against future collapse. However, as Anthony Hamilton argues in the Evening Standard, there are concerns over how effective subsequent regulation has been.
The trade imbalance caused by the huge trade surpluses of China and Germany hasn't been addressed, even though doing so would reduce the amount of capital seeking investments, and thus arrest the fall in lending and investment standards. In other words, the amount of "toxic debt" could be reduced, meaning fewer failed businesses and fewer debts written off.
Looking at financial institutions, there's also room for more effective encouragement toward stability – Hamilton suggests that a shift in taxation would be an excellent start. Currently tax is levied on profits, which encourages banks to borrow more and become unstable. However, shifting tax to liabilities would have the opposite effect: encouraging a reduction in borrowings and an increase in capital base.
A balancing act
Similar problems remain unaddressed at a local level. Independent studies by the European Commission and the Association for Financial Markets in Europe in partnership with The Boston Consulting Group both argued that European companies were too reliant on debt and too wary of equity financing. This results in a similar imbalance to that seen at financial institutions.
Regulators may once more hold the balance. Hamilton suggests that attempts to strengthen market discipline by demanding safeguards like a "living will", so banks can be allowed to fail, jar with regulations that weaken discipline by introducing controls, like board vetting. Choosing one effective path or the other could be what finally swings small business opinion back behind equity investors, and that would solve a lot of economic problems.
A 2014 survey by the Department of Business Innovation and Skills found that 51% of businesses see regulation as an obstacle to business success, and the smaller the company, the more negative their opinion of regulation. Perhaps a more accurate stance for SMEs to take would be to engage with regulators and systems, and feed back for the greater good.
If debt is hampering your business, Dukes Bailiffs can help. Contact one of our advisors to find out more about our considerate, reliable and effective debt collection service via ourContact Us page.