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Finance workshop - The BIG Jelly 25th March 2011 - Nigel Lomax, Tax Assist


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Finance workshop - The BIG Jelly 25th March 2011 - Nigel Lomax, Tax Assist

  1. 1. TaxAssist Accountants <ul><li>Based on Sundorne Avenue in Shrewsbury </li></ul><ul><li>Started October, 2003 </li></ul><ul><li>400 clients </li></ul><ul><li>Team of 7 </li></ul><ul><ul><li>Nigel (FCMA), Melanie, Liz (ACA), Craig, Julie, Natalie and David </li></ul></ul>
  2. 2. Nigel Lomax FCMA TaxAssist Accountants <ul><li>Wide business experience </li></ul><ul><ul><li>Finance and general management </li></ul></ul><ul><ul><li>Many industries </li></ul></ul><ul><li>Approachable, friendly and responsive </li></ul><ul><li>Fixed Fees </li></ul><ul><li>Interest-free Direct Debit </li></ul><ul><li>HMRC enquiry protection </li></ul>
  3. 3. My Objectives <ul><li>Choosing most appropriate structure </li></ul><ul><li>Getting finances right </li></ul><ul><li>Business planning </li></ul><ul><li>Record-keeping </li></ul><ul><li>Using your management accounts </li></ul>
  4. 4. Most appropriate structure... depends on <ul><li>Business volatility </li></ul><ul><li>Your approach to risk </li></ul><ul><li>Your intentions (selling or passing on) </li></ul><ul><li>Taxation </li></ul>
  5. 5. Most appropriate structure <ul><li>Sole trader </li></ul><ul><ul><li>Simple, inexpensive but with risk </li></ul></ul><ul><li>Partnership </li></ul><ul><ul><li>Similar to sole trader (consider partnership agreement) </li></ul></ul><ul><li>Limited Company </li></ul><ul><ul><li>More bureaucracy but usually most tax-efficient and less personal risk </li></ul></ul>
  6. 6. Other important considerations <ul><li>Inform HM Revenue and Customs </li></ul><ul><li>Consider VAT position </li></ul><ul><li>Consider PAYE/CIS position </li></ul><ul><li>Set up a record-keeping system </li></ul><ul><li>Lots of penalties lurking </li></ul>
  7. 7. Getting finances right <ul><li>Have a business plan (not just numbers) </li></ul><ul><ul><li>include a cashflow and profit forecast </li></ul></ul><ul><ul><li>Use it to critically examine the risk in your business </li></ul></ul>
  8. 8. How can a plan help? <ul><li>Gives a structure to develop ideas. </li></ul><ul><li>Helps identify risks and opportunities. </li></ul><ul><li>Leads to growth through extra finance. </li></ul>
  9. 9. Tips for a solid business plan - 1 <ul><li>Be clear on what you will achieve and what you need. </li></ul><ul><li>Make sure the words are reflected in the numbers. </li></ul>
  10. 10. Tips for a solid business plan - 2 <ul><li>Start with an assessment of your finances and your monthly minimum income. </li></ul><ul><li>Present profit and cash-flow statements, explaining differences by referring to capital employed. </li></ul><ul><li>Explain business risk, sensitivities and “hotspots”. </li></ul>
  11. 11. Tips for a solid business plan - 3 <ul><li>Look at it as if you were being asked to invest. </li></ul><ul><li>Explain how the plan will be monitored. </li></ul><ul><li>Be clear about fixed and variable costs, short and long-term commitments. </li></ul><ul><li>Understand the various sources of funding. </li></ul>
  12. 12. Tips for presenting your business plan <ul><li>Be well prepared. </li></ul><ul><li>Explain your track-history. </li></ul><ul><li>Be honest. </li></ul><ul><li>Understand what the lender wants. </li></ul>
  13. 13. Getting finances right <ul><li>Develop an appropriate and useful business record-keeping system </li></ul>
  14. 14. Business record keeping - benefits <ul><li>Improved control </li></ul><ul><ul><li>e.g. Credit control </li></ul></ul><ul><li>Improved decision-making </li></ul><ul><ul><li>e.g. Customer pricing </li></ul></ul><ul><li>Improved planning </li></ul><ul><ul><li>e.g. Investments and cashflow forecasting </li></ul></ul><ul><li>Confidence </li></ul><ul><ul><li>you know why you have so much or so little money in the bank </li></ul></ul>
