Financially secure business

How to become a financially secure business

Financially secure businessAchieving financial stability is not always simple, but through the implementation of specific steps and proper financial planning, small business owners will be able to achieve this goal.

Businesses exist to make money – to generate revenue that exceeds their operating costs and to earn enough to ensure that their directors, shareholders and employees are compensated for their work.

But earning enough does not equate to financial security. A financially secure business has a strong sales pipeline that brings in revenue, a highly efficient workforce that cuts wastage, a robust cash reserve that can protect your business from unforeseen circumstances, and ideally, a growth path that is realistic and exciting. When your business achieves that, it achieves success.

So what should you do to achieve success? At Berley, our small business growth specialists have been fortunate to work with SMEs across London and help them to secure business success. In this article, we aim to share six tips that can propel your business forward, giving it a chance to grow from strength to strength and becoming financially successful.

1. Focus on profitability

Many small business owners we know focus on achieving sales growth – this is fantastic, but without knowing how to control costs and increase profits, turnover figures mean very little as they do not translate to profitability.

A typical error made by many business owners when they set sales prices is that they include the direct costs of the product or service, but not overheads such as rents and business rates. For instance, if it takes your programmer a day to create a complex script for a customer, you take the hours spent and add a mark-up to produce a fee you will charge the customer. Chances are, the mark-up does not include rental cost, business rates, machine use, electricity use, the review time by the supervisor, the marketing hours spent by another colleague, plus the sales effort.

Therefore, it is important to analyse your costs more closely. One effective way to do that is to produce a forecast profit and loss account which allows you to identify all potential costs and use them to set your selling prices.

If you would like to know more about costs, our article “5 ways to manage rising business costs” will make a good read. Alternatively, you can also contact one of our chartered accountants on 020 7636 9094.

2. Good cash flow management

Good cash flow management is key to your business success because it means your business has working capital to meet its day-to-day financial obligations. Cash flow, referring to the amount of money going in and out of your business, is something that you can plan and control. For example, if you know that you have a big tax bill to pay in January, but you are not likely to receive money from your clients due to the festive period in December, then you can choose to incentivise your clients to pay you in advance, such as arranging a business loan, or preparing to impose cuts. These methods will swiftly see you through the period.

Ultimately, the goal is about having a strong cash reserve so your business can withstand any financial stress your business may encounter.

Check out our article “Five ways to improve your cash flow” if you would like to improve your day-to-day cash flow.

3. Make use of management accounts

Monthly management accounts, prepared by your accountants, give an insight into the financial health of your company. The report usually consists of an executive summary, a cash flow statement, a profit and loss report, as well as a balance sheet.

Receiving management accounts is one thing, but understanding them and using them to reduce wastage, modify your budget, improve profitability and plan for growth is another thing altogether. At Berley, our small business accountants are ready to assist you with any questions you may have pertaining to your management accounts.

4. Examine your business model

No matter what industry you are in, the market evolves, and you must be ready to adapt your business to these changing circumstances and needs. The road to long-term financial stability requires your business model to be flexible enough to respond to market demands while identifying growth opportunities.

For example, you run a staffing agency and you can see that potential clients now look online to find freelancers as and when they need them. At the same time, freelancers can also advertise themselves on several online platforms directly to companies who want to use them, bypassing an agency like yours. In this scenario, it is fair to say that you have to adapt quickly so that you are well-positioned for success in an ever-changing landscape.

5. Have several goals

The path to financial security has no overnight shortcuts but a series of decisions made to meet a series of goals such as revenue goals, customer service goals, social responsibility goals, outreach goals and employee appreciation goals, to name but a few.

These goals can be short or long-term. For example, your short-term employee appreciation goal is to reinforce desired behaviours by implementing an “Employee of the month” programme, while your long-term goal is to increase positive employee commitment and loyalty.

6. Talk to a business mentor

At Berley, we like to think that entrepreneurs are superheroes who shoulder heavy responsibilities, but even superheroes realise that they have limitations and they need support from other people. Having a mentor whom you can trust to provide advice and guidance is key. Ideally, the person can also use their clout to open doors to various opportunities for you.

Berley is here to help you obtain financial security

At Berley, we are entrepreneurs ourselves, hence we think and act differently to other accountants in London. For example, one of our goals is to help our clients grow, because we believe that if you grow, we will grow too. To facilitate growth, we strive to set small business owners free of their financial affairs by providing solid accounting and business advice along the way.

So talk to us today – be it business advice, tax services, online accounting or bookkeeping, our expert team of small business accountants and business growth specialists can help you implement a solid business plan, and advice you on your journey to financial security and beyond.

To get the ball rolling, just give us a call on 020 7636 9094 or get in touch using our online form.

This article was first published in 2017 and was updated on 28/08/2019.

If you found the interesting, you might also like:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


Managing rising business costs

5 ways to manage rising business costs

Managing rising business costsReducing and managing your business costs should not require a lot of effort or time, as it often involves making smarter decisions and implementing efficient methods.

Starting your own business from the ground up takes plenty of guts, determination and self-motivation, which are qualities that our experienced accountants at Berley respect and share. We also know that the process of building and running a business, although exciting, can be challenging at times – in fact, one of the greatest challenges small business owners face is managing rising business costs.

At Berley, our small business accountants have years of experience in working with small businesses across London to reduce and manage their business costs. In this article, we aim to share the different types of business costs and our most helpful tips that can assist you with gaining control of your finances.

Defining business costs

Business costs refer to all the costs incurred when carrying out the operations of a business. There are several types of business costs, which can include:

  • Variable costs: These change in accordance with changes in production, such as wages of labour and raw material.
  • Fixed costs: These do not change and remain the same regardless of the level of output, like the salaries of employees and rent.
  • Semi-fixed or semi-variable costs: Costs that change when there is a significant change in output.
  • Sunk costs: Costs that have already been incurred and cannot be recovered.
  • Direct cost: These costs are assigned to the production of certain goods and services, including material, power and fuel.
  • Indirect costs: Costs that cannot be directly attributed to the production of goods and services. General maintenance and administrative expenses are good examples.

