The UK Government announced a new capital allowances relief. From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

• 130% super-deduction capital allowance on qualifying plant and machinery investments
• 50% first-year allowance for qualifying special rate assets

This super-deduction is designed to promote companies to invest in productivity enhancing plant and machinery. It is important businesses understand and take advantage of these generous new reliefs while they are available.

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive. There is no upper limit set for the expenditure, so as long the expenditure is incurred between 1 April 2021 – 31 March 2023. The enhanced relief also does not allow for plant and machinery that will be made available for leasing (including landlord fixtures within rented property) and excludes cars.

The pandemic has been a big blow for a lot of businesses, if you have been looking at equipment to help you grow, now may be the time to use this relief. If you are not sure on whether it is the right time to make a purchase, or if the equipment qualifies for the super-deduction relief, message us on nicola@crossaccountingservice.co.uk or if you would prefer to chat, call Cardiff: 02920 653 995 or Bridgend: 01656 530 063. Our team is always happy to help.

2019 has not been the easiest of years for many of our clients, the lengthy political and economic uncertainty is making the general public think a lot more about spending their hard-earned money.  Small businesses are having to renegotiate with their suppliers and look at all their costs to ride the storm we find ourselves in at the moment.

Not ones to sit down and wait for things to happen, this blog is about refinancing. 2019 may not have been the best year, but let’s not sit and see if 2020 will be better. Now is the time to review your finances. Autumn is a great time of year to look at this, you’re halfway through the financial year, summer is over, and Christmas is around the corner, the end of the year will be here before you know it.

So, what is refinancing?

Refinancing is the process of replacing an existing loan with a new loan. Typically, people refinance so they can get a better deal on their current loan. For example, you may be able to get a better interest rate than what you are on currently, saving you money. Refinancing also depends on your credit score, current deal and many other factors.

You may also have some assets in your business currently tying up cash and want to get a loan to put more liquid cash into the business, to allow you to put some plans for 2020 into practise right now.

Why refinance?

If you have a loan or a mortgage, it is worth speaking to the provider for refinancing. Some potential advantage of refinancing includes:

• Lowering your monthly payments. You can then put to use your extra saving to pay off other debts or towards your saving goals.
• You can combine your debts into one with some refinancing options. This is good so you know exactly when payments need to be made.
• Usually able to negotiate lower interest rates.
• Cashflow is tight but you have some assets that can assist you gain some cash to put back into the business.

Studies have shown that trying to negotiate a better refinancing deal tends to save people money and a lot of stress. Some questions to ask yourself is if you are paying too much monthly on any equipment that you could possibly lower or if you are too dependent on your bank overdraft as it is one of the most expensive bowing methods. Knowing where all your finances lay can help you budget and with the extra cash you can invest in yourself or your business.

Welcome to our latest blog. Christmas is around the corner and it’s our favourite time of the year here at Cross Accounting. It’s the time of giving and is there any other way to give your business a boost a grant to get your finance in place.

A business or an individual will be given a sum of money for a specific project or purpose. A grant usually covers only partial costs involved. Grants are given depending on your business activity, the amount of jobs that will be created due to this investment or if you are in a specific industry sector. Sometimes grants are linked to geographic areas. Such as those areas in need of an economic transformation.

Business Wales can support in finance, take a look at their finance locator to see if grants and other finance your business may be eligible for at https://businesswales.gov.wales/zones/business-finance/funding-search-tool-form

You should ensure that you meet the requirements of the scheme before applying for grants and finance. You’ll have to ensure you are ready to put up some of your own money as grants only cover partial costs. You’ll also need to have a detailed description of your project or purpose and a work plan with full costings. We can assist with a budget and full detailed cashflow to secure the finance you need.

The application process for grants can sometimes be time consuming and there usually is a lot of competition but on the plus side, most grants don’t have to be paid repaid giving your business that extra boost.

If you’re looking for that push to reach some New Years goals, the Development Bank of Wales can support to get the finance your business needs to succeed. Visit https://developmentbank.wales/ to get you ready for the New Year.

You will need to have a polished business plan at the ready.  If you would like us to look at your business plan, then you can book in for a free one-hour consultation where we can discuss how to start the New Year strong. Visit our website on www.crossaccountingservice.co.uk or call us on 02920 653 995. We wish you all a Merry Christmas and a prosperous New Year.

