Chartered Accountants of Poynton, Cheshire

Tax Tip

When you buy new equipment for your business, ask whether it is energy or water efficient.

Check the list on www.eca.gov.uk to see if you could get a 100% deduction fo the cost in the year of purchase.

On-line filing

Every year, employers are required to send details of the salaries, tax and National Insurance deducted from their employees.

These year-end returns have to be submitted by 19 May 2007 to avoid a fine. These documents can be submitted on-line via the internet.

We can assist you in this process. If you are a small employer (less than 50 employees) and you file on-line, HMRC will pay you £150 tax-free if you file on time for 2006/07.

Company Vans

There has been a big change to the taxable benefit due on vans.

Where an employer provides a van for an employee, which they can use for private journeys, the taxable benefit from 6 April 2007 becomes £3000 per annum.

This taxable benefit is not levied if the private use is merely incidental.

HMRC have given some guidance on what is incidental but this is not exhaustive so we will be pleased to advise on the situation if you are providing vans that can also be used for private journeys.

Useful sites

www.hmrc.gov.uk - H.M. Revenue and Customs

www.dti.gov.uk - Department for Trade and Industry

www.companies-house.gov.uk - company information

The Seven Golden Rules

A business can suffer financial problems for a variety of reasons. However, if you spot the problems early enough you can tackle them and help the business recover.

Appletons Accountants look for the seven golden rules to help our business customers:

'A sale is not completed until the customer has paid' is as true today as it ever was. Tight credit control is therefore essential in any business. If your business offers credit, you must follow these minimum requirements.

1. Set credit limits for each customer that they must not exceed.
2. Run a credit check on all new customers (such as with on-line credit-check agencies or Companies House).
3. Send invoices out promptly as delays in invoicing mean delays in getting paid.
4. Prepare a list of debtors' balances daily, or at least weekly, so that you know exactly how much you are owed.
5. Send customer statements promptly at every month end.
6. Ring customers with overdue accounts and keep the pressure up until they have paid.
7. For long-overdue accounts, take legal action to recover the money owed.

Why stock control is vital

Every time a business buys an item, which it intends to sell, costs are incurred. If that item is never sold it becomes an expense or if it takes a long time to sell it will tie up funds until the sale is made.

Tight stock control is therefore vital to both reduce costs and ensure funds are not tied up. The steps you should consider include:

1. Only buying goods when an order has been received from a customer.
2. Ensure you have more than one supplier for all the major items that you sell. This means you do not need to carry as much stock and you reduce the risk of your supplier being 'out of stock'.
3. Carry out regular stock counts so you can have accurate information of the stock levels to prevent excessive ordering.
4. Ensure slow moving items are sold off to at least generate some cash.
5. Use software to monitor both stock levels and ordering. This can be vital where a large number of stock lines are being maintained.
6. Keep stock in secure locations to reduce the risk of theft.

Steps which Appletons Accountants might take to help a struggling business

1. Get some reliable accounting information about the current financial situation, such as recent accounts, cash-flow forecasts and budgets.
2. Help the business generate some 'cash in the bank', which means reducing overdraft and borrowing requirements. You could do this by having a sale of slow- moving stock and unused assets, and chasing debtors.
3. Review the marketing plans, including current customer orders. This review could lead to revamping the products or services, devising a sales plan and reviewing customer requirements.
4. Review staffing levels. Sometimes this leads to redundancies, but it can often just be a matter of retraining current employees or reallocating tasks more efficiently.
5. Restructure the company's finances to give long-term stability, such as arranging new overdraft facilities and reviewing leases, hire-purchase agreements, long- term loans and mortgages.
6. Retraining current directors or even installing a new management team, to ensure the same mistakes aren't repeated.

These are just some of the steps that any accountant would take to help a struggling business, and much of this you can do yourself.

Of course, if your business is not performing as you would like and you want us to take a look, give Appletons Accountants a call!

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