For most small business owners, knowing what you spend every month on costs (office rent, equipment, utilities, payroll, marketing, to name but a few) is critical to your success. The reason is simple – if you spend more than your business can afford, your business is likely to suffer. With this in mind, let us now look at five effective and proactive methods you can use to manage your business costs.

Controlling hidden costs

As a small business owner, you can expect to see the immediate effect of most costs, like if you do not pay rent, your landlord will call and you risk being evicted.

Hidden costs, as the name suggest, are not apparent. The danger of hidden costs is most business owners tend to ignore them as they do not happen regularly. For example, you may only pay obscure bank fees from time to time, or lose inventory to theft occasionally, or have to fight time-wasting printer interruptions a couple of times a month. The thing is, they do add up.

One fascinating thing we find is that most business owners do not associate email use as a hidden cost, despite evidence has suggested otherwise. About a decade ago, business leaders reckoned that email use costs anywhere between £5,000 to £10,000 per employee each year. Just think about the time it takes a person to read an email (or multiple people if everyone is cc’ed, often unnecessarily), reply, sort, delete, and the interruption recovery time between reading/ responding to an email and getting back to tasks – they all add up.

The only way to eliminate hidden costs is to become efficient – in your finance, in your approach to on-site security, equipment maintenance and even your email communication system.

Keeping track of supplier costs

Understanding every aspect of the resources used to produce your products or services is imperative, especially if your profit margin is being squeezed. A few useful tactics which can help to lower your supplier costs include:

  • Discussing discounts – Requesting discounts or asking for other value-adds, particularly if your business is prompt with paying bills or wants to sign a multi-year contract with them.
  • Sharing supplier costs – Finding another business that can share the supplier costs with you.
  • Investigating cheaper alternatives – Although you don’t want to compromise on quality, it can be beneficial to explore other options.

Being creative with space

Small business owners have the luxury of being creative with regards to office space and can lower their cost of rent and utilities as a result. In London, we have met entrepreneurs who choose to have an office outside of London but still keep a desk in the city or use a co-working space whenever they come to London for meetings.

If you are just starting out, working from home or using a co-working space is definitely a sensible move. As your team expands, renting an office becomes a natural move – this is where you can get creative with the layout, like pushing desks together in the middle of the space will fit more team members in the same square footage than arranging desks against the walls.

Making use of the cloud

Today’s digital age calls for a change in how your business operates. Relying on the cloud, instead of having expensive servers on your premises or installing applications in your machines, is one effective way to cut down your IT and energy costs.

Cloud computer, referring to computing based on the internet, allows you to access a myriad of applications – including enterprise-class technology through the internet – with automatic software updates. As your data are stored in the cloud, it means you can literally work from anywhere as long as you have got an internet connection.

In the UK, HMRC has been encouraging small business owners to switch from manual spreadsheets to an accounting system for record keeping. At Berley, we recommend Xero to our clients. Xero is a cloud-based accounting software that is ideal for small business owners and contractors. To find out more, follow this link to the page “Get the most out of Xero with Berley”.

Focusing on quality over quantity

It is well known among manufacturers that improving quality will lead to greater profits. It makes sense – if you do not have to scrap defects, redesign products or manage recalls, you have less administrative and legal issues to deal with, but more loyal customers and greater profits.

The same principle applies to small business owners – the better the quality of your offerings, the more customers you will attract, and the lower the risk of lost business or negative publicity.

Improved quality can also help your product or service stand out in a crowded market, ensuring that your business does not get overshadowed by competition. By continuously striving to take your business to the next level, you can also lower costs through customer retention, as your business will have to spend more money trying to allure new customers than to retain the current ones.

Berley’s accountants can help you manage your business costs

Berley’s expert small business accountants in London know that entrepreneurs are like superheroes. You take on a lot and make many sacrifices along the way. To help you get going, you need a trusted sidekick like Berley who can help you achieve your goals.

At Berley, we think differently to other accountants and will do everything in our power to minimise your tax obligation and maximise efficiency. Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out what Berley can do for your business.

This article was first published in 2017 and was updated on 21/08/2019.

If you found the interesting, you might also like:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


Cashflow concept image

Five ways to improve your cash flow

Pressing cashflow button

Berley’s dedicated accountants have years of experience in assisting businesses to reach their full potential and can help you to manage your business’ cash flow effectively.

Running your own business can prove to be an incredibly fruitful experience, but you will continuously be faced with challenges along the way, particularly in terms of cash flow. According to research conducted by QuickBooks, almost three in five small business enterprises (SMEs) have experienced issues with their cash flow. Cash flow issues are commonly caused by late payments from clients, a decrease in sales or poor cash management. SMEs who fail to improve their cash flow will struggle to meet their financial obligations like paying their staff and suppliers, which can ultimately lead to insolvency.

At Berley, we too have built a business from scratch and understand the obstacles that entrepreneurs across London face, including cash flow management. Using our solid accounting and tax knowledge, we help entrepreneurs and small business owners to keep control of costs, stay on top of cash flow management and help them grow from strength to strength. In this article, we want to share five tips that can help to improve your business’s cash flow. Before we start, we would like to take a step back to discuss what cash flow is and why it is important.

What is cash flow?

Cash flow is the amount of money going in and out of your business as you trade. Cash flow is a natural cycle – you pay for expenses and purchase assets which will then be used to generate revenue from your customers who are buying your business’s services and products.

If the cash outflows are more than the cash inflows, this is called a cash flow gap. To find out more about cash flow gap and how to fix it, follow the link to our post “Cash is King?”.

