Thursday, September 25, 2008

National Minimum Wage Increase

From 1 October 2008, the national minimum wage for eligible workers will increase. Click here to make sure you are ready for the changes.

tax-sorted.biz
welovebookkeeping.co.uk

Friday, September 19, 2008

Tax planning for the Credit Crunch

Like it or lump it, times are difficult at the moment and there’s no getting away from it – not unless you have a media blackout.

So we came up with a few tips so you can start planning now for the ongoing effects of the credit crunch.


Falling profits inevitably result in lower tax payments. If you’re a sole trader or partnership you should start thinking about reducing your self assessment tax payments due at the end of January next year – particularly as they may be based on last year’s higher profits.

However, you should be aware that the taxman will charge interest if it turns out you haven’t paid enough tax on time so make sure that you get your profit projections right.

Is there any way I can reduce my taxable profits?

Well if you’re a sole trader or partnership you can think about changing your accounting date to one later in the tax year – this may allow you to get a quicker reduction in ongoing tax liabilities for declining profits.

The flip side of course is it could accelerate tax liabilities when and if your profits start rising again.

What if I trade through a limited company?

You can extend the company’s accounting period so as to accommodate any losses/further provisions arising after the normal accounting date.

This may enable losses to be offset against profits made earlier on in the same accounting period or reduce the overall profits, which were possibly taxed at a higher rate.

What if I’m just about to start a new business venture?

Think carefully about your choice of business vehicle because, despite what the man in the pub says, trading as a limited company is not necessarily the be all and end all.

A limited liability partnership may be a more viable alternative as it can give commercial protection in this current difficult climate.

If you trade as a partnership or sole trader and make losses in the opening
year(s) of your trade you should be able to relieve those losses against your income for earlier years – this option isn’t available if you run your business through a limited company.

But beware – if you decide to trade as a partnership you must make sure that all partners are active in the business and that the loss claimed by each individual partner does not exceed their capital contribution.

If matters are not structured properly, then the Revenue will most likely deny your loss claim leaving you even more out of pocket.

What about extracting profits from my company?

Well dividends are still the most tax-effective way of extracting profits from the company, though company law dictates they must be “legal” so make sure you have enough reserves to pay them. Care also needs to be taken that a collapse in trading results in the later part of your accounting period does not render previously paid dividends illegal.

Finally what about VAT?

If you’re a small business (i.e. your VAT exclusive turnover is less than £1.35 million) then consider adopting the cash accounting scheme for VAT purposes.

This may be of benefit where late payment of your sales invoices results in you paying VAT to Customs potentially when you haven’t even received the money in the same VAT quarter.

Hopefully these ideas have given you food for thought though if you think we can be of any further assistance please give us a call.

http://www.tax-sorted.biz

http://www.welovebookkeeping.co.uk



Saturday, September 06, 2008

Leaving on a jet plane


Well I'm packing my bags for another trip to England next week to visit some clients and (hopefully!) sign up some new ones too.

I haven't been to England since my last trip back in May so this remote working is really beginning to work for me. For the first few years I was going back every three weeks but have cut it down to over three months! But that was mainly because I hate airports during the summer holidays. Does anyone else have anything to say about running a business remotely?

I may be too busy to make any posts next week but keep checking because I may surprise you (and myself!)

http://www.tax-sorted.biz
http://www.welovebookkeeping.co.uk

Wednesday, September 03, 2008

How to be approachable and look confident to others

I discovered some great short videos on how to look more confident and how to look more apprachable. As business owners we are all sales people so it's really important we don't let ourselves down with the basics.

Click here to watch them

http://www.welovebookkeeping.co.uk
http://www.tax-sorted.biz

Monday, September 01, 2008

Many people pay too much tax and most of it can easily be avoided. Take this example of a family man with a van.

Let’s assume his van is a little tired looking and he thinks it’s time to get a new one for his image. If he’s making £30k profit a year and the van costs £15k then planning to buy this now can save him £6k. Here’s how: -

There are different ways to buy the van such as leasing, outright purchase from cash reserves, hire purchase or contract hire. If he buys it (and he can do this on finance) then that £15k will qualify for a new allowance and he’ll get 100% tax claim. This will reduce his taxable profit to £15k and trigger a Tax Credit claim of £3k.


Next year with all things being equal he probably won’t buy another van so his taxable profit will go up to £30k. But, with Tax Credits you get an award every year based on your last year's claim. This will give him another £3k but amazingly there’s something called the income disregard. The means that provided your income doesn’t go up by more than £25k you don’t need to repay any awards you’ve had!

Nice, but you need to make sure you claim on time because claims can not be backdated. It makes sense with these types of opportunities to have a protective claim in place. Have you done this?

This works for any reduction in taxable profit. So, if you decided to go abroad for a long holiday you’d get £6k from the taxman. Maybe some businesses will be hit with a £15k bad debt in the Credit Crunch. It would be nice to get £6k of this back.

If you would like more details about this please contact me taxsorted(at)googlemail.com

Thanks to Lesley Ward for writing this article