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Inflation sees hike in vehicle-related benefit charges

Inflation sees hike in vehicle-related benefit charges!

Certain benefits, including those related to company-owned vehicles, are revised annually to reflect inflation. The relevant figures for 2023/24 have just been confirmed…

What do you need to know?

The consumer price index is the benchmark the government uses to measure inflation. This is linked to several key figures for the purposes of calculating the cash equivalent to establish the taxable benefits in kind. Three of these figures relate to company-owned vehicles where there is some element of private usage.

Firstly, there is a fuel benefit where an employer provides petrol or diesel to an employee that is used for private journeys. There is no de minimis, so a small amount of fuel provided and not reimbursed by the employee is enough to trigger the benefit. The cash equivalent is worked out by multiplying the appropriate percentage for the car by a fixed fuel benefit multiplier. For 2022/23 this is £25,300, but due to high inflation this will increase to £27,800 from April 2023. A jump of £2,500.00!

Next, there is the company van benefit. This is a fixed amount, i.e. there is no variance depending on the van’s emissions level. If the van is used for private journeys, and this usage is not “insignificant”, the employee will be taxed on a fixed cash equivalent. For 2022/23 this is £3,600, and will increase to £3,960 from April 2023.

Finally, if fuel provided by the employer is used for private journeys, the employer will be taxed on a fixed cash equivalent of £688 for 2022/23, rising to £757 from April 2023.

We are also currently running a promotion until 1st January 2023.

£225 + VAT for a basic Self-Assessment Tax Return (usually £299 + VAT)

Offer is valid until 01.12.2022.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

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Time to pay arrangements (TTP) are now much easier to agree!

Time to pay arrangements (TTP) are now much easier to agree!

Agreeing a time to pay (TTP) arrangement used to involve calling HMRC and convincing them that you were struggling to pay. The agreement was often made grudgingly. This stance has softened in recent years, and there may be no need to make a call at all.

So, what do you need to know?

TTP arrangements are informal agreements between the taxpayer and HMRC in situations where the self-assessment bill can’t be paid in full by the deadline. Instead, the TTP arrangement allows the bill to be spread across monthly instalments by direct debit.

Previously, TTP arrangements could only be set up by calling the self-assessment helpline, explaining the circumstances, and making a case for it. Taxpayers would often find HMRC reluctant to agree a payment period of more than a few months. The advent of the pandemic and the cost of living crisis has changed this.

It’s now possible to set up a TTP arrangement online with no need to make a call. This will be possible if you:

  • have filed your tax return
  • are within 60 days of the payment deadline
  • owe less than £30,000; and
  • can pay in full within twelve months.

Guidance on how to set this up is available online. Note that late payment interest will be charged, but no late payment penalties. As interest rates are steadily increasing, paying sooner rather than later is recommended wherever possible.

You will need to have your tax return done before applying for TTP arrangements. We are currently running a promotion until 1st December 2022.

£225 + VAT for a basic Self-Assessment Tax Return (usually £299 + VAT)

Offer is valid until 01.12.2022.

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

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How to set payment terms if you’re a freelancer or contractor

How to set payment terms if you’re a freelancer or contractor!

Following up on late or non-paying customers is no freelancer’s favourite task. Which is precisely why you need to set payment terms up front (and in writing!) before you work with a new client or customer.

By communicating and agreeing on the non-negotiables for doing business with you, you’ll avoid awkward misunderstandings, frustrating disputes, and in most cases, the ugly hassle of debt collection.

These tips will help you pave the way for consistent cash flow by setting clear payment terms.

Minimum legal requirements:

As a business owner you are only required to include your business name and address on your invoices. But it’s in your best interest to include more information than the law requires.

It’s recommended that every invoice include:

1. The invoice date
2. Complete contact info
3. Payment instructions (i.e. acceptable forms of payment and when payment is due)
4. An itemisation of services

If you haven’t shared your payment terms in writing and a client won’t pay, you have little recourse. You won’t be able to charge a late payer interest on their balance owing, let alone engage the services of a debt collection agency.

In addition to including your payment terms in clear and simple language on every invoice, be sure to state your payment terms early on.

Send along your policies in an email, include them in an agreement or contract, and/or point new clients to the terms and conditions outlined on your website.

What to include in your payment terms:

It’s up to every entrepreneur to decide when and how much they need to be paid in order to operate a smooth, positive cash flow business.

