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Category: Cash Flow

Business Planning- Thinking of Making Changes in 2026?

Posted on by Sarah

January Business Planning Matters More Than You Think.

For many business owners, this is when thoughts start forming about growth, restructuring, investment, and improvement, even if the action won’t happen for months – and that’s exactly how it should be.

Because the biggest business mistakes are rarely about ambition.

They’re about timing.

Taking on Staff

Hiring is rarely “just” hiring.

It brings PAYE, pensions, employer NIC, payroll software, HR policies, holiday pay, and cash flow impact. Businesses often underestimate the true cost of an employee by 20–30%.

Business Planning this early allows you to:

  • Forecast affordability properly
  • Choose the right pay structure
  • Avoid panic hiring later in the year

Changing Business Structure

Sole trader to limited company is not a badge of success. It’s a tax and risk decision.

Timing matters. Profit levels matter. VAT status matters. Existing contracts matter.

Get it right and you save tax.

Get it wrong and you create admin, cost, and sometimes HMRC attention you didn’t need.

Investing in Equipment or Vehicles

Capital allowances, VAT treatment, finance structures, and cash flow all collide here.

Buy at the wrong time, and the tax benefit disappears.

Buy at the right time, and the business keeps more of its money.

The difference is planning, not luck.

mproving Systems

Better bookkeeping, better software, and better processes don’t just save time.

They protect decision-making.

If your numbers are late, messy, or unclear, every decision is a guess dressed up as confidence.

Reviewing Financial Processes and Your Accountant

January is also when many business owners quietly question whether their current financial setup is really working.

Are reports late or unclear?

Do you only speak to your accountant when something has already gone wrong?

Are you getting compliance, but no guidance?

Sometimes the issue isn’t the business. It’s the process, or the support around it.

Reviewing your bookkeeping systems, reporting structure, and even your accountant is not disloyal. It’s responsible. Businesses evolve. The level of financial support they need evolves too.

The right accountant should help you plan, challenge assumptions, and protect future decisions, not just file past ones.

The Truth

Big changes work best when they are planned, not rushed.

January is not about doing everything.

It’s about positioning yourself so that when opportunity appears, you are ready rather than reactive.

If you are not having at least one structured planning conversation with your accountant each year, you are leaving money, time, and control on the table.

We can help with all of the above. Get in touch and arrange your free call.

Business Pay- Do You Know How Much Your Company Needs to Turn Over to Pay You What You Want?

Posted on by Sarah

Business Pay:-One of the biggest frustrations I hear from directors is this:

“I know what I’d like to take home, but I’ve no idea what my business needs to turnover to get me there.”

It’s a common challenge – and one that can leave you feeling like you’re working hard but not moving forward. The truth is, there’s a big difference between turnover and take-home income. Unless you’ve done the maths, you may be underestimating just how much your business needs to generate to cover both tax and operating costs before it ever reaches your pocket.

Why This Matters

  • Avoids Guesswork: Without a clear target, you’re flying blind when it comes to pricing, sales goals, and growth plans.
  • Realistic Goal Setting: Knowing the turnover you need gives you a concrete figure to work towards – whether that’s £100k, £250k, or more.
  • Tax Clarity: Income tax, National Insurance, Corporation Tax, and dividend tax all chip away at your profit. Understanding their impact upfront means no nasty surprises later.
  • Cash Flow Confidence: When you know your true numbers, you can plan salaries, dividends, pensions, and business reinvestment with confidence.
  • Work-Life Balance: Ultimately, your business should support your lifestyle—not the other way around. Clarity on the turnover required to fund your ideal income helps you design the business (and life) you want.

The Director’s Turnover & Tax Calculator

To make this simple, we’ve built our Director’s Turnover & Tax Calculator. It shows you:

  • How much turnover your business needs to deliver your target personal income
  • How different mixes of salary and dividends affect your tax bill
  • The impact of Corporation Tax and allowances on your take-home pay

It’s quick, easy, and tailored for UK directors who want clarity without spreadsheets or tax jargon.

Ready to Find Out Your Number?

Instead of guessing or waiting until year-end accounts to see what’s left, use the calculator to work backwards from your personal goals. That way, you’ll know exactly what turnover target to aim for – and can set realistic business goals with confidence.

 Try the Director’s Turnover & Tax Calculator today.

Please contact us if you’d like to discuss your Business Pay and  tax calculations then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

Full Finance Function: Stop Losing Time and Money Without One

Posted on by Sarah

Why A Full Finance Function is important to you and your business.

You didn’t start your business to reconcile bank feeds or chase VAT deadlines.