Why is cash flow so important?

When starting up a business from scratch, cash really is king because it sustains the operation and gives the business a chance to succeed. Having sufficient cash on hand will allow you to meet financial obligations; without it, you cannot pay bills and consequently, your business may be liquidated or wound up.

The good news is cash flow is something that you can manage and plan in advance with the support and advice of an expert accountant. To get you started, you can follow these five useful tips:

Create accurate cash flow projections

A cash flow projection or cash flow forecast sets out the flow of cash coming in and going out over 12 months, though you can design it to cover a shorter period. It should include an estimate of likely sales, projected payment timings and anticipated costs.

The focus of a cash flow projection is not on profit or loss, but on the amount of cash you have at a certain time. If you know that you will have a significant amount of cash in six months’ time, you can then decide on the timing of an investment like hiring another person to grow sales. Equally, if you know that your cash reserve will dry out in nine months’ time, you may choose to sell your account receivables to factoring companies for cash before it happens.

At Berley, our small business accountants in London work with entrepreneurs across London to strengthen their cash flow management and lower the risks associated with cash flow gaps. Give us a call on 020 7636 9094 and we will be happy to assist.

Don’t delay when collecting your debts

SME owners know the stress that comes with attempting to collect overdue payments. Research conducted by the Federation of Small Businesses in the UK has even shown that SMEs are owed an average of £6,142 mostly by larger firms not paying them for goods and services on time, resulting in cash flow difficulties.

To prevent this, it is important that you inform your customers of your payment terms before proceeding. In the case that you are offering a professional service, ask for a payment up-front and request for the remaining balance to be paid at each milestone. You may also let the customer know that you will not proceed unless the previous payment has been settled.

The moment that you realise a particular client is not following through on their payments, you should follow up with phone calls and re-issue the invoice. If a customer does not seem to be paying, you need to act fast to recover the debt. The quicker you chase a customer, the less time and resources will be wasted trying to recover debts.

Review your overheads

Business overheads refer to expenses that are related to the day-to-day running of your business and have nothing to do with a service or product sale. Overheads can include fixed monthly or annual costs like utilities, rent and salaries.

When your cash reserve is low, reducing overheads is a common way to address the issue. For example, instead of hiring a full-time marketing employee, consider hiring a freelancer who is likely to be cheaper than having a permanent staff.

Accept multiple forms of payment

When we published the article “Accepting card payments, what are my options?”, we heard from customers saying they enjoyed reading it. The truth is, if you are in the B2C space, you must accept multiple forms of payment to stay competitive.

For those that are B2B, you know that bank transfer is the most common payment method. Payment methods like direct debits and PayPal are not used as much, but it is worth considering direct debits because they will ensure that you receive payment on time.

Take advantage of online accounting software

Business owners can stay on top of their finances by taking a digital approach and using online accounting software like Xero. Designed with small business owners in mind, Xero is user-friendly and it allows you to track payments, invoices, bank accounts and effectively manage your cash flow.

Main benefits of Xero include:

  • Real-time reports
  • Online hosting
  • Safe storage
  • Automatic back-ups
  • Automatic upgrades
  • Multi-user access
  • Worldwide accessibility
  • Technical support

Follow this link if you would like to know more about Xero and how you can get the most out of it.

Trust Berley to help you manage your cash flow

At Berley, we believe that to be in business, you need to keep a cool head when tackling any cash flow challenges along the way. Every entrepreneur is a superhero in our eyes, and our small business accountants in London are ready to help you reach your full potential.

Apart from cash flow management, we can also help you with:

  • Tax advice and tax planning
  • Completing tax returns
  • VAT
  • Payroll and PAYE
  • Management accounts
  • Bookkeeping
  • Company audit

Our services include a fixed monthly fee, honest answers and no hidden charges. Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting.

If you found the interesting, you might also like:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


The hiring dilema

The hiring dilemma

Job recruiter shaking hands with potential employeeAs a small business owner, it is quite a major accomplishment to get to a point where you are ready to hire a team to help you out. This exciting time has its own set of challenges, however, so how should you go about hiring your dream team?

It is said that the average time taken to hire an employee is a month in the UK, longer if you do not want to settle for ‘okay’ individuals who are likely to cost you more money and headaches in the long run. As a small business owner in London, you also know first-hand how easy it is to hire and lose someone, considering the vast amount of talent and jobs available. At Berley, our small business accountants work with entrepreneurs and start-ups across London to grow their business and manage their payroll process, so it is natural to encounter issues posed by our clients pertaining to recruitment. With this in mind, we aim to share a few employment options and tips which can potentially help your business.

The different employment options

Permanent employee

This is the most common type of employment option. In a nutshell, your employee legally agrees to work towards the success of your business. In exchange, you are required by law to fulfil several obligations including registering with HMRC and issuing payslips showing all deductions including PAYE and National Insurance contributions. On top of that, you are required to give paid holidays, sick leave, maternity or paternity leave, and pension.

It is also possible to hire a permanent employee who wants to work reduced hours. For example, a stay-at-home mother who comes to work three days a week instead of five.

As companies are required by law to manage payroll for their permanent employees, most entrepreneurs look to outsource this function to an accounting firm like us the moment they start assembling a team. Regardless if you have a staff of five or fifty, our payroll team offers fully-managed and bespoke services which take care of all aspects of your payroll, leaving you free to focus on your business.