As a starting point when setting payment terms, think of the troubles you’d like to avoid and how you could prevent them with the right policies.

In addition to when payment is due (i.e. on receipt of invoice, Net10, Net30) you might want to include:

1. Pre-payment requirements (i.e. a full or partial deposit)
2. Incentives for early payment (e.g. “Net30” means clients get a 2% discount on invoices due in 30 days if paid within 10 days)
3. Late payment fees (e.g. 2% on the balance, accruing monthly)

You might also include a description of the products or services offered, delivery timelines, a reminder of the terms of your agreement, and what will happen if either party doesn’t stick to the policies in place.

Final thoughts

For freelancers and contractors, requiring pre-payment in the form of a full or partial deposit can really help avoid the “feast or famine” cash flow cycle.

It can feel a bit intimidating to ask for payment before you’ve completed the work but think of it as a client screening process. After all, it’s only the ones who understand you are offering a valuable service and are willing to pay for it that you want to work with.

As a secondary benefit, when clients invest up front they understand they are working with a professional and act accordingly. And if it turns out you do have a few late paying customers from time to time, those deposits you’ve collected will ensure you have the cash to carry you through.

If you are looking for Fulham accountants or a tax advisor in London, get in touch!

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

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Why your business needs you to say no

Benefits of using technology!

These days, you can use technology to take care of almost any issue facing your business. If you have a task you don’t like to do, there’s an app or software program to take care of it for you. 

Being open to new possibilities is a positive trait shared by most entrepreneurs. But saying yes to all the people you meet and opportunities that come your way can get you into trouble.

When we overcommit (especially when we take on projects that don’t actually benefit our business) our stress can hit the roof. It’s much hard to be productive when we’re feeling burned out and resentful.

One of the most impactful changes you can make in your business is to form one simple habit: give yourself time to weigh the cost and benefit before making any decision, and politely decline any opportunity that doesn’t align with your goals.

If you’re feeling stressed and less productive than you’d like, it’s time to get better at saying no. Here’s how:

Check your business plan!

Your business plan is more than a record of the year’s goals and projections. It’s a living document designed to help you guide your business in the direction you want it to go.

Although some decisions may seem small (an invitation to coffee, a request for advice), all of those “asks” add up. In order to stay focused on the success of your business, you need to always keep your short and long term goals in mind.

If you don’t have a business plan (or it’s been some time since you wrote one), any of these free small business plan templates can help you get clear on where you want to take your business – and how you’ll get there.

Make a thoughtful decision:

If someone’s request does not help your business, your decision is easy. If you may want to work with the person in the future, or there’s something you can ask in return that will benefit your company, a definite maybe is in order.

Before you say yes ask yourself the following questions:
How does agreeing to this benefit my business? How important is that benefit at this time or in the future?
Do I have the capacity to carry out this request at this time? How might other aspects of my business suffer if I prioritise this request?
What does my gut say? Will I feel burdened, owed a favour, or for any other reason resent saying yes to this request?

Scripts for saying no:

If you’ve weighed the decision and need to turn someone down, these simple phrases can help you to say no gracefully.
Thank you for thinking of me but I can’t take on another project right now.
I’d like to help you but I have other commitments.
A healthy balance at work at home is my priority at the moment. I know this is a small request but I can’t be of service right now.
I’m sorry I can’t do what you’ve asked, but I can do this for you if it helps.
I’m unable to help you now, but perhaps another time.

Notice that specific reasons given for declining a request aren’t offered. You don’t need to give a list of excuses for saying no, which can sound unconvincing. 

Unfortunately when offered reasons for refusing a request, some people will add pressure by trying to challenge them.

Final thoughts

When you become skilled at saying no, you’ll not only avoid additional stress, you’ll have more time to spend doing meaningful work you enjoy, building a business you love.

One final thought: if the thought of saying no still fills you with dread, don’t think of it as saying no. Think of it as saying an enthusiastic “yes” to you and the success of your business.

Kind Regards,

The Team at London Accountants

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Do you know your break-even point?

Do you know your break-even point? 

All business owners need to be aware of this – that is, the number of units they need to sell in order to cover their operating costs.

Once you’ve reached your break-even point, it’s time to celebrate: your business is no longer in the red, and you are officially earning a profit.

This article will show you how to calculate your break-even point so you can make wise business decisions that support greater growth.