But without a full finance function in place, you’re probably:

  • Duplicating data entry across systems
  • Reacting to problems after they hit
  • Making decisions with outdated numbers
  • Paying penalties because something was missed

Our clients who’ve switched to our fully managed finance function have saved hours each week – and tens of thousands per year. Why? Because we systemise, automate and optimise your entire financial workflow.

No more siloed spreadsheets. No more panicked HMRC calls. Just proactive financial management that pays for itself.

💡 Tax Tip: Want to reduce your Corporation Tax bill? We help identify eligible expenses—like director life insurance policies under an “excepted group life scheme”, staff events, or even home office allowances – that most business owners overlook. These small wins add up fast when tracked by someone who knows where to look.

Please contact us if you’d like to discuss your Finance tax planning then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

Tax for Sole Traders Simplification: Is the Cash Basis Now Right for You?

Posted on by Sarah

For the many sole traders and partnerships, managing finances and preparing for the year-end tax return can be a significant administrative burden. Traditionally, this has involved accrual accounting – a method that requires you to account for all invoices and bills when they are issued, not when they are paid.

However, in a major move to simplify tax for the sole trader or self-employed, HMRC has introduced significant changes that make a much simpler method – cash basis accounting – the new default.

Here at The Accountancy Office, we want to break down what this change means for you and your business. It’s a positive development that could make your bookkeeping easier and improve your cash flow, but it’s important to understand if it’s the right fit.

What is Cash Basis Accounting?

In simple terms, the cash basis is a method of accounting that records income and expenses only when money actually changes hands.

  • Income is recorded when it lands in your bank account.
  • Expenses are recorded when you actually pay for them.

This straightforward approach eliminates the need to track debtors (money you’re owed) and creditors (money you owe) for your tax return, offering a much clearer, real-time picture of the cash available to your business.

What Has Changed for the 2024/25 Tax Year?

Previously, the cash basis was an optional scheme with strict turnover limits. From April 2024, HMRC has supercharged the scheme, making it more accessible and beneficial than ever before. The key changes are:

  1. It’s Now the Default: Cash basis is the new standard for sole traders and partnerships. If you want to use the traditional accrual method, you now have to actively choose to do so on your tax return.
  2. Turnover Thresholds Scrapped: The previous entry limit of £150,000 and exit limit of £300,000 have been completely removed. This means unincorporated businesses of any size can now benefit from this simpler system.
  3. Finance Cost Cap Removed: The previous cap that limited the deduction of interest and financing costs to just £500 has been abolished. You can now deduct the full interest costs, provided they are incurred wholly and exclusively for the business.
  4. More Flexible Loss Relief: Restrictions on how you can use a business loss have been lifted. Under the new rules, losses calculated on the cash basis can be used in the same way as accrual losses, meaning they can be offset against your other income from the same or previous year.

The Benefits of Using the Cash Basis

For many businesses, these changes make the cash basis an attractive option:

  • Simplicity: Your record-keeping is significantly simplified, making it easier to manage your own books.
  • Improved Cash Flow: You only pay tax on money you have actually received. This can be a huge advantage if your clients are often slow to pay.
  • Clear Financial Picture: It provides an immediate and easy-to-understand snapshot of the cash your business has at any given moment.

Is the Cash Basis Right for Everyone?

While the cash basis is a fantastic simplification for many, it’s not a one-size-fits-all solution. For example:

  • Businesses that hold large amounts of stock may find the accrual basis gives a more accurate reflection of their profitability.
  • If you are seeking significant business finance, lenders often prefer to see accounts prepared on an accruals basis as it shows a complete picture of your financial health, including future liabilities and income.
  • The cash basis is not available for Limited Companies.

The new, expanded cash basis is a great opportunity for many sole traders, but it’s crucial to get it right.

To find out more and discuss what these changes mean for you, get in touch with our team today.

12 things limited company business owners should think about ahead of the new financial year

Posted on by Sarah

For many Limited Companies, as 1 April approaches, mark the start of a new financial year and now is the perfect time to reflect, reassess, and plan ahead. 

A strong financial strategy can set the stage for a more profitable and stress-free year. Financial planning isn’t just about your business – it’s also about ensuring your personal finances are in order.

Here are 12 key areas to focus on for a successful year ahead.

Business Planning

1. Review Your Current Performance

Start by assessing how your business has performed over the past year. Review your financial statements, compare actual results against forecasts, and identify any trends. Are you hitting your revenue targets? Are there areas of overspending? Understanding your numbers is the foundation for future growth.

2. Set Clear Business Goals

What do you want to achieve in the next 12 months? Whether it’s increasing turnover, expanding your team, launching new services, or improving efficiency, setting measurable goals will keep you focused and help guide your decisions.