  15. 15. Business record keeping - principles <ul><li>Use bank accounts and credit cards solely for your business </li></ul><ul><li>Have a clear audit trail </li></ul><ul><li>Ask you accountant for advice on record-keeping systems </li></ul><ul><li>Talk to your accountant a month before your year-end about debtors, creditors and documentation required. </li></ul>
  16. 16. Business record keeping - options <ul><li>DIY </li></ul><ul><ul><li>Manual </li></ul></ul><ul><ul><li>Excel </li></ul></ul><ul><ul><li>On-line </li></ul></ul><ul><ul><li>Sage50 </li></ul></ul><ul><li>Accountant managed </li></ul><ul><ul><li>On-line </li></ul></ul><ul><ul><li>Sage50 : from prime documents </li></ul></ul><ul><ul><li>Sage50 : client input </li></ul></ul>
  17. 17. Management Accounts <ul><li>Management accounts report trading performance (P&L Account), capital employed (Balance Sheet) and cashflow </li></ul><ul><li>Cashflow is the result of profit and how much money is tied up in the business </li></ul>
  18. 18. Trading account analysis <ul><li>Supports decision-making (fixed asset investments, marketing projects, new products/markets. </li></ul><ul><li>Prevents expenditure drift </li></ul><ul><li>Break-even point analysis </li></ul><ul><li>Allows benchmarking </li></ul><ul><li>Makes obtaining finance easier and the business more valuable </li></ul>
  19. 19. Cashflow <ul><li>Cashflow is the change in your bank balance. Sole traders will add back drawings to measure the business cashflow. </li></ul><ul><li>Most businesses measure cashflow... Fewer businesses explain cashflow... Fewer still predict cashflow </li></ul><ul><li>Cashflow is important as poor cashflow rather than poor profitability can be fatal </li></ul>
  20. 20. Working capital <ul><li>It is influenced by the “speed” of the “production” cycle and the strength of the supply chain. </li></ul><ul><li>How quickly you invoice and how quickly you get paid. </li></ul>
  21. 21. Speeding up customer payments (1) <ul><li>Only trade with businesses that can pay </li></ul><ul><li>Take every opportunity to publish your trading and payment terms </li></ul><ul><li>Invoice immediately, send invoice by post and e-mail </li></ul><ul><li>Make sure systems exist to prevent invoicing delays (sales pricing system) </li></ul><ul><li>Send reminder before payment is due </li></ul><ul><li>Offer a variety of payment methods </li></ul>
  22. 22. Speeding up customer payments (2) <ul><li>Put your bank details on all invoices and statements </li></ul><ul><li>Reward prompt payment / discourage late payment </li></ul><ul><li>Find out who will authorise payment </li></ul><ul><li>Explain that your prices do not include administration cost to collect late payment. </li></ul>
  23. 23. Speeding up customer payments (3) <ul><li>Have a collection routine and stick to it </li></ul><ul><li>Be firm but polite when requesting payment. We are all busy and sometimes things get missed. </li></ul><ul><li>Involve a 3 rd party when required </li></ul><ul><li>Management attention </li></ul>
  24. 24. Warning signs <ul><li>The sudden big order </li></ul><ul><li>Broken promises/non-availabilty </li></ul><ul><li>Requests for extended payment terms </li></ul><ul><li>Deteriorating payment performance </li></ul><ul><li>External information (e.g. Google) </li></ul>
  25. 25. VAT registration illustration
  26. 26. Payroll <ul><li>Must run where employees earn above NI LEL limit. </li></ul><ul><li>Strict definition of casual employees </li></ul><ul><li>Beware of paying net and grossing up </li></ul>
  27. 27. Other common questions <ul><li>What can I claim </li></ul><ul><li>Using own car </li></ul><ul><li>Use of home </li></ul>
  28. 28. TaxAssist Accountants 01743 366669 <ul><li>1 Sundorne Avenue, Shrewsbury. SY1 4JW </li></ul><ul><li>[email_address] </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>