Blog

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Pay your spouse a salary 

This is a favourite bit of advice from ‘Dave at the pub’ and he may well be right as it reduces the corporation tax that you pay. If your spouse works in your business, then it would be right and fair to pay them for that work. Remember that all expenses must be ‘wholly and necessarily for the purposes of business’ so, if your spouse doesn’t work in your business, it could be fraudulent.  

We always ask our clients to provide a realistic job description (if we do your bookkeeping then you can’t include this as one of their tasks! Nor can you claim diary management if you trade from a mobile phone and book all your own appointments) and an estimate of the number of hours worked. This should show that the salary is reasonable for the work they do. You should pay them at least minimum wage and deduct relevant employment taxes.  

Please don’t try to claim that minor children are working in your business! There is separate legislation covering minors in the workplace and you will need to get authorisation from their school and the local council as well as your insurance company. 

Save corporation tax, pay PAYE/NI 

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Content that converts – what to share to attract better clients 

Most content is focused on the business itself sharing company news, awards won, and generic advice. This is all fine for building credibility but it doesn’t really drive engagement or enquiries. 

Instead of broadcasting try helping. 

Your content should put the client (or prospect) sharing advice on problems that your audience face daily. Use simple, jargon-free language and demonstrate a proper understanding of the issues (this is where AI posts often fall down) 

Here are three types of high-performing posts that you can try: 

1.Problem led eg Struggling with cash collection? Here’s what you can do … 

2.Insight and expert opinion eg Why many business overpay tax and what to do about it  

3.Real stories and examples (anonymised) including lessons learned and outcomes achieved. 

Posting regularly (you choose the frequency that you can manage) builds consistency and don’t forget that you can repurpose the content in different formats. Our weekly Tax Tips are also recorded as videos AND are collated in our Tax Tips book which is updated annually. 

Done is better than perfect. Just get that content out there! 

Give a clear call to action such as an invitation to one of our informative monthly webinars or encourage signups to your mailing list or offer a helpful downloadable resource (our checklists are popular) 

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Sole trader £1k allowance or utilising losses 

£1,000 income allowance 

If you have a small side hustle or startup with income (not profit) of less than £1,000pa then you don’t need to report this to HMRC 

BUT 

you might choose to do so. 

If the business is making a loss, then you can either offset this ‘sideways’ against your other personal income in the same year to reduce the overall tax paid OR carry it forward to set against future profits from the same business and therefore minimise future tax. This sideways loss relief is particularly useful if you are starting your business as a side hustle to your main employment. 

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The power of niche positioning and how specialising can help you to win more clients 

Have you ever tried to hit some of those moving targets in tan online shooting game?  

How much time do you spend wavering between targets? And how many potential targets do you miss as a result? On the other hand, if you are clear about your target and track it for a while, you have more chance of hitting it. 

Vague, generalist messaging doesn’t resonate and it is hard for prospect to see the relevance of it to them. 

Having a strong niche means that you can share messages and advice that are relevant to your audience and feel as though they were written just for the person reading them. This brings in higher quality leads and leads to faster trust as they feel that you truly understand them 

1.Choose your niche which may be clients you enjoy working with and where you are able to deliver the most value (providing that they have sufficient profit to pay you, of course) 

2.Update your website messaging 

3.Update your social media profiles and refresh your content 

4.Share case studies relevant to your niche 

5.Share advice for their specific problems 

Be known for something and your message will be much clearer for the right clients. 

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Why referrals aren’t cracking it any more

For decades referrals have always been the most reliable source of growth for established businesses but these days word of mouth is no longer enough. Buyer behaviour has changed and prospects are researching you online before they even speak to you. Even referred clients will Google your business and take a peak at your website before picking up the phone.

We need to move from passive marketing to visible expertise.

Prospects trust experts that they see regularly and this builds confidence before the first meeting. This consistent visibility also reduces price sensitivity as the prospect feels they are taking less of a risk with a ‘known’ business.

Marketing isn’t about hard selling. It is about showing up with helpful content. It’s about helping your prospects rather than boasting about yourself.

3 actions to strengthen your online presence

  1. Optimise your social media presence with clear, niche messaging that speaks to your reader. Post value driven content and then take time to truly engage with your network by commenting on their own posts instead of just broadcasting at them.
  2. Regularly create useful content by answering common client questions. Share insights, not just updates and don’t forget that you can repurpose content across different platforms.
  3. Build a simple email list that helps you to stay front of mind. Share you insights monthly (our tops tips are deliberately short enough that we can share them weekly. It’s also the length of post that I like to write). As you draw closure to your prospects on your list you can take the time to nurture them.
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Be your own cheerleader!

As a business owner you’re often on your own making decisions and living with the consequences. Even if/when you have a team you’re still ultimately responsible for running the business.

As a kid my parents were often overseas but, whenever they were in the country, my mother would be in the front row of every performance, waving away. When I ran the Bristol 10k for the first time she even borrowed my daughter’s pompoms and cheered me on. And for my ironman triathlon in 2017 the whole family turned up with wigs and inflatable palm trees and they played the LOUDEST music which motivated all the runners throughout the long, gruelling marathon element that finishes the 226.3km (140.6 miles) of this hardcore event.