3. Conduct a Pricing Review

Are your prices still competitive and profitable? Many business owners set their prices and forget to review them regularly. Consider rising costs, inflation and industry benchmarks to ensure you’re charging appropriately for your services.

4. Create a Budget for the Year Ahead

A solid budget keeps you in control of your finances. Factor in expected income, expenses, tax obligations, and potential investments in your business. Having a clear budget helps prevent cash flow surprises and ensures you’re allocating resources effectively.

5. Plan for Tax Efficiency

Tax rules change frequently, so it’s wise to review your tax position with an accountant. Are you making the most of tax reliefs, allowances, and deductions? Could you benefit from extracting profit in a more tax-efficient way, such as dividends or pension contributions?

6. Strengthen Cash Flow Management

Cash flow is the lifeblood of your business. Review your invoicing process – are clients paying on time? Could you improve payment terms or introduce automated reminders? Consider whether you need access to financing to smooth out cash flow fluctuations.

7. Assess Your Marketing Strategy

A new financial year is a great time to refresh your marketing efforts. Does your branding still align with your business goals? Are you consistently attracting your ideal clients? Review your website, social media presence, and client acquisition strategies to ensure they’re working effectively.

8. Review and Improve Business Processes

Are there any inefficiencies in your operations? Look for opportunities to streamline workflows, automate repetitive tasks, or adopt new software that could save you time and money. A more efficient business means more profit and less stress.

9. Plan for Growth and Investment

If you’re aiming for growth, think about what investments you need to make. Do you need to hire staff, upgrade equipment, or invest in professional development? Planning ahead ensures you have the resources available when needed.

10. Protect Your Business

Risk management is often overlooked but is crucial for long-term stability. Review your insurance policies, contracts, and compliance requirements. If you rely on key team members, consider key person insurance. If you’re a director, ensure you’re meeting all your legal responsibilities.

Personal Financial Planning

11. Review Your Personal Budget

How much money do you need to cover your lifestyle and future plans? It’s important to assess whether your salary and dividends are sufficient – and sustainable. Consider any big expenses you have coming up, such as a house purchase, renovations, or that dream holiday.

12. Plan for the Future: Life Insurance, Pensions & Investments

As a business owner, your personal finances are closely tied to your company. Have you protected yourself and your family with the right life insurance and income protection? Do you have a will and lasting power of attorney in place? Are you making the most of pension contributions and investments to secure your long-term financial future? If you’re unsure, now is the time to get advice.

Final Thoughts

he start of a new financial year is a prime opportunity to reset and plan for success – both in business and in life. Taking a proactive approach in these 12 areas will put you in a stronger position for the year ahead.

If you need support with business or personal financial planning, we’re here to help. From tax efficiency and cash flow management to pensions and life insurance, we offer a full range of services to keep your finances on track.

Call us on 01386 366741 or visit accountancyoffice.co.uk to book your free consultation.

Keeping More of Your Money: A Real Story

Posted on by Sarah

We recently started working with a married couple running a successful limited company, despite only forming their company two years ago.

They were making good money, but every month, whatever came in, went out. When the tax bill landed, it was always a shock. They felt like they were working hard but never getting ahead financially.

The Problem?

  • No system for taking money out of the business efficiently
  • No tax planning – so the Corporation Tax bill was always a nasty surprise
  • They wanted to buy a house but struggled to show enough income 
  • They wanted to improve their lifestyle and needed an additional £3,000 per month personal income from their company, but their finances felt unpredictable

What We Did:

  1. Set up a structured way to take money out of the business, balancing salary, dividends and pension contributions to maximise tax efficiency.
  2. Created a tax reserve strategy so they weren’t caught off guard when bills were due.
  3. Planned their income properly so they could show enough on paper for their mortgage application.
  4. Helped them set business profit goals that allowed them to take home the income they wanted while still covering tax and business growth.

The Result?

  • They now pay themselves £3K+ per month comfortably
  • Their next tax bill is already planned for – no stress!
  • Their mortgage application looks stronger
  • They finally feel in control of their finances instead of constantly reacting to surprises

f you’re running a business but struggling to make your hard-earned cash actually work for you, we can help. Let’s get your finances working for your life goals – not against them.

Call The Accountancy Office  on 01386 366741 or book a call for a time that is convenient for you.

12 Monthly Checks To Keep Your Business Finance Healthy

Posted on by Sarah

Running a successful business isn’t just about making sales—it’s about keeping your business finances in order so you can grow sustainably and avoid cash flow surprises. 