Methods of Finance

In our latest blog, we talk about the best methods of finance for your business. Sometimes it’s great to have that extra push to take your business to the next level. To attract the best funding for your business, you will need a business plan. We are experts in the field of preparing a cashflow and a business plan and can assist you in achieving the best method of finance for your business.

Finance Wales

Finance Wales are set up to aid in funding. They offer bespoke debt and equity investment packages designed to boost your business and accelerate growth. They offer three types of packages, micro loans under £10,000 have an easy two-day process. Have a look at their website, 

http://financewales.co.uk/business-finance-/growing-a-business/micro-loans-under-%C2%A35,000.aspx 

for more information.

Bank Loans

Bank loans are probably the most common types of finance for you and I. These types of finance are an amount of money borrowed for a set period with an agreed repayment schedule. The repayment amount will depend upon the size and duration of the loan and rate of interest. The terms and price will vary between bank providers. There isn’t just one type of loan, there are many different types, which I will look in to and describe the differences.

·         Working Capital Loan – This type of loan is usually required at short notice or emergency situations. This will usually incur the highest percentage of interest.

·         Fixed Asset Loan – For buying assets, where the asset itself is used as a security for repayment.

·         Factoring Loans – This type of loan is based on money owed to your business by customers or clients.

·         Hire Purchase Loans – For long term purchase of assets such as vehicles or machinery.

It’s best to talk to your bank or bank manager, as they will let you know the exact amount you can get for finance. The bank managers love an excellent business plan and cashflow, so make sure yours is current and polished to get in the good books of your bank manager!

Overdraft

This method of finance is a sum of money extended to you as credit by your bank, set at a pre-arranged limit when your account balance drops below zero. Usually charged interest on any amount of overdraft you use. The terms and price, like the loans, vary between providers. This is a good source to manage cashflow, but it is probably not suitable if you’re looking for long term financing.

Crowdfunding

Crowdfunding, also known as crowd financing or crowd sourced capital is usually carried out online. This allows several investors to individually invest smaller amounts of money in to a business. The individual investments are then combined to help a business reach its funding target. Crowdfunding is an excellent option for businesses that struggle to raise finance through loans or the conventional funding methods. Since crowdfunding is conducted online, you should make sure your idea is protected. In return of the funding, investors usually get a percentage of share of the business.

You can find more information by visiting http://www.crowdfunder.co.uk/help/what-is-crowdfunding

Government Offers

Governments usually offer support to businesses in all different shapes and sizes. https://www.gov.uk/business-finance-support here you can find from funding and finance, to grants and to mentoring for your business.

Caerphilly council are offering a business development grant. This grant can provide up to 45% of eligible expenditure to a maximum of £2,000. Business must be based in Caerphilly and be in the manufacturing or service to the manufacturing sector, or have a minimum of 60% business to business. For businesses in the Caerphilly area, please look at this link http://www.caerphilly.gov.uk/Business/Business-grants-and-funding/Business-development-grant to get more information.

Remember the key to accelerating your business in the positive forward thinking way to get that extra push is to have a business plan and cashflow in place. We offer a one hour no obligation consultation, where we can sit down with a cup of coffee and discuss your business. 

Visit our website on www.crossaccountingservice.co.uk or call us on 029 20 653 995 to see how we can assist you.

Use your business plan to get funding

The essential elements of a business plan

Potential investors and lenders will look closely at your business plan to help them decide whether to risk their money.

There is no standard format but most plans include:

• An executive summary highlighting the main points - to catch people's attention.
• Details of key personnel with an organisational chart showing individual responsibilities.
• Market research - details of competitors and how your product or service fits into the market - eg who your potential customers are and why you think they will buy your product or service.
• Your marketing plan - how you are going to get your product or service in front of potential customers, together with any assumptions made when setting your targets.
• Financial information - eg key ratios. These can be used to compare your business' performance against industry benchmarks. It's also a good idea to give details of any major expenditure you have made on long-term assets and explain the reasons behind any changes in working capital items, such as stock, debtors and creditors. Remember to include balance sheet and profit and loss account details. Many lenders ask for three years' financial information. If this is not available, supply details about trading to date.
• How you will manage credit, expenditure, stock planning and control, and debtors and creditors.

When seeking funding, include:

• A cashflow forecast indicating the amount of funding you need and why. For a start-up, include estimates of how much finance you will require for two to three years or until you start to make a profit. Indicate contingency funds that might be needed for rough patches. This is usually between 10 and 20 per cent of the total funding requirement. See our guide on cashflow management: the basics.
• Financial forecasts for a three to five-year period. Try to present this information in the same way as historical financial information, so that straightforward comparisons can be made.
• How a loan will be repaid, how investors can get their money back, and when.

