Importance of Financial Planning: Key Considerations

Importance of Financial Planning: Key Considerations

While owning a business can be rewarding, there’s no doubt that it can be a stressful experience. It can feel like you are constantly putting out fires everywhere you go. While there are lots of issues beyond your control, financial planning is an area which, thankfully, can be managed.  

However, while financial planning can be handled with less turbulence, it still requires a comprehensive strategy. At Fiander Tovell, we can provide you with all the tips to navigate the intricacies of financial planning to establish an effective plan tailored to your business’s needs.  

In this blog, we break down just some of the guidance from our experienced team to steer clear of a financial crisis.  

Separating personal and business finances  

A common mistake we see is businesses using a single bank account to manage everything. Not only does this cause confusion, but you can also end up in legal trouble. This could leave you (as the owner) personally liable for all your company’s debts and liabilities. We suggest creating a separate bank account and obtaining a distinct credit card solely dedicated to your business. This segregation facilitates streamlined tracking of expenditures, simplifies tax calculations, and ensures the maintenance of transparent financial records. This active management serves as a protective measure for your personal assets against potential business liabilities.  

Tracking your money 

Now that you have separated your finances, you will have an overview of cashflow. Tracking your money becomes much more manageable, which is essential for understanding where your business stands financially and for making informed decisions.  

With Fiander Tovell, we can analyse your cash flow statements to identify trends, patterns, and potential areas for improvement. This analysis provides us with essential data for creating financial plans tailored to your business. Overall, understanding your expected cash inflow and outflow allows you to make decisions surrounding investment, expansion, and other strategic initiatives.  

Establish and Review Budgets 

Budgeting is a cornerstone of financial planning, enabling you to allocate resources effectively and prioritise spending. Take the time to establish realistic budgets for your business, and regularly review them to track performance against targets. This proactive approach will help you identify areas for improvement and adjust as needed to stay on track. 

Manage Accounts Receivable and Payable 

Efficient management of accounts receivable and payable is critical for maintaining a healthy cash flow. Implementing strategies to accelerate receivables, such as offering incentives for early payment, and negotiating favourable payment terms with suppliers can help optimise cash flow. Our team can work with you to develop tailored solutions for managing accounts receivable and payable effectively. 

Planning for the Future 

Successful financial management isn’t just about the present—it’s also about planning for the future. Whether it’s investing in growth opportunities, saving for expansion, or preparing for unforeseen challenges, having a comprehensive financial plan in place is essential. Our experts at Fiander Tovell can assist you in developing a strategic financial plan that aligns with your business goals and sets you up for long-term success. 

By implementing our tips for better financial management and planning, you can take better control of your business’s finances. At Fiander Tovell, we’re committed to helping business owners like you achieve their financial goals. Our team is here to support you every step of the way. 

If you would like to enquire about our services or would like more information, please contact our Commercial Client Director, Fabrice Legris, at fabrice.legris@fiandertovell.co.uk 

Abolition of FHL regime

Abolition of FHL regime

If you own property classed as a furnished holiday let (FHL) for tax purposes, then it’s vital that you’re aware of the planned abolition of its favourable tax treatment from 6th April 2025 (1 April 2025 for companies).  

Although new legislation is yet to be drafted, we can expect short-term and long-term residential lets to receive the same tax treatment, meaning that it will no longer be tax-advantaged to commercially let your property for a series of short periods. This comes as the government plans to ‘level the playing field’ between ownership of short-term and long-term lets, with the overall goal of helping people to live in their local area. 

Reminder of the current regime 

At the moment, your FHL benefits from the following tax treatment: 

  • Being able to fully deduct interest incurred on mortgage borrowings from taxable profits. 
  • The availability of a number of capital gains tax reliefs, including business asset disposal relief, rollover relief and business asset holdover relief.  
  • Capital allowances for items such as furniture, equipment and fixtures. 
  • Classing profits as earnings for pension purposes, allowing tax-advantaged contributions.

Uncertainties regarding the new regime 

Without any legislation regarding the changes, right now we have more questions than answers. Some of the key areas of uncertainty are as follows: 

  • Will there be any transitional provisions regarding capital allowances? Without such provisions there would be a balancing charge giving rise to a tax liability when the current regime ends. 
  • What will happen to existing FHL losses, which under current legislation, can only be used against future FHL profits? 
  • Will HMRC give a clear definition of ‘trading’? Getting rid of FHLs means there’s much more of a gulf between a rental property and a B&B. 
  • In the budget it was announced that anti forestalling rules in relation to capital gains tax relief would apply from 6 March 2024. We do not know yet if this will apply to all or just some of the existing capital gains tax reliefs. 
  • Will the current regime regarding business rates and FHLs remain, or will all FHLs become liable to pay council tax instead? This would have an adverse effect on owners currently liable to business rates but qualify for small business relief.