Whether you’re handling your finances in-house or outsourcing them to a finance team like ours, there are key checks you should be making every month to keep your business in good financial health.

Here are 12 essential things to review every month:

1. Cash Flow Position

Cash is the lifeblood of your business. Check your cash flow statement to see how much money is coming in and going out. If your cash reserves are running low, identify where the bottlenecks are and take action – whether that’s chasing late payments or adjusting spending.

2. Bank Reconciliations

Ensure your bank statements match your accounting records. Unreconciled transactions could indicate missing income, duplicate payments, or errors that might distort your financial picture.

3. Aged Receivables (Outstanding Invoices)

Check your list of unpaid customer invoices. Who owes you money? How overdue are they? Consistently late payments can hurt your cash flow, so follow up on outstanding invoices and consider adjusting payment terms if late payments are a recurring issue. 

It’s also crucial to issue invoices promptly – delays in sending invoices can lead to delays in payment, which in turn affects your cash flow. The sooner your customers receive their invoices, the sooner they can process and pay them.

4. Aged Payables (Outstanding Bills)

Review what you owe to suppliers and ensure you’re paying on time. Late payments can lead to damaged relationships or unnecessary interest charges. If cash flow is tight, prioritise essential suppliers and negotiate payment terms.

5. Profit & Loss Review

Look at your monthly profit and loss (P&L) statement to see if your revenue and expenses are on track. Compare against previous months and your budget—are there any unexpected changes that need addressing?

6. Business Savings & Tax Reserves

Set aside money for tax liabilities such as VAT, Corporation Tax, and PAYE. Unexpected tax bills can cause cash flow problems, so having a dedicated savings strategy is crucial.

7. Payroll & Staff Costs

Ensure payroll is processed correctly and on time, and check for any discrepancies. If staff costs are rising, assess whether this aligns with business growth or if there are inefficiencies to address.

8. Expense Tracking & Cost Control

Are your expenses creeping up? Review your spending to ensure you’re not paying for unused subscriptions or unnecessary costs. Small leaks can add up over time.

9. VAT & Other Tax Deadlines

Ensure you’re keeping up with VAT returns, PAYE, and other tax obligations. Missing deadlines can lead to penalties, so stay on top of them or use an outsourced finance function to manage this for you.

10. Sales Performance & Pipeline

Revenue isn’t just about what you’ve made—it’s also about what’s coming in. Review your sales figures and check your pipeline. If sales are slowing, consider adjusting your strategy or increasing marketing efforts.

11. Stock & Inventory (If Applicable)

If you sell products, review your inventory levels. Are you holding too much stock and tying up cash? Or are you running low and at risk of losing sales? Keeping a balance is key.

12. Business Goals & Financial KPIs

Each month, assess your progress towards key financial goals. Are you hitting your revenue targets? Have you reduced costs where needed? Are you staying within budget? Tracking KPIs will help you make informed business decisions.

By running these checks monthly, you’ll gain a clearer understanding of your business’s financial health and be able to take proactive steps before issues arise. 

If you’d rather focus on growing your business and leave the numbers to experts, our outsourced finance function can handle all of this for you – giving you peace of mind that your finances are in safe hands.

Need help staying on top of your business finances? Get in touch with us today.

Call us on 01386 366741

VAT, Can I reclaim it pre-trading ?

Posted on by admin

 

There are special rules that determine the recoverability of VAT incurred before a business registered for VAT. 

This type of VAT is known as pre-registration input VAT. There are different rules for the supply of goods and services, but VAT can only be reclaimed if the pre-registration expenses relate to the supply of taxable goods or services by the newly VAT registered business.

The time limit is backdated from the date of registration and is:

  • 4 years for goods on hand, or that were used to make other goods on hand; and
  • 6 months for services.

The pre-trading VAT input tax should be reclaimed on a business’s first VAT return. When a new VAT registration is applied for, there is an option to backdate the registration (known as the effective date of registration), this option should be considered if there is additional input tax that will be made recoverable.

There are special rules for partially exempt businesses and for businesses that have non-business income and for the purchase of capital items within the capital goods scheme.

HMRC’s internal guidance on the issue provides interesting examples. One of those relate to the purchase of a van by an individual for wholly private purposes. Three years later the individual registers for VAT and uses the van exclusively within their business. The VAT incurred on the purchase of the van will never be recoverable because there were no business activities at the time the van was bought.

Please contact us if you’d like to discuss your company’s tax  options  then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

How can I raise cash to grow my business?

Posted on by admin

This is often one of the biggest hurdles that growing businesses face, raising cash. You’ve increased your sales to maximum capacity, you’ve got a team and processes in place but you can’t plan for further growth without further financial investment.

