A city accountant is urging entrepreneurs embarking on a growth strategy for their business to ensure it is set-up correctly to avoid missing out on potential tax savings.
Speaking at a Boot-camp workshop event for entrepreneurs at the Nottingham Cleantech Centre, Jill Evenden, MD of Nottingham’s EBS Accountants, stressed the tax-saving benefits to a growing business of being a Limited company.
“Setting up as a Limited company may save on the business’ tax, so it is vital to take relevant advice early on and up front to get this right,” explained Jill. “Limited companies are liable to Corporation Tax and will probably be VAT registered, depending on their size, and Corporation tax is due nine months after the year end.”
She added that all business owners, from start-ups to SMEs, should keep an eye on the top six components of a company’s accounts, which form the basis of her ‘Finance and Cash Top Tips for Growth’.
• Budgeting and Cash Control – Cashflow is key to the sustainability of the business and budgeting enables the business to plan, in particular for funding requirements to support growth, via monthly figures and cost control. It’s especially important for covering payment of tax bills. It should include all customer and supplier payment terms, credit control, and property leasing costs.
• Profit and Loss Account – an instant summary of the business’ gross and net profits, losses, revenues, costs, work in progress, stock, turnover and tax liabilities.
• Balance Sheet –a snapshot of the assets and liabilities of the business which highlights whether the business is solvent or needs to build up cash reserves. This should include shareholder capital investment.
• Key Indicators – a vital tool for effective business management, as it reveals seasonal and industry trends through a monthly analysis of stock turnover, debtor and creditor timescales, alongside assets and liabilities.
• Reporting – Limited companies have to produce Annual Accounts and submit an Annual Return and pay VAT on a quarterly or annual flat rate if the business is registered.
• Tax – make provision for Corporation Tax that is calculated before dividends are paid.