As an introvert who prefers to avoid the spotlight I found all this EMBARRASSINGLY supportive. But it’s also good to have somebody in my corner. No matter what. Unconditionally.

Who supports you in the lonely role of running your business? Who is there for you on a bad day/week/month/year?

Business coaches can help (I like to think that I provide this support for my clients) but it’s also important that you build a whole network around you. The accountancy world is very collaborative so I’m lucky to have people around me who understand my issues a bit better than my adoring family.

But again, the buck stops with you and YOU are responsible for motivating yourself through the dog days.

I recommend:

  1. Keep a list of your successes to refer to when imposter syndrome strikes 🎉
  2. Keep a list of quick fixes when you’re struggling to start something eg I like to get outside, preferably by water but, if short on time, I have recorded 1min of waves breaking on a beach. 🔧
  3. Keep a reminder close by of your reason for your business. I have a shell on my desk that is a visual and tactile reminder that I am building my life as a digital nomad. 📌
  4. Keep a playlist that will lift your mood 🎵

What do you do to motivate yourself?

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Claiming VAT on mileage

Last week I mentioned the increase in the flat rate mileage allowance from 45p to 55p (for the first 10,000 miles). But did you know that you can also claim VAT on part of this allowance? The amount that you can claim is the VAT on the fuel element which varies each quarter and depends on the engine size of your car.

This is the same rate used for company car fuel and you can find the latest list here.

https://www.gov.uk/guidance/advisory-fuel-rates

eg if your fuel rate is 17p you can claim 17p/1.2x.2=2.83p VAT on the 55p.

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Mileage rate for private cars used for business 

It’s long overdue but, finally, the HMRC allowable mileage rate has been increased from 45p per mile to 55p per mile (for the first 10,000 miles per tax year). This change has been backdated to April. 

All other mileage rates are unchanged. 

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How to prepare your business for sale

I don’t know about you but I hope to retire some day. I’m not in a hurry as I love what I do but I thought I’d share some of the factors that helped me to obtain 32% MORE than average on the sale of my second business. (My first business was a small partnership with a friend that we wound up amicably when I returned to the UK)

Yes, buyers will look at the profitability but there’s more beyond that so here’s a checklist for you to work on. The difference between and average and a premium valuation often depends on preparation.

1.Stable revenue and profit trends – stability is often better than erratic growth. The new owners want to know how much profit they will be able to generate. Clean, well-organised accounts – these give an impression that the whole business is well run. EBITDA is more than a buzzword, it’s an adjusted profit measurement that allows buyers to compare like with like when looking at different businesses

2.Minimise risk for the new owner – reduce risk leads to higher multiples. Assured future revenue through contracts, retainers, subscriptions, and repeat customers will guarantee the new owner their first income. This assured revenue also gives confidence over future cashflow

3.Diverse customer base. A big ‘name’ may sound impressive but they may be at higher margins and/or the business may be overly dependent on them. Risk concentration is a concern for prospective buyers. Diversified income streams (customers and products) increase stability and confidence

4.Strong brand and market position. Brand recognition and reputation will continue to attract customers to your business in the future. If you have a niche it may be easier to stand out as a specialist. Identify any competitive advantages that you have in terms of USP and intellectual property. A trusted brand will often receive a premium offer.

5.Documented systems and processes – these will help the business to run smoothly without you making the transition easier for the new owner will also increase the value of your business

6.Reduced dependence on the owner. If the business is dependent on you to continue running then it may well collapse without you and so will be valueless to the new owner. Start your retirement now. Ensure that others in your team have knowledge of operations and sales as well as customer and other business relationships. It is important to delegate to your team.

7.Experienced and reliable team – they will keep the business running day to day when you have exited. Retention of employees post-sale is often desirable for the new owner so ensure that the buyer is aligned with your key team. This will reduce operational risk for the buyer (as well as looking after the team who have served you well)

8.Potential – Buyers will pay for potential growth and scalability. Ensure that you have up to date, scalable systems in place (this is where many retiring accountants fail to prepare leaving the new buyer with too much work to do). Identify untapped markets, new products, and expansion opportunities

9.Clean compliance position. Ensure that all contracts, licences, insurance, etc are in order and settle any outstanding disputes or liabilities

10.Clear exit preparation and timing – spend 1-5 years preparing* in advance of the sale by improving financial metrics and reducing risk.

Increasing the value of your business is not just about increasing profit but also reducing risk and proving that profits are sustainable. Put yourself in the position of the buyer. Small improvements can often significantly increase sale price.

*Warning – when Della has coached business owners to prepare their business for sale two thirds of them have liked the new business so much that they have deferred their retirement!

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Tax efficient salary 

For many years it used to be more tax efficient for director shareholders to take low salary and high dividends but things have changed.

Over the last 3 years the optimal salary/dividend policy has changed because:

  • Higher corporation tax rate of 25% introduced with a marginal rate of 26.5% 1 April 2023
  • Dividend tax free band reduced to £500 2024/25
  • Employer NI starting point reduced to £5000 2025/26
  • Employment allowance increased to £10500 2026/27
  • Dividend tax rates increased to 10.75%-39.35% 2026/27

It keeps us accountants on our toes revamping all our models each year!