Sources of fund are available in the form of

Bank financing in the form of Invoice financing. This allows you to raise your sales invoice and use a bank or a finance company to get a large percentage of the income immediately. Which will allow you to ease your cashflow

Overdraft facility with the bank - this is normally short term and can be recalled on demand.

A secured long term loan funding equipment or property.

Car financing with your local bank or car retail store.

There is some financial assistance to companies based in deprived areas for equipment, websites and training needs for staff. These are very few and far between and strict rules apply.

There is business assistance and courses available for new start up businesses in the Cardiff and Wales areas.    www.businessinfocus.co.uk

Equity financing.  This is related to gaining finance from private investors, they take a percentage of your company. In return you get business advice and mentoring, along with funding.  This option is normally suitable to fund large expansion plans, or to take your business global.  There is normally a contract in place confirming payback terms, interest and purchase of your shares back.

The Business Link website has an article dedication to informing small businesses about financing available.

Business Link Website

Another link that might be useful is the European Social Fund.  There are trained experts in the field who can apply for funding on your behalf.

http://www.dwp.gov.uk/esf/funding-opportunities/

What banks look for in a business

All investors assess applications for loans or investments using different criteria, and you should ensure you are aware of any specific requirements before making your application to particular lenders or investors.

However, if you are applying for finance from a bank or just setting up a new business bank account, there are some general points that almost every investor will want to take into account:

• a good financial track record and credit history for you and your business – see the page in this guide about credit rating and scoring
• a good management team with the right skills and expertise – involve your senior team from the start
• a business plan that shows clear thinking on ideas and strategy – this is an essential tool for your business and should include up-to-date financial information
• commitment from management and (as appropriate) other shareholders - the investor will need to be assured that the investment is one that everyone at the top of the business is happy about
• security - most lenders will want their money to be secured against tangible assets, so they can be sure of getting their money back
• your understanding of your market - the investor will probably want to make their own investigations of the market, but will need to know that you understand it as well

Even if your proposition is good, there are some things which will weigh against an application for loans or other funding:

• unauthorised overdrafts
• missed loan repayments
• County Court judgements against the business or its directors
• adverse credit rating data, against the business or its directors

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

As the clock ticks towards 01 April 2024, businesses across the nation are bracing themselves for the significant minimum wage increase set to come into effect. With no accompanying support from governments in these challenging times, the burden falls on the shoulders of businesses to adapt and plan effectively.

The Rise of Minimum Wage

As with every year, April 1st marks a pivotal moment as the minimum wage sees a substantial increase. Workers aged 21 and over will be entitled to the National Living Wage where currently it was workers aged 23 and over. While the intention behind such adjustments is to uplift low-wage workers and tackle income inequality, the reality for businesses is starkly different. For many, this hike presents a formidable challenge, with limited government assistance.

Financial stability is crucial to any business. It is extremely important that you protect and enhance it. Cashflow of your business is vital. You need to be aware of how much money is coming in and how much money is going out of the business. You will need to have a plan in place to cover any shortfalls.

Governments are having their own challenges and not always there to help us in a crisis, we have to stand on our own two feet, to see ourselves through these challenging trading times.

To stay on top of cashflow, it is best to speak to your accountant about cashflow projections. We have also got examples of how to get the best of cashflow on our website, click here to find out more.

We have examples of cashflow and budgeting here.

So, what can be causes of cashflow issues?

The number one issue we see is when a supplier has increased their prices significantly. This is when you need to decide if there is something you can scale back on or is it time to start shopping around. Talking to your suppliers if you notice increases, we’ve all been facing this over the past 18 months.

Track and monitor your costs, by carrying out management accounts, comparing this year with last year, you can see instantly what has changed for you and your business.

Late payments from customers can lead to cashflow issues too. This can sometimes cause tension as you do not want to ruin relations. The following tips can help tackle these issues;

·        Ensuring your invoices are accurate and on time can help avoid late payments.

·        Giving gentle reminders as it approaches credit term limits.

·        Providing easy payment solutions such as bank transfer or a direct debit system

·        Check your customers credit score, giving too much credit without looking into your customer bill paying activities can lead to bad debts.

