5 Top Tips on How to Get Your Business’ Finances in Order
Regardless of the size of your business, it’s crucial to keep on top of your finances, as doing so can save you considerable amounts of time and money in the long run.
MPA Group, the innovation funding specialists, have put together five top tips to help get your books in order.
1. Review tax changes
Businesses should always be aware of tax changes made at the end of each financial year as some can have major implications. This year some of the changes involved Personal Allowance, Income Tax, dividends and workplace pensions.
The amount you can earn before paying income tax increased from £11,850 to £12,500. This will give most people an annual saving of £130 a year in tax.
Businesses are now allowed to take more in dividends before switching to the higher dividends tax rate.
Pensions are also affected. You now need to pay a minimum of 8% of an employee’s qualifying earnings into their auto-enrolment workplace pension – an increase of 3%.
2. Go green
Climate change and other environmental issues are now getting the media attention they deserve, and there are a number of ways that your office can help to make a difference. The Making Tax Digital government initiative, launched on the 1st April 2019, will certainly help. To reduce your physical waste, keep as many records as you can on cloud software. Even simple changes can make a big impact. Switching off everything, from printers to heaters, can significantly reduce your energy emissions and save you large amounts of money in the long term.
3. Update your records
Ensuring that your company records and accounts are up to date is always important, so if you think you might be behind, spend some time going through them. Check that all paid invoices, expenses, salaries and pension contributions are accounted for. Paper files are especially easy to misplace or forget, so if you don’t use software to run your business bank account, take extra care.
Taking these steps will enable you to accurately assess the financial position of your company, as well as identifying any tax due and the dividend that you can pay yourself. It is important to remember that any dividends should come from available company profits.
4. Take advantage of the R&D Tax Credit scheme
R&D tax credits can provide cash injections to innovating businesses, significantly improving their financial situations and helping fund progress. It’s therefore crucial that companies remember to claim tax credits for any time spent on research and development. If your business has spent money on starting projects that explore new processes, products or services in the last two years then you should be eligible to claim.
5. Register for Patent Box
The government’s UK Patent Box initiative is another way of rewarding innovation and if you are eligible, be sure to take advantage. The scheme enables companies to pay a reduced Corporation Tax rate of 10% on any profits that are a result of sales of products or services that contain a qualifying patented innovation. These products and services can be as small as a technical improvement on an existing product or process. A staggering 97% of eligible companies claiming R&D tax credits don’t currently take advantage of Patent Box, so your business could be missing out on significant funding.