Raise cash
Raise cash

It’s a great position to be in but you need to consider your options for funding.

Firstly, be sure of what you’re setting out to achieve. Have a clear plan in place and clearly define your goals:

  • What’s your action plan for the next 12 months?
  • The next three years?
  • The next five years?
  • How much cash do you need for each of the above stages?

There are several different approaches to guiding your business to the next level. Here we list some potential options for consideration:

Personal Funding

The quickest and easiest way to raise finance is often to utilise personal savings. The disadvantage is that the amount of funds may be limited and insufficient to fund the level of growth required. Also, there may be a level of risk with no guarantee that the company will be able to repay those funds. Raising money from friends and family is also another option but again there is a level of risk and no guarantee that the money will ever be returned which can lead to strained relationships.

There are then only two other options – Equity or Debt.

Equity

Equity means you are looking for investor to give you money, in exchange for a stake in your business. 

The benefit of raising cash this way is that it doesn’t need to be repaid and you may get to benefit from an investor with extremely valuable experience which will help the business grow in the direction you want it to. However, you’re also giving away a portion of your business which means you will have less control so it’s important to make sure you choose the right investor. 

Here are some examples of equity investments:

Private Equity – investors who provided cash to established businesses in return for a large or controlling stake, to help them grow to the next level.

Corporate Venture Capital – an investment made by a large company into a smaller business, in return for a share of that business.

Expansion Capital firms – give established businesses money to grow and reach maturity.

Angel Investors – act as mentors and invest their own money in early-stage businesses for a share in the company.

Venture Capital – invest in businesses with high growth potential, often after Angel investors have got the business started. The money comes from established entrepreneurs, investment banks and other financial institutions.

Crowdfunding – Using an online platform, investors buy shares in a company to help it grow.

Debt

Debt financing means you are borrowing money that needs to be repaid, usually with interest being paid on the amount you borrow.

Debt is often a scary word and managing any borrowing needs to be done carefully when looking at raising cash. Some debt is straight forward and short-term. Other debt is longer term. This is why you need to be clear of the purpose for your lending requirements. 

Always consider all the options and think ahead to your 5 year plan. Raising equity can be complex and is a lengthy process. Make sure you have sufficient cash to meet your plans. Having a strong financial business model and cashflow plan is essential. 

Here are some debt options for consideration:

Overdraft – short term lending, typically from a compay’s bank and up to an agreed limit. Overdrafts can be expensive but a business will only pay interest on the amount they actually borrow.

Credit cards – another short term option and easily accessible but usually with a high interest rate.

Invoice factoring – selling your unpaid sales invoices to a third party who will collect the debt from your customer, paying you a percentage of the invoice value up front, minus their fee. A fairly expensive option but useful if you have a large amount of outstanding invoices with slow payers.

Asset financing – raising funds to purchase physical assets such as vehicles and equipment. A fairly quick form of finance, also giving the lender tangible assets to recover should you default on the repayments. Useful for asset intensive businesses with the option to consider refinancing the assets and releasing cash to the business. 

Supplier Credit terms – often overlooked as a form of financing and another short term option. Negotiating extended credit terms with your key suppliers can free up working capital. 

Business loans – borrowing money from a loan provider such as a bank and then paying it back with interest over an agreed period. Loans can be both short-term and long-term. There are also various Government backed loan schemes such as the Recovery Loan Scheme and start-up loans.

Peer to Peer Lending – a business borrows money through an online platform and pays it back with interest over an agreed period.

Direct lending funding – A business borrows money from a fund and repays it with interest. A fund may be able to provide loans where a bank will not.

There is also one other option – Grant Funding. A Grant is a non-repayable type of funding, usually awarded by governments, organisations, or companies to invest in certain assets or activities, or to help a business achieve a particular goal.

Exactly what level of debt is suitable for your business depends on your precise requirements at any one time. Whatever level of debt you undertake, it’s important to measure it. Keep track of your level of gearing and monitor your debt to equity ratio – a simple formula to show how capital has been raised to run a business. This is an important financial metric because it indicates how financially stable a company is when facing problems with trading or other operational considerations and what ability it has to raise additional capital for growth.

How an accountant can help you

There are a number of ways in which a qualified accountant can help make your business more efficient, especially when it comes to managing your debt. Every business is different but monitoring cash and debt, is equally as important as measuring profit. 

An accountant can support you in creating a cashflow forecast to make sure you’re in good cash health and by spotting any potential cash shortfalls early on. You also need to understand what you owe as well as what cash you have in the bank. Looking at your bank balance every day won’t tell you all you need to know.