Why your break-even point matters:

Entrepreneurs who attempt to run a business without knowing whether or when they’ll be profitable probably won’t be in business long.

Knowing your break-even point comes in handy whenever you’re making plans to invest in your company’s growth, or making a decision that will have an impact on profits (i.e. a cost-benefit analysis).

Another key advantage of knowing exactly how much you have to earn to start generating profits is improved accuracy of your budgets and forecasts.

What are your fixed costs?

The first step to calculating your break-even point is to list the predictable, ongoing monthly expenses required to run your business.

Examples of fixed costs include:
– Rented or leased office space
– Rented or leased retail space
– Employee salaries
– Office expenses
– Insurance
– Utilities (e.g. heat, electricity, phone service, internet)

Do the best you can to include the most accurate numbers on your break-even spreadsheet – and be sure to add an additional 10% to cover unforeseen miscellaneous expenses.

List your variable costs

You’ll also want to take into account the business expenses that vary month to month. In order to be as precise as possible, calculate an average monthly cost by tracking your variable expenses over a two to three month period.

Examples of items you’ll want to include monthly estimates for are:
– Inventory
– Labour
– Commissions
– Shipping costs
– Delivery fees
– Interest fees Icalculated on your business credit cards or lines of credit)

Based on your fixed and variable monthly costs, you can now determine how much you need to sell in order to reach your break-even point.

Try this simple break-even formula

To find the break-even point for any product or service you offer, enter the following numbers in the formula below:
1. your company’s fixed overhead costs
2. the price of each item for sale
3. each unit’s variable costs

Fixed costs ÷ (unit sales price – variable costs)

As an example, let’s calculate the break-even point for a web designer offering fixed rate website packages priced at £5,000/each.

Fixed operating expenses: £10,000
Variable expenses/package: £1,000
Current sales price: £5,000/package

£10,000/(£5,000 – £1,000)
£10,000/(£4,000) = 2.5

According to this calculation, the web designer would need to sell 2.5 website packages to break even and start earning a profit.

In order to improve profitability, the designer may decide to cut expenses, switch to lower-priced business service providers, raise her rates, or try to sell her customers new “add on” services.

Final thoughts

To ensure you’re always making business decisions based on the most accurate, up to date info, make it a habit to update your break-even analysis each quarter.

Now that you know your company’s break-even point, what will you do to increase your small business’s profitability today?

Kind Regards,
The Team at London Accountants

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Smart money tips for business owners

Smart money tips for business owners!

Small business owners know how important it is to save money. They know that one day that few quid they’ve saved could come in handy, especially during slower times.

Saving money is definitely important, but there are also things small business owners can – and should – spend their money on today. It might seem counterproductive to spend money when you want to put it in the bank (and make no mistake, saving and investing are also vital) but sometimes spending your money can wind up helping your business immensely, protecting it from slower times.

Here are three things smart business owners spend their money on.

1. Their employees

Your business is nothing without your employees and happy employees are more productive, motivated and loyal. Smart business owners know that it’s worth spending a little extra money to ensure you have the best employees on your staff and to reward them for their hard work.

When you can, spend money on your employees. Offer bonuses or gifts for meeting their goals or exceptional service, provide better-than-average benefits plans, give them opportunities for training, or increase their salaries.

Happy employees not only give more to your business they reduce the turnover rate, saving you the cost and headache of finding and training new workers. Plus, your clients and customers like seeing consistency in your staff, so they’ll appreciate that you keep your workers happy.

2. Their marketing

Many business owners think marketing is about finding clients today, but a good marketing strategy looks to the future. Just because your business is busy today doesn’t mean it will be tomorrow and if you only focus on your marketing when things are slow, your downturns will last longer than they should. Unfortunately, too many business owners only gear up their marketing efforts when business slows down.

By then it’s too late.

No matter how busy you are today, marketing should be one of your financial priorities. You need to market yourself today to ensure customers tomorrow, next week, and next month. Spend your money on a proven marketing strategy that draws customers in and you might be able to avoid future downturns or at least stop them from lasting as long.

3. Their administrative tasks

There’s a lot to running a business that can be outsourced. Yes, outsourcing costs you money. But it also saves you valuable time and energy. It may also prevent needless headaches.