·        Discounts for early payment to improve the timing of when the cash will be paid in can help too.

We all dislike to pay tax, but it is a part of life. Tax planning helps to keep your business financially healthy. We must ensure we have the funds to cover the tax payments. This is why it is crucial to work with your accountant so that you know well ahead of time how much your tax bill is. Not paying the tax bill in full and on time can add to the cost. Penalties and interest will incur and can make this less manageable.

There are allowances and reliefs out there to bring the tax bill down. Getting this done correctly will ensure that you pay the lowest but accurate amount over to HMRC.

Set up a savings account, and slowly build up the cash towards any tax bill, you don’t get surprises when its time to pay the bill then. Any surplus in that account, could pay for something you want.

Businesses that plan ahead, traditionally do better than those that don’t plan and work in the dark.

There are approximately 5.6 million businesses in the UK, of which 98% are considered small to medium sized businesses. So, we small businesses are crucial to the UK economy, there is no denying this.

Whether you are a start-up and excited for the times ahead, or an establishment renewing your challenges, we all want to be successful with our business. In our latest blog, we talk about tips we think are vital to any business.

We all have a vision in mind, of where we’d like to see our business in the future. This vision needs to be translated on paper as your business plan. A business plan is a must for all business owners. This can help outside investors get an insight of your business, for if ever you need funding to grow your business.

Business Plan

A business plan should consist of;

·    Summary – What is your purpose, what is your vision?

·    Target market – Who are you likely to sell to

·    Competitors – What is your rivals weakness? Why are you different?

·    Staff – Do you need people to help run your business. What level of skill and pay is required?

·    Suppliers – Who will be your main supplier?

·    Marketing Plan – How will you advertise yourself to the world

·    Operations – Which is the best way to run your business.

·    Finance – How much money do you need? Determine the profitability of the business.

Business Structure

As well as a business plan, you will need to have a business structure. Sole trader, partnerships and limited companies all have their own pros and cons. Deciding which structure to choose is not always straightforward. If an asset is owned outright, then you would need to consider retaining personal ownership on incorporation. If you’re not sure which structure model you should go for, then here at Cross Accounting we can give tailored advice to you.

Year End

We cannot stress enough the importance of doing your year end as early as possible. Once completed, this will give you peace of mind as you will not have to worry, until next year. It will also give you more time to budget for your tax bill. You will not be in a rush to find the money for the tax bill and not kill your cashflow. Keep all receipts for your expenses, these will all help lower the tax bill. If you buy equipment or tools, mobile phone bills, petrol, these are all deductible. HMRC can conduct random spot checks, so it’s important to keep paperwork, recommended for 6 years.

Budgeting

Having budgets in place for your business can help you predict the near future. This allows you to have a spending plan, so you can make sure you have money for the things you need and the things that are important to you. You can see what is eating up your cash and avoid spending on unnecessary fees. Below is an example of a very simple budget.

These tips will keep you motivated and more importantly give you an idea of where your finances lay, helping you to quickly identify if there are rainy days ahead.

If you need expert tailored advice, please do get in touch as we are always happy to help.

There is always new rates and thresholds that come in to place in the new financial year.

The National Minimum Wage rate has gone up, however, the personal threshold has stayed the same.

Personal Allowance

The personal allowance is the amount you can earn without having to pay any tax.

This financial year 2023-24 is £12,570

National Insurance Rates

As an employee, you will pay Class 1 NI rates. If you earn above the primary threshold, then you will play Class 1 NI. The primary threshold for 2023-24 are £242 a week, or, £1,048 a month, or, £12,570 a year.

You will pay an additional 2% if you are in the upper earning limit. The upper earning limit are £967 a week, or, £4,189 a month, or, £50,270 a year

As an employer, you will have to pay national insurance on your staff members. This includes if you are a sole director on payroll. The rate applies to earnings above the secondary threshold. The secondary threshold for 2023-24 are £175 a week, or, £758 a month, or, £9,100 a year.

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount. For the year 2023-24 this is £5,000

National Minimum Wage

The National Minimum Wage is the minimum pay per hour all workers are entitled to by law. These rates apply from 1 April 2023

SSP Statutory Sick Pay

Employees are entitled to SSP if they are off work for 3+ days. The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

If you want to ensure you are not breaking the payroll rules with NMW and SSP, message us to see how we can help.

If you do not understand the personal allowance threshold give us a call on our Cardiff or Bridgend office where the team will be happy to help.