Posts tagged ‘Twelve Months’

On Wednesday 24th March the Chancellor, Alistair Darling gave what could be his last budget. Many are saying how the budget was a waste of time, being so close to an election and the lack of assistance to small businesses or real attempt to recover from the significant budget deficit certainly supports this view.

Businesses however, should consider reviewing their own budgets and make sure they are set appropriately. As someone a lot wiser than me once said ‘failing to plan is planning to fail’.  Just as sinful is spending time creating a business plan and annual budget and not reviewing, updating or revising them on a regular basis.

Budgets are an important tool for anyone in business and at least an annual review should be considered. Many businesses approach their accounting year end at this time of year so it is an ideal time to appraise how your business is doing and what you wish it to achieve in the future.

Here are a few tips to consider when reviewing your budgets for the year:-

  • Are you producing management accounts on a regular basis, if not, what financial information can you easily extract from your accounting system that would help you monitor the business?
  • Business forecasts and cash flow projections should be prepared for a minimum of twelve months giving you something to monitor performance against;
  • You should ensure budgets are realistic in the current climate,
  • Are there any costs that can be trimmed back? Do you know which of your costs are fixed and which are variable, in reality in the short term most costs are fixed, if you need to go through a cost cutting exercise you need to know which costs can be varied and when.
  • Is cash flow behaving as expected? Are you likely to need further banking facilities at some point in the future?  Are your debtors and creditors being managed appropriately?
  • If you are selling a product, it is important to know at what point the business is generating a profit, following the recession with pressure on prices the break even point can be higher than you realise, you need to be aware of this.
  • If you are selling a service, do you know how many of hours of time you are invoicing out a month, you may feel busy but is it resulting in billable income.
  • How are you generating new business, and what is this costing you in terms of time and resources.  Are you being realistic about how much new business can be won?

Focus your attention

Reviewing your businesses budget can be a very valuable exercise.  It will focus your attention on how your business is doing and help you to keep control of costs.  It should also give you a target to achieve for the future.

If you are in business on your own, it may be beneficial to speak through your budgets with someone who understands your business, like your accountant, for example as this may help you to look at the bigger picture, question your processes or brainstorm ideas.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

The end of the tax year is almost here, so those of you who administer the payroll function for your business are nearing a busy time and need to ensure you are prepared for a few changes which occur this year.

Online Filing

The first change affects those who have not previously filed their Employer Annual Return online. 2009/10 is the first year that online filing is mandatory for all employers regardless of the size of the business. Paper filing of forms is no longer an option. Therefore if you have not previously been registered for electronic filing you must ensure you now register with HMRC’s PAYE Online Service which can be done via the HMRC website.

Late Payment Penalties

Another change which will affect employers from May 2010 is the introduction of late payment penalties if your PAYE is paid late. Currently interest is only charged when the PAYE payment is received late at the end of the tax year.

From May 2010 your PAYE payment will need to be received on time either each month or each quarter depending upon which basis you pay.  Businesses will have to ensure that HMRC always receive postal payments by the 19th of the month or that electronic payments are received in HMRC’s bank account by 22nd of the month to avoid a late payment penalty. The new late payment penalties will apply to all employers and contractors that do not pay on time.

Details of whether you have incurred a penalty will not be sent out until April 2011 but will apply for the whole of the 2010/11 tax year. Penalties will start at 1% of the late amount and will increase to 4% depending upon how many times you pay late. You will not have to pay a penalty if only one payment is late unless it is more than six months late. Payments that are more than six months late may attract a penalty of 5% and a further 5% if still outstanding after more than twelve months.

This is an important change for employers who should ensure they get in to the practice of paying their liability on time each month not just at the payroll year end to avoid any extra costs.

If you have any queries regarding the preparation of your payroll my colleagues at our in-house payroll bureau PayScheme will be happy to help. Contact a member of the team direct on 01767 220199.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.