There are many service providers out there that offer valuable assistance, freeing up your time for the things you love to do, and are more skilled at. You can outsource your payroll, invoicing, bookkeeping, accounting, legal advice and marketing. You can even hire an administrative assistant to help you with day-to-day business tasks.

These outsourced service providers are specialists in their field and can provide you with the services you need, when you need them. If you’re not an expert in those fields – especially legal and accounting – outsourcing those tasks can also prevent costly errors.

Your time is valuable. Spending money so someone else can take care of the mundane tasks you dislike is worth the expense.

Final thoughts

Smart business owners know there’s a time and a place to spend money. Spending your money in smart ways saves you time and energy. It can even save you money in the long run by reducing turnover and preventing expensive mistakes.

Consider whether you could help your business, and yourself,  by spending money on your employees, marketing, or administrative tasks.

Kind Regards,
The Team at London Accountants

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Automating These Business Activities – Are You Falling Behind?

Automating These Business Activities – Are You Falling Behind?

The daily processes and transactions involved in operating a business can mean long hours of repetitive tasks and occasional oversights due to human nature. Automating these tasks can result in significant savings in resources and eliminate mistakes caused by human error. The key, however, is to know which tasks should be automated and which ones warrant staff intervention and guidance. Let’s take a look at some of them.

Here are six activities that you should definitely be automating for your business.

1. Abandoned Online Carts

Not following up with visitors who’ve abandoned shopping carts on your site is just leaving money lying on the table. They’ve already expressed interest in your products. Automated engagement touch-points can create the perfect follow up to prompt them to finish their purchase. Exit pop-ups and follow-up emails are great devices to use when reaching out to visitors who’ve abandoned carts on your site.

2. Lead Capturing, Nurturing, and Scoring

Automating your lead development process can do wonders for your company’s conversion rates. Both hot and cold leads require attention and targeted engagement in order to convert into paying customers. Using automation software can help sales reps to strategically guide prospects to end of the sales cycle, and it can also direct you towards the leads that will convert the fastest.

3. Engaging New Contacts

Entrepreneurs meet new contacts all the time. Whether it’s a potential business partner or prospective customer, automating your engagement with them can help you forge a solid rapport after your initial contact. There are several CRM options that’ll allow you to group contacts by event, type, company, and location, amongst other settings to ensure that your business card collections don’t go to waste.

4. Personal Direct Mail

Outreach efforts with a personal touch tend to garner higher engagement rates, which explains why businesses send out birthday cards, calendars, seasonal greetings, and other materials to customers. With the right software, you can set up automated, sequenced events to gather customer personal data and incorporate it into specific marketing activities.

5. Hiring Processes

Automating your hiring process is one of the best things that you can do for your business. Everything from receiving applications and interviewing to setting up drug tests and completing new-hire paperwork can easily be done with automation. First, outline what your hiring process looks like. Next, determine staff member roles and duties within your process. And lastly, establish time frames that each activity should fall within. There are tons of HR software programs that can make automating your hiring process a breeze.

6. Word-of-mouth marketing

Numerous marketing studies show that consumers are more likely to buy from companies if they’ve been referred by a friend. Encourage customers to give referrals about your products by simply asking for them.  There are several ways to automate this, including adding referral mentions to order confirmations, discount offerings, and email outreach campaigns.

Set aside a week or two to take a look at any processes that can be automated within your business. Automating repetitive and tedious tasks can aid you in uncovering hidden cost-savers and potential sales opportunities for your business.

Kind Regards,
The Team at London Accountants

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Get paid first – why your salary should be your business’s first monthly expense

Get paid first – why your salary should be your business’s first monthly expense!

It’s the line item most often left out of a small company’s budget: the business owner’s salary.

Let’s face it: you can always spend cash on your business. From office expenses to employee salaries to rent, every month a portion of your revenue is accounted for.

But paying yourself first is a must. You need to earn a living – and paying yourself can actually help your business succeed.

Here’s why you should make your salary a top priority, starting now.

It’s the first rule of wealth building

A business exists to make money, but business owners thrive when they continuously save and invest profits. If you aren’t paying yourself before your vendors, suppliers, and employees, you’re probably not setting aside funds to re-invest in your business to help grow more profits – or investing in a wealth building portfolio.

Pay yourself what you can afford monthly or biweekly and earmark a portion to invest in savings. Making consistent financial contributions throughout the year will help you build a healthy nest egg – and the sooner you start the more you’ll benefit from compound interest.