How can you prepare for the changes? 

Firstly, the key preparation for the abolition of the FHL tax regime, is to understand how owning and letting the property will impact your personal finances without the tax-advantaged rules. Secondly, it would be valuable to consider what options are available to you, for example it may be beneficial to incorporate or perhaps accelerate expenditure on items such as furniture, fixtures or equipment to the 2024/25 tax year. Although when considering any planning it would be necessary to wait for draft legislation before any action is taken. 

How can we support? 

If you own a furnished holiday letting, we want to help you navigate the changes that will arise when the tax regime is abolished on 6th April 2025. In the meantime, as the new legislation is announced, we can help you to weigh up available options and consider the most tax efficient routes to take.

Please don’t hesitate to get in touch for further assistance. 

Navigating business obligations: registering with HMRC

Navigating business obligations: registering with HMRC

If you’re at the beginning of an exciting new business endeavour, there is one key step to take before it’s well and truly underway – registering with HMRC. Every business in the UK must be registered with HMRC; it’s a fundamental step which lays the groundwork for financial compliance and legal legitimacy. 

At Fiander Tovell, we are dedicated to assisting businesses at every stage of their journey, from inception to triumph. While registering with HMRC is relatively simple, there are some key considerations that can impact your business in the long run. That’s why our team is here to guide you through the process seamlessly.  

So, are you ready to make your business official? Learn how to register your new business with our comprehensive guide!

 

1. Choosing your business structure  

If you are one of our avid readers, you may have seen our blog about trading options,which covers the different business structures available to start-ups. Whether you chose to operate as a sole trader, partnership or limited company, it’s important to be aware of what each structure would mean for your operations:

 

Sole trader 

An individual operates as the sole owner and is personally responsible for all aspects of the business, including finances and liabilities.

 

Partnership  

A business structure where two or more individuals share ownership and responsibility for the business, including profits, losses, and liabilities.

 

Limited Company  

A business structure where the company is a distinct legal entity from its owners (shareholders), offering limited liability protection and the potential for growth through the sale of shares. A full rundown on setting up a Limited Company can be found here.
  

2. Registering online  

Once you have decided on a business structure, you’ll have to register your business online. HMRC offers an online registration portal designed to streamline the process. You will need to provide information such as your personal details, business name, address, nature of business activities, and relevant financial details.  

When registered, HMRC will issue you with a Unique Taxpayer Reference (UTR) and may allocate other reference numbers depending on your business structure.   

Once you’ve set up your business tax account, you can use it to: 


3. Ongoing compliance  

Once registered with HMRC, it’s crucial to stay compliant with regulations by filling accurate tax returns on time, making payments promptly, and keeping a detailed record of all business transactions. Failure to comply can result in penalties, fines, or even legal action from HMRC, which can have severe consequences for your business’s reputation and financial stability.  

Our experts are fully aware of compliance with HMRC regulations. With our comprehensive understanding of tax laws and diligent approach, we ensure that your business stays on track with accurate tax returns, timely payments, and meticulous record-keeping. This is why we outsource our bookkeeping services to provide businesses with skilled professionals that can streamline the entire process to avoid costly errors.  

There, you should now be fully registered with HMRC! However, our help doesn’t stop here. We have a wealth of articles covering the different aspects of business growth along with the services we provide to ease your stress. Why not take a look at the next step of starting up your business: ‘Sustaining your start-up‘  

If you want more information on our services, or further guidance, don’t hesitate to contact our Commercial Client Director, Fabrice Legris: fabrice.legris@fiandertovell.co.uk  

Financial Check-ups: How we can improve your businesses’ health

Financial Check-ups: How we can improve your businesses’ health

Running a business is like nurturing a child; it requires constant attention, care, and vigilance to ensure its growth and well-being. Just as a parent takes their children for regular check-ups, a business owner should diligently tend to the financial health of their venture. Neglecting such issues is like turning a blind eye to a child’s needs – leading to unforeseen consequences.  

At Fiander Tovell, we act as the doctors for your business. We provide comprehensive financial check-ups tailored to your unique needs. Our analysis and strategic insights serve as the ‘apple a day’, ensuring your business sustains financial heath and keeping you on an upward trajectory!  

So, how is that important? Let’s delve into some of the key benefits of conducting regular financial health checks for your business! 

Importance of Regular Financial Check-ups  

It’s fairly easy as a business owner to neglect your finances while you focus on core operations. However, check-ups are crucial to sustain success and keep your business alive. If left unattended, your business could experience cash flow issues, tax penalties, and in the worst case – bankruptcy. With our accountancy services, we can help you stay on top of your finances and catch any issues early before they develop into serious problems.  

