Running a company that only serves the small business market has given me numerous opportunities to gain insight into the minds of small-business owners. Many of these small-business owners are in the process of launching a new venture. They're bootstrapped, hustling for every dollar of revenue and attempting to discover the secrets to consistent growth. When it comes to tax return preparation, our accountants are experts, and we're here to help you do it right the first time. Our accountants know the ins and outs of taxation like the back of their hands. When you work with our Accountants in Kent, you won't have to be concerned about your financial situation. The harsh reality is that many startups launch, have some early success, and then simply stop growing. When it comes to growth, I've met countless business owners who seem to make the same mistakes over and over. Here are four to stay away from. 1. Making the decision not to grow in the first place. This is a problem for small-business owners who believe they've "arrived." From the outside, they appear to be stable. Internally, they believe they have enough customers to keep them busy and pay the bills. This is the kind of attitude that leads to the demise of many startups. I don't see any distinction between this way of thinking and an ostrich burying its head in the sand to avoid danger. It may seem like a good idea in the short term, but it isn't in the long run. You'll be in big trouble if you lose sight of the fact that competitors are working hard to steal your business around every corner. If you're not working as hard as they are, if not harder, you're putting your company at risk. Never, ever, ever rest on your laurels. 2. Over-reliance on referrals You can't deny the value of referrals for a startup. As you work to establish yourself and make a name for yourself, referrals can help to legitimise you and your business in the eyes of others. They generate new revenue while also building goodwill with existing customers. Referrals, on the other hand, are like a pleasant winter day. They're great when they happen, but if you start wearing shorts every day in January, you'll be very disappointed. One thing that many entrepreneurs and startups fail to recognise is that even if people like you and your company, they are under no obligation to share your information. People are pressed for time and have a lot on their minds. They're probably not thinking about you. With this in mind, keep in mind that, while referrals are great and should be requested, the responsibility for growth ultimately falls on your shoulders. Nobody will do it for you. 3. Belief that you'll "figure it out" Entrepreneurs who are launching startups are so used to doing everything themselves that they can easily overlook opportunities to get help when they desperately need it. Business owners who become engrossed in the day-to-day operations of their company fail to take the time to learn from others, which is a mistake. If they believe they will eventually "figure it out," they are likely wasting a lot of time and effort in the meantime. There is more help available than ever before if you are willing to ask. Don't be afraid to draw on the experiences of those who have gone before you. Most of the time, they are eager to assist, and your company will benefit as a result. 4. Doing everything on your own This is a classic entrepreneur's pitfall, and I've seen it countless times: they just can't let go. As Infusionsoft was getting off the ground, I struggled with this as well. The solution to this problem is simple: trust. Entrepreneurs and startups must be able to put their trust in others in order for their businesses to grow. Having one person try to do everything for himself or herself stifles growth and holds everyone back. Only after entrepreneurs begin to relinquish responsibility do they realise how much more they are capable of accomplishing. It is not always easy, but it almost always pays off. In addition, we have a website with the domain name CruseBurke, where we provide accounting services in Croydon.
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Passing on one's possessions, whether monetary gifts, jewellery, or property, is the only way to move beyond the veil. However, the ideal distribution of that bequest entails not only the right division among your close relatives based solely on merit, but also a significant financial decision. After all, in most circumstances, inheritance is a source of support, and it's not fair to have the value of that assistance shrink due to inheritance tax concerns that could have been prevented or lessened. Here's a simple advice to keep you prepared and ensure that inheritance tax doesn't detract from the beauty of what you leave behind for people who will carry on your memory and name. Dartford is well-known for its role in the industrial and cultural sectors. It's a major rail hub, and the main through-road now passes through the town itself rather than through it. Here is where you can start your business. Our best accountants in Dartford are here to make your start as simple as possible and your future bright. What precisely is inheritance tax? It is a tax that is computed and paid based on the value of the estate and other assets (deductible after death). Following that, the procedures are transferred to the heirs.