Setting up automated fund transfers from your business to an investment savings account will make paying yourself easy. After a month or two, you won’t even notice a difference in your cash flow – but odds are you will be motivated by your growing balance.

Avoid a cash flow crunch

There will be times where you’ll need additional funds available for your business – and borrowing from a lender may not be an option. Unfortunately if you’ve only been in business for a short time, it can be difficult to qualify for a business loan or line of credit.

When you make it a habit to pay yourself first you’ll be able to build up funds. When you need to make a large purchase, an unexpected expense comes up, or you’re ready to invest in profit-generating growth strategies, you’ll be prepared – and can avoid the risk of debt.

Pay yourself – even when you think you shouldn’t

Sometimes it may feel like you need to compromise between two priorities: paying yourself and paying all your bills in full.

Continue to pay yourself a minimal salary every month, even when money is tight. Then pay the rest of your bills, putting down as much as you can above the minimal required payment. This strategy will help you build a solid credit rating – so when you apply for a business loan a lender will consider you a good risk.

It’s worth noting that banks, finance companies, and investors regard business owners who pay themselves in a positive light – and are much more likely to want to deal with them.

Financial reward can be a powerful incentive

Many businesses generate revenue, but it typically takes time to see healthy profits – another reason it can be difficult to pay yourself first.

Nonetheless, rewarding yourself for your hard work will motivate you to keep working, even if you aren’t able to pay yourself a large salary right away.

Talk to your accountant for a guideline on how much to pay yourself – and always treat yourself as generously as you would your employees.

Reward financial milestones met and projections exceeded with a bonus. Raise your salary when your profit shows continuous growth. If giving yourself a raise creates some anxiety, do it in confidence knowing you can always make adjustments as needed.

Kind Regards,
The Team at London Accountants

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Setting and Achieving Financial Goals

Setting and Achieving Financial Goals!

Financial security, whether that’s for a business or an individual, requires planning. You need to know where you want to be, where you are now, and how to cross the gap between the two places. Having goals and a plan makes it more likely that you’ll achieve financial security; whatever that means to you.

Here are some steps to setting your financial goals.

1. Be specific with what you want

It’s easy to say you want “financial security” but what does that mean to you? After all, financial security can mean different things to different people. Do you want money to cover your retirement? Do you want enough cash that you can handle emergencies? Do you want to live a lavish lifestyle or are you planning on downsizing?

Once you know your big goal, write out what that actually looks like to you. How much money do you feel you’ll need in retirement to cover your lifestyle? How much would make you comfortable? If you’re not sure what you’d need, talk to your financial advisor, who can ask you the questions and provide you with the guidance you need to determine how much money you should be planning for.

Remember that the most actionable goals are SMART (specific, measurable, attainable, realistic and timely). Know when you want to retire, for example, how much money you’ll need and how much you can realistically save by that time.

2. Write your list of goals and put each in a category

Some goals are short-term, some are medium-term and some are long-term. Planning for a holiday this year is a short-term goal, while retirement planning is long-term. Once you know what your goals are, put them in a category based on whether they are short-, medium-, or long-term goals. This will help you plan how much you need to set aside to achieve each, and what sort of timeline you’re looking at.

3. Determine your assets and debts

If you’re like most people, you likely have both assets and debts. Achieving your financial goals won’t be as simple as saving money. You’ll have debts you need to pay off. In the past, people often focused on paying off their debts, but that meant there wasn’t as much money set aside for the future.

Before you can map out a plan to achieve your goals, you need to know where you are currently. How much money do you have available to you? How much are you bringing in monthly? What are your expenses? What debts do you have and what are the interest rates?

Take stock of money flowing into and out of your accounts over a few months. Where do you spend the most money? Are there places you could cut back?

4. Build a plan to help you reach your financial goals

This can be a difficult step to take on your own because your own patterns and habits might influence how you plan. It’s worthwhile to talk with a financial advisor, who can review your information and help you set up a path forward. They can also keep you accountable for achieving your financial goals, and assist you in addressing any emergencies that may arise. They will also identify areas where you could cut back and how to make your money go further for you.

Final thoughts

By knowing what your goals are and having a plan to achieve them, you’re more likely to achieve financial security. Talking with an advisor can help you get your finances on track.

Kind Regards,
The Team at London Accountants

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