By conducting financial check-ups, you can:  

  • Keep a keen eye on cash flow, adjusting as you go 
  • Find opportunities, increase revenue, or trim expenses  
  • Keep ahead of tax obligations  
  • Identify areas to streamline operations and improve efficiency 

Our Services  

As part of our service, we can provide tailored reports that allow you to plan and forecast effectively, understanding the financial status of your business. The more information we get from you, the more we help you achieve your financial goals. 

Here’s how we conduct your financial check-ups:  

Organising/reviewing financial documents 

We gather all financial documents – this includes bank statements, credit card statements, invoices, receipts, tax returns etc. Each of these transactions are transferred seamlessly to our bookkeeping services, which provide a clear and accurate snapshot of your business’ financial health. This helps us monitor your overall cash flow, enabling us identify areas of savings or increase revenue. Additionally, this can show whether you have enough liquidity to cover expenses and manage any unexpected downturns in revenue.  

Tax planning and compliance  

Staying compliant with tax laws and regulations is critical for avoiding penalties and maximising tax efficiency. We provide proactive tax planning services, helping you to optimise your tax strategy, take advantage of available deductions and credits, and ensure timely and accurate filing of tax returns. 

Financial forecasting and planning 

Using your management accounts, we assist you in developing comprehensive financial forecasts and strategic plans aligned with your business objectives. Whether you are looking to expand, secure financing, or prepare for unforeseen challenges, our forward-looking approach helps you navigate with confidence.  

At Fiander Tovell, we are committed to helping businesses thrive by providing financial check-up services tailored to your unique needs and goals. With our expertise and dedication, you can trust us to safeguard the financial health of your business and pave the way for long-term success.  

If you require any further advice, or would like to enquire about our services, please do not hesitate to get in contact with our Commercial Client Director, Fabrice Legris at fabrice.legris@fiandertovell.co.uk 

Business Basics: Setting up a Limited Company

Business Basics: Setting up a Limited Company

Welcome to our comprehensive guide on establishing a limited company in the UK; we’re here to illuminate each step with clarity and precision. 

In today’s fast-paced business landscape, forming a limited company can offer unparalleled advantages in terms of liability protection, tax efficiency, and credibility. 

However, navigating the incorporation process can seem daunting without proper guidance. So, stay with us as we highlight the intricacies of company formation, empowering you to lay a robust foundation for your business aspirations in the UK market. 

What is a Limited Company?

A limited company is a type of business structure where the liability of its members or shareholders is limited to the amount of money they invest in the company. Additionally, the limited company structure is a separate legal entity from its owners, allowing you to enter into contracts, own assets, and conduct business in your own name. 

Why Choose a Limited Company?

The main advantage of a limited company lies with limited liability. Essentially, it separates you from your business, meaning that as a company director, your liability is limited to the value of your shares in the business. Therefore, if the company is at risk of bankruptcy or legal action, your personal assets would be protected. This is one of the reasons why operating as a limited company may be more favourable, particularly if your business brings a level of risk that may not be covered by your insurance.  

The 6 steps for setting up a Limited Company

If you have choosing to operate as a limited company is right for your business, we have broken down the steps to start your journey below! 

1. Choosing your company name 

Make sure the name you have chosen is available and complies with company names rules 

2. Choose director/s  

You must appoint at least one director, which may include yourself, but you may also choose to have multiple directors. Directors work together to make decisions for the company, adhere to regulations, and bear the responsibility for tasks such as filling accounts and ensuring corporation tax compliance.  

3. Decide on who the shareholders/guarantors are 

A limited company must have at least one shareholder (where limited by shares) or one guarantor (where limited by guarantee). A director can hold shares which can be divided among other directors, should you choose to have multiple. Additionally, a shareholder that holds more than 25% of the shares constitutes as a ‘person of significant control (PSC) which we advise to identify in this step of the process.  

4. Prepare company documents  

Your company must obtain and complete certain documents that show the formation of the company and how it is to be run. These include: 

  • The memorandum of association  
  • The articles of association  

Click here for more information in obtaining and completing these documents.  

5. Check what records you will need to keep 

You will need a full list of company and accounting records that you must keep. This includes records about the company itself such as directors, shareholders, and company secretaries along with internal votes and resolutions from shareholders.  

6. Register with Companies House  

Lastly, you must register your company’s official address and choose an SIC code which confirms what your company does. Additionally, you should register for corporation tax while completing this step.  

And there you have it! A full breakdown of what a limited company is and how to set it up. Choosing a trading option should not be a quick decision, however, and we encourage all businesses to consider each trading option in full and decide on what is most beneficial for your business. Our trading options article provides an overview of each option for you to consider.

What happens next? Check out our guide: Running a Limited Company, for an insight to the stages following incorporation.  

For further guidance, please get in contact with our Client Commercial Director, Fabrice Legris at fabricelegris@fiandertovell.co.uk