Money and tax
VAT, PAYE, corporation tax, business rates and the bank manager. What a small British business actually owes, when, and what happens if it cannot pay.
VAT, PAYE, corporation tax, business rates and the bank manager. What a small British business actually owes, when, and what happens if it cannot pay.
- The VAT threshold is a cliff, not a slope. The £90,000 test runs on a rolling twelve months, not your year end. Most people who get caught out were looking at the wrong number.
- What your first employee actually costs. The salary you agreed is the smallest line in the calculation. Employer NI, pension, holiday and insurance all land on top, before anyone is productive.
- Profitable businesses go under every week. The profit and loss says you made £40,000. The bank says you have £1,800 and the wages are due on Friday. Both are correct, and only one of them can pay.
- Your bank manager is a person with a target. A facility review is not a formality and your bank manager is not the decision maker. Knowing what the credit function sees changes how you ask, and what you get.
- Your first Self Assessment, and the payment on account trap. Your first January bill is often half as much again as you budgeted, because HMRC asks you to pay next year's tax at the same time as last year's.
- Limited company or sole trader, honestly. The tax answer changed when dividend rates did, and it changes again with profit level. Liability and admin often matter more than the few hundred pounds either way.
- Business rates, and the relief nobody claims. Relief on a rateable value under £12,000 can take your bill to nothing, but you usually have to ask for it. The valuation itself can be challenged too.
- Chasing money without losing the customer. Most late payment is not a dispute. It is a purchase ledger paying whoever asks loudest. A ladder that ends in a letter before action usually stops at step two.
- Gross margin is the number to watch. A 2% price rise can do more for you than a 20% sales push, and cost you nothing. Gross margin is the number that tells you which lever is worth pulling.
- Corporation tax, associated companies and the marginal band. Two companies, identical profits, different tax bills. The gap is the marginal band and the number of companies you happen to control.
- Making Tax Digital, in plain terms. The spreadsheet is not banned. Typing numbers off it into a portal is. Who Making Tax Digital applies to, from when, and what a digital link actually means.
- Selling up, and what a buyer is really buying. A buyer is not buying your business. He is buying the profit it makes after you leave, which is usually a smaller number than the one in your accounts.
- The month the overdraft is called in. An overdraft is repayable on demand, and the demand arrives on the worst possible morning. What you do in the first forty-eight hours decides most of it.
- What an accountant is actually for. Accountant is not a protected title in the UK. Anyone can use it. Here is what separates the ones who file your return from the ones who are worth paying.
- Bookkeeping you can keep up. The shoebox is not a cheap system. It is an expensive one with the bill deferred to January. A weekly hour costs less than the annual reconstruction.
- Forming a company, step by step. Incorporating takes about twenty minutes and costs less than a tank of fuel. The decisions you make in those twenty minutes are the ones that are awkward to undo.
- What being a director actually commits you to. Seven duties in the Companies Act 2006, and one moment when the company you serve stops being the shareholders and becomes the creditors. Most directors never learn where that line is.
- Salary, dividends, or some of each. The optimal split is worth a few hundred pounds a year and about an hour of thought. Taking money the company has not made is worth considerably more than that, in the wrong direction.