Contractors

Using self-employed contractors, freelancers or consultants to fill gaps in the workforce is an inexpensive and efficient option, as it requires less commitment from both parties. The obvious advantages include:

  • Contractors are cheaper than permanent staff as you are not required to pay National Insurance, tax, pension and benefits.
  • Contractors tend to be specialists working in niche areas which your business may only require from time to time.
  • Contractors allow you to identify the desired knowledge, skills and qualifications you really need.
  • The arrangement is highly flexible; contractors can come and go whenever you need them, meaning you can respond better to market changes by increasing or decreasing the number of contractors easily, this is something that you cannot do with permanent staff.
  • Most contractors also issue you invoices which you pay as a business expense. While there is no payroll involved, it is vital that your bookkeeper keeps accurate records.

Zero-hour contract employee

Zero-hour contract refers to a casual working arrangement where the business offers a task to a worker when a need arises and the worker can accept or reject. Although zero-hour sounds similar to contractors, they are different in three ways:

  • In a zero-hour arrangement, you actually have an employment contract with a worker; it is just that the contract does not guarantee the worker a minimum number of working hours each week or each month.
  • A zero-hero contract worker is not self-employed but contractors are.
  • HMRC has made it clear that zero-hour workers are entitled to statutory annual leave and must be paid the National Minimum Wage. And even if the zero-hour contract bars the workers from working with other competitors, the rule is not enforceable. On the contrary, contractors invoice you for the work done and they are not entitled to any benefits.

Temporary agency staff

Another possible option is temporary agency staff, which can be hired from an employment agency. This is a low-risk type of employment as you can hire people temporarily and set the amount of time or resources you need for a certain role. Although this is highly convenient, it is a costlier option than employing a person directly as you will have to pay agency fees and commission.

Apprentice

An apprenticeship is an increasingly popular option among growing businesses because it provides competent workers at a lower price. The idea behind an apprenticeship is to give young adults a chance to learn skills and gain experience, and as an employer in England, you may get government funding to cover some of the training costs provided the following criteria are met:

  • Your apprentice is working with experienced staff.
  • They are learning job-specific skills.
  • They are studying during their working week with an organisation that offers additional training.
  • You pay them at least the minimum wage, which is £3.90 per hour from April 2019 if the apprentice is younger than 19.

Useful hiring tips for small business

The recruitment process is far from easy. And you have probably heard from HR professionals advising small businesses to hire for personality over skill, focus on diversity, or be willing to invest. While those tips are useful, bear in mind that they are not silver bullets and do not apply to every situation.

In this article, we would like to share what Alan Hall, an entrepreneur and angel investor wrote in an article for Forbes.com where he shared a system called the 7 C’s that can help in the recruitment process:

  • Competent: look for the necessary skills, experiences and education in relation to the tasks.
  • Capability: look for a person who is capable of taking on more responsibility.
  • Compatible: look for someone who can work harmoniously with colleagues and clients.
  • Commitment: ideally, you want someone interested to stay long-term rather than this job being just a temporary stop on their journey.
  • Character: fundamental values like time-keeping and honesty do not go out of fashion, so find a person who possesses similar values to you.
  • Culture: values, expectations, policies and procedures shape the company culture; accordingly, cultural fit refers to aligned beliefs and behaviours.
  • Compensation: it is essential that the employee is satisfied with the compensation package.

While the 7 C’s are highly useful, keep in mind that finding someone who is committed, pleasant, willing to grow, has the right skillsets, has good values with aligning personality and culture takes time and effort. Also, you may consider using DBS and background checks to narrow down the prospects.

  • Disclosure and Barring Service (DBS) – The purpose of this service is to help employers make safer recruitment decisions by processing and issuing DBS checks. There are four types of DBS checks: basic, standard, enhanced and enhanced with barred lists. These checks will involve research into an individual’s background and will result in certificates that an employer can view to see if they are recruiting a suitable person for their company. It is worth noting that if you carry out criminal record checks, you must have a policy on employing ex-offenders and show it to any applicant who asks for it.
  • Reference checks – To avoid hiring a candidate with a fraudulent degree or without the experience that they featured in their CV, it is essential to call up references.

The payroll process

Having a dream team helping you can spur growth. At this stage, your focus should be on taking the company to the next level; this means delegating administrative tasks or tasks that are time-consuming to someone else. Payroll is a good example. Instead of spending your time calculating holiday pay and filling out forms, outsource the payroll function to an accounting firm like us.

Our payroll services include:

  • Preparing your monthly payroll
  • Providing summaries and analysis for general accounting purposes
  • Preparing and distributing payslips to your employees
  • Providing any compliance work for PAYE regulations
  • Completing of P45s
  • Completing of year-end employer returns
  • Liaising with you to assist in the preparation and filing of P11D

Berley can help you grow your business and manage your financial affairs

At Berley, we are passionate small business accountants in London who do not sit back and remain content with performing run-of-the-mill functions. Instead, we think and act differently to other accountants and strive to go above and beyond to guide and support you throughout your business journey.

Whether it is managing your tax and financial affairs or taking care of your payroll process, you can count on us to surpass your expectations.

Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out how Berley can help you.

This article was first published in 2017 and has been updated on 07/08/19.

If you found the interesting, you might also like:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 

 


Accountants for law firm concept - smiling man in business suit

A good lawyer knows the law. A great lawyer knows Berley.

Berley’s specialist law firm accountants are highly skilled in all financial and accounting areas related to law and we continue to assist London’s law firms successfully.

At Berley, we understand the immense pressure and daily requirements of a law professional who works relentlessly to safeguard the rights of individuals and businesses. In fact, many lawyers in London do share with us how demanding and competitive their chosen field can be.

Given that lawyers often need to work long hours and make personal sacrifices, our dedicated accountants for solicitors and law firms serve to ease the minds of law firm owners and their partners by offering them specialised services, efficiently managing their accounting and tax affairs, as well as payroll and bookkeeping responsibilities.

By employing our services to oversee your everyday financial matters, you can focus on providing outstanding legal services to your clients and take steps to grow your clientele in London’s competitive market.