The Inheritance Tax Workings Explained The government will calculate the entire worth of assets (including liabilities). In this case, outstanding debts would also be evaluated. The following are the primary assets: Cash in bank accounts
1- Is Inheritance Tax always applicable? When you are not subject to it: Inheritance tax is a complicated subject since even if you do not have to pay it, there are numerous forms to complete. The good news is that it is not always appropriate. For example: (1) if the value of your estate is less than £3,25,000; (2) if the estate is bequeathed to your civil partner or spouse (this includes leaving everything beyond the £3,25,000 limit); If it exceeds this amount, a 40% tax is charged, which is why the spouse is the preferred choice of the inheritor. Even if you fall below the aforementioned threshold, you must still disclose the same to HMRC. 2- What happens if you leave your house to your children? On the plus side, the threshold sum in this scenario can rise to roughly £5,00,000, which is a bit of a relief (this includes foster, stepchildren and even adopted children). The same is true with grandchildren. Also, if your estate's value is less than your threshold, it can be immediately added to your partner's threshold following your death if you are in a civil partnership or married. 3- When must Inheritance Tax be paid? After inheriting, you have six months to make the payment (roughly six months post the decease). If you are unable to pay the lump sum, you can choose for instalments over a maximum of 10 years while dealing with the property. However, interest costs are applicable, therefore it could be a good idea to consult with an accountant about it, since it doesn't make sense to part with cash unnecessarily. 4- How does Inheritance Tax work? Assume your estate is worth £500,000 and your tax-free threshold is £325,000. Inheritance tax is levied at 40% on £1,75,000 (the value of the estate less the £3,25,000 exemption). When is the reduced rate of Inheritance Tax applicable? The lower rate of inheritance tax is 36%, however it only applies to a portion of your assets. However, you must first leave at least 10%, if not more, of the actual 'net value' to a charity of your choice. 5- What exactly is taper relief? Surprisingly, gifts made while you were living may still be taxed after your death. When that particular present was delivered was taken into account in this case. Taper relief refers to the amount of Inheritance Tax that is levied on a gift that is less than roughly 40%. In most circumstances, for taxes to apply, the gift must be worth more than £3,25,000 and the person must die within seven years after making the gift. 6- What presents have been exempted? Small gifts made from your earnings are exempt from taxation. Christmas gifts and birthday presents are two examples. Such presents are known as exempted gifts. Furthermore, if you and your civil partner or spouse make gifts to each other, there is no Inheritance Tax to pay. There is no limit to the amount that can be provided, however they must be permanently resident in the UK. Gifts of up to £3000 in value can be made each tax year without increasing the value of one's inheritance. This is included in one's annual exemption. 7- What is the definition of a gift? Any valuable possession, such as property, money, or the like Any value loss that has been willingly incurred. For example, suppose you sell your home to your child for less than market value. Even if you did not explicitly state it, the difference calculated would be deemed a gift. Individually, up to £250 in gifts can be given under the exemption as long as it is not utilised twice. After reading the post, if you have any questions about accounting, please do not hesitate to contact Cruseburke Accounting Services. Small and medium-sized businesses have a strong desire to grow, but they frequently fail to understand the fundamental requirements. One such thing is bookkeeping, which, if not addressed, will jeopardise your business operation. Many business owners believe that accounting is a straightforward procedure and do not give it the attention that it deserves. Poor accounting and bookkeeping processes, on the other hand, can have a negative impact on the financial health of any organisation. In many circumstances, recurrent bookkeeping errors might lead to your company's collapse. So, here are ten frequent bookkeeping blunders that small businesses should avoid at all costs in order to run smoothly. Are you apprehensive about your upcoming major business decision? What about real-world findings that can be put to use? We're talking about a yearly review of your financial statements. It's possible that you've spent money on assets and projects that haven't generated enough revenue to justify their expense. Don't make the same mistakes over and over again. Speak with one of our small business accountants in Croydon about expanding your revenue base. 1. Failure to devote sufficient attention to the bookkeeping procedure Accounting is one of the predictors of your small business's success. Whether it's a small payment or a large transaction from consumers or clients, it's critical to ensure that every financial transaction is properly recorded and categorised in your records. Regardless of how tiny your company is, taking the bookkeeping process seriously offers you with a realistic picture of your company's prosperity and enables you to see just how effectively (or poorly) you've performed over a specific time period. 