We often get asked whether certain training courses can be claimed against tax and we give the usual accountant’s answer … it depends.
It depends whether the training is to improve an existing business service or to start a new one. Eg a hairdresser wanting to start providing nail service could not claim a course on manicures but the could claim an course on colouring. Similarly an accountant beginning to provide business coaching can not claim the initial course but can claim subsequent courses to improve their coaching service.
Collaboration for the win
A while ago our local post master observed my kids spending their pocket money and reported back to me. Apparently they figured out that if they pooled their money they could get a big packet of sweets between them which was even better value. Collaboration for the win!
Years later, when they were old enough, he gave each of them a job as soon as he had a vacancy. Watching their behaviour over the years had given him some idea of how they would get on with customers.
In our business we rely on each member of the team using our different skills collaboratively to provide the best service to our clients.
But it’s not just internally that we work together. We extend our support to clients’ bookkeepers. They can contact us through the year with coding or other queries. In return we benefit by getting neater records coded as we like them so the year end is faster. Sometimes we get early warning of areas we can advise our mutual client. We’re always happy to explain any year end adjustment journals so that Xero (or other software) records are better each year.
We also work with software providers to ensure that any new software is properly set up to give both year end and management information. Or with IFAs and mortgage advisers to provide the best information to help our mutual clients with nonbusiness finances.
How could you collaborate with others to increase the size of the pie?
Tax tip
Business entertaining is not allowed for VAT or Corporation/Income tax purposes.
The only exception is staff entertaining. I’ve written on this separately if you want the detail but it must be below £150 per person per year.
Customer and supplier entertaining are never allowable and this is one of the many adjustments that we make when we prepare your accounts and tax returns.
Is it your husband’s business?
When I set up my first business in 2009, I lost track of the number of times that I was asked whether it was my husband’s business or mine!
Initially I ran the business from home in order to be available for my small children. But it didn’t look like a typical house because it was a former Post Office where we had two rooms set aside for me and my staff.
When we reached a team of 5, we had to move out to commercial offices in the next town in order to grow further. This had the benefit of a large meeting room where we could host our Money Matters events and Xero training courses. (It was also above a Domino’s which was great when the whole team got together for our monthly lunch and learn sessions) With larger premises and running events I was clearly the public face of the business, and nobody asked about my husband anymore.
Since I sold that business in 2017, I have started 3 more businesses, all of which operate remotely with no permanent office space. The Money Matters events are now a series of monthly webinars to help business owners and the Xero training is also online.
Once again people are unable to judge the size of my business from any physical premises. Now I get all sorts of subtle questions probing for how big the team is. (In case you’re curious Minerva Accountants currently has a permanent team of three people plus regular and occasional sub-contractors but watch this space)
How do you think your business is perceived and what can you do to change that?
Should I be a limited company?
There are all sorts of reasons for incorporating and most of these are unchanged but two things have changed or are about to change.
1.Corporation tax increases combined with National Insurance reductions mean that the level and which it is tax efficient to incorporate have increased to around £100k* profits
2.At the moment small companies do not have to publish full accounts at Companies House. In future they will need to show their profit and loss account. This means that sensitive commercial and personal information will be in the public domain. For sole directors their salary will be available for anybody to see.
There may still be reasons, tax and otherwise, why business may choose to trade through a limited company so personal advice is more important than ever.
*This is a guide and the actual level still depends on individual circumstances.
Tax Tip – Tax efficient salary 2024/25
A tax efficient salary for director/shareholders has always depended on your personal circumstances but, for most people, it mainly depended on whether our clients had spare Employment Allowance or not. Now that corporation tax rates have increased and national insurance rates have fallen there are far more things to consider and we will no longer publish a generic rate.
The good news is that we will soon be releasing an app so that you can work out the best rate for yourself. Please let us know if you would like to be informed when this is available.
Tax Tip
Client gifts are not usually tax deductible. Here are a few simple rules to ensure that you can claim them
- They can not be food, drink, or tobacco
- They must be under £50
- They can not be cash or cash equivalents eg gift vouchers
- They must carry a conspicuous advert for your company
Free samples of your products are usually acceptable
What is a Clarity review?
We try to encourage all our business clients to have regular Clarity reviews. These can be monthly, quarterly or annually depending on the size of the business.
- We connect their Xero or Quickbooks to Clarity HQ software which analyses 7 key indicators that reflect profitability, productivity, and value of the business.
- This shows where their business is NOW
- We discuss where they want to be on each of the 7 indicators in the next 12 months
- We come up with an action plan on how to get there
- We have regular check ins to help them work through their actions. This is where Della’s business experience and coaching come in
- We celebrate clients getting closer to their goals
- We repeat with enhanced goals
It’s all about constantly moving forward
10 questions business owners should ask their accountant
- What was my turnover this month? How does it compare to previous months/years/budget?
- What are my main sources of income and how can I grow them?
- What is my gross margin and how does this compare to others in my industry?
- How much cash do I have in the bank? How much do I need to pay out in the next week/month?
- What is my working capital and how can I improve it?
- How much tax (corporation tax, VAT, PAYE) do I have to pay and when?
- What are the key financial ratios that I should track and why?
- How can I collect money from customers faster?
- What is the best accounting software and processes for my business?
- How can I grow my business or make it more profitable or increase the value for my retirement?
Do you have regular reports/conversations that show this?
Tax tip – Don’t forget to get the VAT invoice!
No VAT invoice = no VAT reclaim so it is important to request a VAT invoice (which shows the VAT number along with other necessary information) and not just the receipt from the card machine.