Specialist law firm accountants

Owning a law firm is similar to owning any other businesses in the sense that it has to respect tax and financial obligations laid out by the government. Time is invaluable for a law firm, so it’s essential that the billable hours are not wasted on figuring out your VAT or tax liabilities.

Law firms in London operate in one of the following structures:

  • Sole Proprietorship – an enterprise run and owned by one person.
  • Partnership – when two or more people operate a business as co-owners and share income.
  • Limited Liability Company – a business structure where members and shareholders have their liability limited to the contributions, which they have made or invested.
  • Limited Liability Partnership (LLP) – a partnership in which some or all of the parties have limited liabilities.

Whatever the structure of your law firm, our dedicated accountants are well versed in the applicable tax and financial responsibilities that you will be faced with. We can expertly advise you and explore ways to maximise your income while minimising your tax liabilities.

Although law firms have similar obligations to other businesses in the UK, they are also governed by the Solicitors Regulatory Authority (SRA) rules. These rules are continuously being updated, and our accountants will make sure that you’re up-to-date so that your firm can operate proficiently.

Personal services for law firm accountants

Working with Berley is a smart move because we can use our wealth of knowledge to enhance the financial health of your law firm.

Some of our accountancy and business services include:

  • Completing your accountsbookkeeping, payroll, VAT and PAYE on your behalf
  • Providing a personal tax service for law firm partners
  • Advice on business funding to help grow your law firm
  • Advice on the most tax-efficient law firm structure to adopt
  • Support on expanding your law firm internationally
  • Business valuations
  • Assisting with a cloud-based accounting system

You can trust Berley to manage the finances of your law firm

We pride ourselves on being experts in accounting and financial matters, especially when it comes to providing the services you need to run your law firm successfully. Our specialist law firm accountants strive to help make your business accounts more efficient and to find ways to increase your income and reduce your tax liabilities legitimately.

Our services include a fixed monthly fee, honest answers and no hidden charges. Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out how we can help your law firm.

This article was first published in 2017 and has been updated on 31/07/19.

If you found the interesting, you might also like:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 

 


Tax documents

Contractors: what are your tax obligations?

Tax documentsContractors across London can trust Berley to assist them with their specific tax responsibilities, ensuring that no valuable hours are wasted.

The contracting organisation, IT Contractors, completed a survey in 2018 and found that around 2 million professionals work on a self-employed basis, and 1.77 million of them contract on a full-time basis. The perks and flexibility of a contracting role continue to attract people to this ever-growing community, but if contractors don’t observe their tax responsibilities, the self-employed dream can become more of a nightmare.

With the dedicated assistance of our chartered accountants, contractors can rest easy knowing that their finances are in the hands of experts. At Berley, we tailor our services to your specific contractor needs, as we understand that every contractor is unique. We can provide you with all the advice and guidance you require to make informed decisions regarding your taxes.

Starting up as a contractor

Before you even contemplate your tax obligations as a contractor, you need to be legally established.

There are many ways in which you can be set up as a contractor but the two common ones are:

  • A limited company
  • An umbrella company

A limited company

A limited company is legally separate from the people running it, meaning that they are entities and separate taxpayers – the company’s finances are separate from the personal finances of the owners.

If you’re working as a contractor, a limited company is often the better option as it is tax efficient and your take-home pay is maximised. For contractors operating under a limited company, your main tax obligations include National Insurance Contributions (NICs), Corporation Tax, Dividend Tax, VAT and income tax.

National Insurance Contributions (NICs)

If you’re drawing a salary of more than £166 to £962 a week, you’re required to pay 12% Class 1 National Insurance rate. For a salary above £962 a week, you’ll need to pay a 2% charge on the additional earnings.

Many contractors choose to pay themselves a low salary (hence lower National Insurance Contributions) and make up their income by declaring dividends – a sum of money that a limited company pays out to its shareholders. The reason is simple – dividends aren’t subject to National Insurance Contributions and are also taxed at a lower rate than salaries.

Corporation Tax

This type of tax refers to a levy paid on a company’s profits – as soon as a company makes a profit, it needs to start paying Corporation Tax. In 2019, the Corporation Tax rate for company profits is 19%, which is standardised for all businesses. The government has promised to reduce this rate to 17% for tax year 2020/21.

In terms of Corporate Tax, the tax year spans from 1 April to 31 March – and you have 12 months from the end of your accounting period to file your return and nine months to pay any tax that is due. To ensure that you adhere to the timeline, Berley’s accountants can keep you on track.

For contractors operating outside of IR35, you can also claim legitimate expenses which will also help to lower your tax bill.

Dividend tax

When a company has paid its Corporation Tax, the retained profit can be distributed as dividends to the shareholders – this would usually refer specifically to you, as you’re likely to be the shareholder of your limited company.

Many contractors use dividends to form part of their income given that:

  • Dividends have a lower tax rate than salaries. For tax year 2019/20, dividend tax rates are 7.5% (up to £37,500), 32.5% (£37,501 to £150,000) and 38.1% (over £150,000), which you must declare on your self-assessment.
  • Dividends are not subject to NICs.
  • A £2,000 dividend allowance is provided, meaning the first £2,000 of dividends are not taxable.

To pay dividends you must declare them in the company board meeting minutes and put them in writing in a dividend voucher, which shows the date, the name of the company and the name(s) of the shareholders(s), whom are being paid a dividend, as well as the actual amount of the dividend.

Value Added Tax (VAT)

As a contractor, you’ll most likely be registered for Value Added Tax (VAT). This tax applies to all the services that you offer to your clients. Every quarter, you’ll have to submit a VAT return to HMRC as well as an electronic payment for this sum.

Many contractors also apply to HMRC for the VAT Flat Rate Scheme – allowing you to negotiate a reduced fixed rate of VAT while maintaining the differences between what you pay and what you charge your customers. Your VAT turnover must be less than £150,000 (excluding VAT) a year for you to join the scheme.