2. Failure to keep track of minor purchases Even the most seasoned business owners occasionally fail to keep track of their financial activities. While it may not seem like a big deal if a meal ticket goes missing, these modest transactions may add up quickly if they are neglected on a regular basis. You also don't want the government breathing down your neck to see whether you've claimed costs and don't have any evidence to back them up. Being mindful of the minor transactions makes it easier to deal with the major ones. As your organisation expands in size and the number of transactions increases, you'll find it easier to keep your records in order. 3. Relying excessively on accounting software Many bookkeeping errors are caused by oversights that may be easily caught and corrected with a human audit. It is not uncommon for small firms to completely avoid them because they are overly reliant on their accounting software. Small firms must do proper financial audits to search for bookkeeping flaws in their spreadsheets or faults that the software missed. The sooner you realise that no accounting programme can correct every mistake, the better your chances of keeping an error-free financial record. 4. Failure to perform basic financial reconciliations It is your job to reconcile your company's books with the bank statement every month. Account reconciliation is a basic process. You must verify your books to your bank statement to ensure that there are no discrepancies. If you discover an error, contact your bank right away to address the problem. By repeating this process on a monthly basis, you can ensure that bookkeeping errors are successfully eradicated before they cause a significant financial setback. 5. Failure to understand the distinction between cash flow and earnings A small business might have positive cash flow in a short period of time and still be unprofitable. Again, it may have a negative short-term cash flow but yet be profitable in the long run. The first scenario is prevalent among small firms since they frequently need to pay their suppliers before receiving money from their customers. "You need to liaise with an accountant so that he/she can prepare the financial statements on a regular basis to get a comprehensive image of your organization's genuine financial condition at all times," says Brent Mulligan, a finance expert. These should be presented at least quarterly and include a balance sheet, profit and loss statement, and income statement. 6. Using the Do-It-Yourself Bookkeeping Method Many small business owners take pride in wearing numerous hats, which includes keeping the books and accounting. However, this aspect of the business should be managed by a professional. Accounting and bookkeeping can become quite technical and complex. The money spent on a professional bookkeeper or accountant, even on a part-time or contract basis, will be worthwhile in terms of the time saved and the mistakes avoided. 7. Failure to allocate adequate budgets for each project Is your company starting a project without first calculating a reasonable budget? Starting a project without knowing how much it will cost is a good way to end up spending more than you expected. Failure to develop a budget also makes it harder to keep track of your spending. As a result, your organization's limited money will be spent on projects that will not provide a significant return on investment. As your small business expands, you'll discover more about how much money it requires to stay in business. This also allows you to set aside funds for projects that have a high likelihood of success in terms of revenue. 8. Merging personal and corporate expenses Regardless of the size of the organisation, it is critical that business and personal costs be reported separately at all times. One of the first things that small business owners should do is register a business account and deposit all of their company's earnings into it. The next step is to collaborate with an accountant to create an earnings management strategy that defines how cash is segregated from the business in order to maintain personal costs. Your earnings management strategy will be determined by factors such as how much of your profits must be reinvested back into the organisation, the timing of payments for large business expenses, your seasonal cash flow needs, and your long-term personal financial plan. Best Croydon Accountants provide services relating to accounting for sole traders, small enterprises, start-ups, contractors, and a variety of other businesses in the Croydon area. So, if you require service, please do not hesitate to contact us. |
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August 2022
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