Income Tax

If you’re a contractor, a director of a limited company or a business partner, you’re required to file a tax return. By failing to submit your self-assessment tax returns by 31 October (paper) or 31 January (online) you’re at risk of being penalised. Take advantage of Berley’s accountancy services to assist you with this assessment, making sure that it is correct and submitted in time.

An umbrella company

This type of company employs agency contractors who work on temporary contract assignments. In this structure, you’ll be ‘employed’ by an umbrella company and will need to submit timesheets and expenses to the company – allowing them to handle any administrative issues, calculate your taxes and NICs for a monthly fee (usually a percentage of your earnings).

This option does sound easier, but you are likely to pay more as the monthly fee charged by the umbrella company can be substantial. In the end, you’ll probably take home 60-65% of your total contract earnings. If you were working for a limited company, you would probably take home more, but you would have more responsibilities to handle.

Specialist accountants for contractors

To decide which route to take when it comes to setting up as a contractor, our chartered accountants for contractors are happy to help. For established contractors attempting to juggle their tax duties along with all their other responsibilities, our comprehensive contractor accountancy services will ensure that your business runs at its best.

Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out what Berley can do for you.

If you’d like more information concerning business growth, you can check out:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


What can Berley do for your business?

Young business people solving jigsawGiven Berley’s entrepreneurial background, you can trust our services to assist with the improvement and growth of your business – allowing it to reach its full potential.

In the UK alone, there were 5.6 million small businesses recorded at the start of 2018, according to The Federation of Small Businesses – and this number continues to grow. It’s one thing to start a small business, but maintaining it and growing it is another challenge altogether.

The good news is, there’s no need for you to tackle this challenge alone. Berley was started by entrepreneurs, so we know first-hand what your business needs to succeed. We also understand the importance of employing the services of a hands-on accountant – one that will go above and beyond to meet your business and financial needs.

How Berley can help small businesses

Regardless where a business is at in its lifecycle, every business has its unique set of capabilities and capacities. It faces different challenges and resource constraints but is also presented with tremendous opportunities. To ensure that your business has lasting power to overcome challenges and tap new growth opportunities, you need a dedicated team working closely with you and sharing your vision, and Berley would be proud to be part of your team, supporting you at every stage.

For over 30 years, we have helped companies across London grow and flourish by strengthening their financial health with our complete range of tax and accounting services which include:

  • Tax advice, planning and efficiency – Our tax experts will keep you up to date with your tax obligations and seek to minimise your tax responsibilities while your business operates with the maximum profitability.
  • Completing tax returns – We help you submit your tax returns in a timely and efficient manner, ensuring that you only pay the minimum required for a business of your type and size.
  • Value Added Tax (VAT) and Pay As You Earn (PAYE) advice – VAT is a consumption tax on the sale of most goods and services, and PAYE refers to an income tax deducted from a salary before an employee receives it. With the assistance of our VAT and PAYE services team, we provide thorough and professional services that meet your business needs.
  • Payroll services – Berley’s outsourced payroll services will review and streamline your payroll process while adhering to the latest rules and regulations – reducing costs and saving you time, so you can focus on the other areas of your business.
  • Management accounts – Often featuring executive summary, cash summary, profit and loss report, balance sheet, aged receivable and aged payable, well-prepared management accounts give you well-rounded insights to your business’s performance.
  • Bookkeeping – Accounting and bookkeeping functions should not be a burden or slow down your progress, so let Berley step in to provide a bookkeeping service that matches your needs.
  • Company audit – Essentially a health check process, a company audit can identify potential areas of weakness and new opportunities, thereby improving profitability and business efficiency.

In addition, we can also help you with more detailed aspects of your business such as:

  • Sourcing and applying for business funding
  • Dealing with any international operations you may have
  • Restructuring your business when necessary
  • Working with you to create investment strategies
  • Offering advice on retirement planning

Berley can help your business flourish

As dedicated chartered accountants in London, we’re passionate about working with you to improve your business with support tailored to your specific needs. We take pride in every success that you experience, and want to pass on our years of entrepreneurial knowledge to you.

Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out what Berley can do for your business.

If you’d like more information concerning business growth, you can check out:

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


Tech start-up: how to make it successful

Can entrepreneurs draw lessons from the moon landing event 50 years ago and apply them to running a tech start-up and making it successful?

It could be argued that there hasn’t been a better time to be an entrepreneur in the tech industry. With entry barriers at an all-time low thanks to the prevalence and availability of good development tools and technology, the idea of running a tech start-up can seem too good to pass up.

As an entrepreneur, you see the opportunities and you know that many others see them too, leading to a crowded playing field. So what can you do to gain success in such a highly competitive industry? Before we jump straight into strategies, let’s pause for a second and talk about the moon. After all, we’re approaching the 50th anniversary of the first moon landing on 20th July.

Back in the 1960s, the landing seemed far away, illogical and impossible – even in the weeks and months leading up to this historical event – and yet they did it.

They shot for the moon, and they did it

The astonishing achievement of the moon landing has inspired a term that many budding entrepreneurs are familiar with – ‘moonshot’, referring to grand projects that seem impossible to pull off but if successful, they can end up affecting entire industries, societies and even the entire world.

Moonshot sounds a lot like a start-up.

Expensive? Yup.

Difficult to achieve? You bet.

Seems impossible? Oh yeah.

So that means you shouldn’t do it, right? Absolutely not!

But you do need to have the ‘moonshot mentality’ possessed by these risk-takers, to make your tech start-up a success. So what is this moonshot mentality exactly? Let’s take a look:

1. A clear vision

In a field as crowded as the tech industry, it has never been more important for budding entrepreneurs to have a clear vision of how their new start-up is going to stand out among the competition.

It must be said that the vision can’t be some sort of ‘carrot and stick’ motivator – it has to be something tangible, something real.

Assuming you are developing the next app that will disrupt how traditional business is run, you should develop your app or your product to the best of your and your team’s abilities, and the app itself should actually have value and be able to solve real market needs.

To achieve this, your vision needs to be clear across this journey and you must also have solid commercial plans to see you through. From what you are going to develop, who is going to develop it, what purposes does it serve, to how much do you plan to make to sustain it and what is your business forecast, to name but a few.

When they landed on the moon, they didn’t get there by accident – they had a vision, and from that vision, they developed solid plans that could lead to achieving that vision. Your start-up should aim for the same.

2. Innovation

The moonshot mentality is a key driver of innovation, breakthroughs and new possibilities – irrespective of the limitations imposed by a lack of finance and hours. As aforementioned before, the moon landing was only made possible through innovation and doing something that no-one else had ever done.

You could also argue that innovation is a way for start-ups to minimise risk. A combination of outside-the-box thinking, examination of market needs, and having the right staff and tools in place can create a product that solves the problems of your potential customers – or even solves a problem they didn’t even realise they had. That’s what innovation can do.

And remember: innovation is not necessarily something new; it can also be a new approach to an old or established product.

3. Engagement is key

In this day and age, almost every company looks to create brand awareness and sell through social media. We want to argue this – your endgame maybe to sell a product or a service, but your goal should be to attract and engage your audience first. Once trust has been established between you and your audience, sales come naturally.

Engagement is also about connecting with key industry figures and influencers. An endorsement in the form of a retweet or a like from a highly influential tech expert or entrepreneur can be such a powerful way of getting the tech industry’s spotlight on you.

The bottom line here is that you need to deliver a strong marketing message to go along with a strong product or a service. It is simply not enough to do one or the other as a tech start-up in 2019; nor would it have been for NASA in 1969.

4. Protect your ideas

The ‘Space Race’, as comical as it sounds today, was a very serious rivalry between the United States and its Cold War rival, the Soviet Union. Both countries guarded their ideas and innovations fiercely and so should you with your ideas and products.

Much like these global superpowers, tech companies also have to take preventative measures to protect their interests from rival companies. When developing a product, discretion is often a necessity.

The threat of idea theft is, of course, always real and this can even come from people within your own company. Consultation with a good lawyer is worthwhile as it can ensure your start-up’s products and developments are as protected as they can be from external and internal threats.

Non-disclosure agreements, well-written employment contracts, background checks, training and bringing awareness of theft and fraud to everyone involved are some of the key measures you can put in place to mitigate the risk of idea or asset theft.

5. Location, location, location

For start-ups, interconnectivity with clients and fellow start-ups can be an important factor in success. One way to ensure this connectivity is by basing your start-up’s home operations in locations that are tech-friendly or where a tech industry has already been built up. For example, look for a location which already has excellent broadband access available inexpensively, and it also has a pool of talents working and living nearby which you can tap into.

The moon landings were all about carefully selected locations too – from where Apollo 11 launched to where it landed on the moon’s surface. It is said that the latter of which took two years to decide, hopefully, it won't take you this long to decide on an office location.

It must be said that there are also tech start-ups that operate remotely – and with employees from all corners of the world contributing to the projects. If this is the route you choose to take, then you need to consider how you want to establish your company culture, workflow, equipment needs and communication, among others.

6. Shooting for the Moon? Then you need good accountancy

One final factor that determines the success of a start-up is how well it can manage its finances. It is all well and good with a grand vision to shoot for the moon, but your finances need to be well managed and maintained if you want to have any chance of even leaving the ground. Neil Armstrong knew that. After all, his dad was an auditor for the Ohio state government.

At Berley chartered accountants, we are specialist accountants for tech companies – the logical Spock to your bold Kirk. We are the reliable side-kicks who offer you sound advice so you remain on course and can be successful.

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We provide tech start-ups with:

  • Regular updates on your company’s performance.
  • A proactive and adaptive approach to accounting processes for your tech start-up.
  • Solid advice on compliance and regulations.
  • A transparent, honest approach to what you’re paying for.

Our accountants love working with like-minded tech entrepreneurs who are not afraid to realise a dream. We will help your start-up manage the finances more effectively, ensuring you can spend more time on realising your vision.

Talk to us today by calling on 020 7636 9094 or via our contact us page. We offer a fixed monthly fee with no hidden charges.

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This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


Specialist financial care for your business

At Berley, our dedicated chartered accountants are specialists in the field of finance; managing the complex financial needs of leading companies in London and beyond.

As a boutique chartered accounting firm, we bring a wealth of tax experience and practical commercial knowledge to your business, helping you to enhance the financial health of your business and achieve success.

Inspired by entrepreneurs just like yourself, we understand what it takes to build your business from the ground up, which is why we are here to add significant value to your business and provide comprehensive assistance from tax planning, financial reporting to compliance, key areas that can help your business flourish.

Unlike other accountants across London, we believe in growing with our clients together. This mindset is the reason why we seek to strengthen our relationship with you. And by taking the time to understand your business, our team of chartered accountants, tax experts and financial strategists can work cohesively to provide tailored services for you and your business.

Tailored services for your business

For over 30 years, we have been providing companies in London and beyond with outstanding tax, accounting and financial services, allowing your business to achieve its maximum potential at any stage in its lifecycle. Broadly speaking, our services can be grouped into two areas: general accountancy services and specialist financial areas.

General accountancy services include:

  • Tax advice and planning – meeting your tax obligations efficiently, including VAT and practical small business tax advice.
  • Audit and accountancy services – safeguarding your company’s financial health by providing bookkeeping, management accounts and company audit services.
  • Payroll services – reducing your payroll costs and streamlining your payroll systems.
  • Insolvency – supporting you throughout the process and helping you to get your business running again.

Specialist financial services include:

Business growth

At Berley, we’re not just chartered accountants; we’re business growth specialists who know exactly what you need to make a business successful. If you’re ready to take your business to the next level, we can implement a personalised growth strategy for your business. Having the right strategy in place is crucial - to implement this, we need to understand what makes your business tick.

It must be said that there are many growth strategies available to help you develop new capabilities and tap new growth opportunities but there isn’t a one-size-fits-all approach. The underlying principle is often a strong set of business fundamentals, so speak to one of our business growth experts if you would like to know more. Alternatively, these posts on business growth may be of interest to you:

International business advice

Business today continues to cross over borders and expand internationally. Our chartered accountants have been helping UK-based companies to take their first steps in overseas expansion – from launching overseas operations to finding local partners and market promotion. At Berley, we have a network of dedicated accounting professionals in major trading cities across the globe – strengthening our international reach and allowing us to support and advise you wherever you or your business is based.

Our team of international business advisers have also built a strong reputation for overseas companies who want to invest and set-up operations in London and the UK. Possessing necessary experience and great commercial knowledge to help your company establish its London presence, we deliver the complete range of services from company formation to international taxation.

Specialist market sectors

At Berley, one of our core strengths is working with specialist business owners in the following fields: creative agencies, healthcare, hospitality, law firms, recruitment agencies and technology. These businesses require up-to-date and accurate financial information to help them compete and respond to changing customer needs. This is where we come in – offering a range of accounting and tax services, many of them with a fixed monthly fee and no hidden charges. With us taking care of your financial needs, you can focus on delivering your best value to your customers and grow. To find out more, follow the link to our Specialist Accountants page.

Wealth management

Planning for the future can seem like an abstract concept without an expert guiding and explaining how exactly you can create and grow your portfolio in a tax-efficient way. On our wealth management page, we explain the difference between an independent financial advisor and a restricted financial advisor and how they can help to strengthen your investment opportunities.

Berley is well positioned to provide specialist financial care

Our dedicated specialist chartered accountants work to ensure that you’re financially prepared for any surprises the future may bring and that you’re able to make the most of the finances you have available to you.

Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out how Berley can help you with your specific financial needs.

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This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 


Growing your business by going global

Given that business today is becoming increasingly international, expanding your company globally could be the answer to exploring new opportunities.

For many entrepreneurs whom we work with across London, once they have established their business in London, the next step is to target other cities in the UK, and the natural progression is to expand overseas.
At Berley, we believe in growing alongside our entrepreneurial clients, and with the assistance of our international business advisors, you can determine whether you are financially ready for overseas expansion. Our expert accountants are well versed in international tax laws, payment systems and legal requirements, and will be with you every step of the way.

Find the funding

To grow your business aboard you are likely to need a sufficient amount of funding. For instance, targeting new markets, increasing stock levels and launching marketing campaigns in an overseas market does require additional investment.

You can source investment through one or a combination of means such as:

  • Investing profits back into your business
  • Selling your company shares to investors
  • Taking out a loan
  • Looking for other sources of funding

When it comes to using additional funds to grow your business, there’s no such thing as one-size-fits-all business funding advice, which is why our team of chartered accountants at Berley will work with you to find the right funding that will benefit your business. We will also help you to construct the appropriate legal framework to accompany your application for loan or equity capital.

It is important to take into consideration that producing more stock or hiring new employees will require cash investment, practical cash flow planning and a solid growth plan. If you spread yourself too thin financially or expand rapidly without a plan, you may jeopardise your UK operations. That is why employing an experienced chartered accountant to manage your finances is an integral part of a business expansion plan.

Research is key

With us helping you on the financial side, you and your team can focus on other aspects that are critical to growing your business overseas. Before expanding, thorough research needs to be conducted, and a solid marketing strategy needs to be put into place.

Detailed research should include:

  • Determining which markets to target
  • Exploring what adjustments need to be made locally
  • Considering any legal limitations that you could face
  • Investigating local marketing practices
  • Analysing competitors and trends
  • Identifying distribution channels
  • Communicating with prospective customers aboard
  • Consulting local experts in your destination market

Even with today’s technology, which allows you to connect with partners and customers overseas electronically, many small business owners still insist that the best approach is to visit the destination market and gather first-hand intelligence by spending time talking to the potential customers, logistics partners, marketing agents and even banking staff in the market you want to be in. If this appeals to you, then heed the advice and visit your target market.

Explore the market

After crunching through data and gathering insights, the next step is to test it out. Create a local campaign, assess the demand, test the fulfilment process, get feedback and adjust your plan accordingly. To help you with this procedure, talk to our chartered accountants at Berley about the tax system in your target market and the impact it may have on your business.

If you are convinced that you need a physical presence in the new market, then we can assess the impact of your cash flow. The option to expand overseas by working with partners in your destination market is also viable, and perhaps a less costly approach. However, you do need to make sure that your agreement is watertight.

Be mindful of post-Brexit implications

It is fair to assume that the way UK companies conduct business in the EU will be affected by Britain leaving the European Union. It should not be a deterring factor, however, and many UK companies are continuing to form partnerships with European businesses. Companies doing business in the EU should pay close attention to the business climate and be prepared to cross more red tape.

Let Berley help you grow your business abroad

When you think of an overseas expansion plan, you may not think you need an accountant at first, but having one by your side will prove to be beneficial. Our small business growth business specialists have years of experience with helping UK based companies looking to branch out overseas. Berley also has established relationships with accountancy firms in the world’s major trading cities so that we can support you wherever you choose to do business.

Call us on 020 7636 9094 or use our Online Form to arrange a no-obligation meeting and find out how we can help you grow your business abroad.

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