Blog

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Tax tip – interest on your director’s loan account 

If you have put money into your limited company that has not yet been repaid then you can pay yourself interest on this loan. This can be a tax efficient way to take money out of the company BUT you would need a CT61 form completed for HMRC each quarter. 

If you’re interested then please contact us for further information. 

If, on the other hand, you have borrowed money from your company then you may face a higher tax charge and even a personal tax charge. We have software to help you plan your dividends. 

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Paying your spouse

Paying your spouse a salary can be a good way to save tax if they are not using all of their personal allowance.

BUT you need a credible job description and they must be paid at least minimum wage. We’re happy to make suggestions of how they can assist you in your business.

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New corporation tax rates

As from 1 April corporation tax rates increased for companies with taxable profits above £50,000. The new rate is 25% for companies with taxable profits above £250,000 with a hybrid rate of 26.5% for profits between the two limits.

If your profits are close to the £50,000 you may wish to consider:
1. Are all your costs allowable for tax?
2. Paying into a company pension for yourself or your employees
3. Paying interest on any directors’ loan accounts that are in credit.

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Know your client

Lots of client meetings this week. Yes, we need to know our clients for AML but chatting to them usually results in extra work. Sometimes it’s a quick query that can be answered straight away and earn ‘brownie points’ and client loyalty but sometimes it is paying work that earns extra fees.

How often do you speak to your clients?

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Are you multitasking or attention switching?

We used to be proud to multi-task.
And then we were told it was wrong as we were attention switching which was less efficient rather than more.
But sometimes it is possible to multi-task efficiently.

This is when we’re doing simple tasks that require little thought. For instance, this tip is a result of me cracking an egg for my breakfast while pouring water into the teapot. Both simple tasks that I was able to do using muscle memory and minimal brain input. I also do those all essential pelvic floor exercises while cleaning my teeth so that I can laugh as much as I like when I’m in that retirement home.

Many people listen to a podcast or radio show while doing doing physical exercise. (I’m unable to do this as my focus super-power means that I automatically block out all sound to focus on the other task)

What little tasks can you combine without losing quality?

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Would you buy a discounted parachute?

It’s a question that Brad Burton asked which got me thinking. (So I hope it will get you thinking too)

Why do we assume that we need to be cheap to be attractive?

Quality is often more important than price. Yes, at Minerva we can use software to churn out accounts fairly cheaply but business advice is much more valuable and that takes time to understand the client’s business. It’s hard to be reactive, let alone proactive, on a tiny budget.

What could you do better in your business if you had a little more time or money to put in? And how much more valuable would that appear to your ideal customers?

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Getting the most out of conferences

There are all sorts of conferences and events you may attend for different reasons but you need to prioritise what you want to get out of an event in order to make the most of it.

For me it’s usually about the people and maximising the time. I try to meet all the people I chat to remotely throughout the year. Here’s how I go about it.

1. Wear comfortable shoes and make sure that you look like your social media photo so you’re easy to spot. For me this means an up to date, professional photo online and remembering to wear contact lenses, hair down, and usually a branded shirt at the event.

2. First plan any talks you want to see – If speakers are unpaid the talks are often just selling a product rather than real value to you so leave.

3. Next identify any exhibitors you want to catch up with or see new products. This is the time to meet the people. If necessary you can arrange a demo when you get back to the office. Worth having a separate email when booking to separate the more spammy follow ups. If you don’t want a follow up don’t agree to have your badge scanned or hand over your details (it saves their time too)

4. Book when and where you’re going to meet other business friends.

5. Carry plenty of business cards unless you prefer to keep your contacts on Linked In. (Whilst sales folks often have their contact details on Linked In many people don’t due to the volume of unsolicited calls. Having a Linked In profile doesn’t mean that people log into the app; even my retired parents have profiles for some unknown reason 🤷🏻‍♀️)

6. Associated social events are an added bonus. Usually great for dancing but too loud for proper networking (or is it just my age?).

7. Transfer any items to your to do list on the train home so they might actually get done.

8. Book the next day as a quiet day for an introvert crash and/or to follow up on everybody that you met. Add new contacts to your CRM and connect on social media

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Less is more

Management accounts. What should they include?

It depends very much on the users, their goals and their understanding of finance.

Most management accounts that I have seen over the years are just information overload. I prefer to focus on three key numbers at a time. These numbers may vary over time as focus shifts to improving different parts of the business.

Of course there should be more information available to drill down but most managers prefer to focus on a few key items at a time.

What do you like to see in management information?

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Your business, your goals

When I talk to accountants about how to have a ‘better’ tax return season my assumption is that they want to avoid having to do all the work in a short period but I am aware that some accountants choose to work this way. They deliberately set aside December/January to do nothing but work, and then take most of February as holiday, and work part time the rest of the year.

And you will all have different goals for your businesses.

Most goals are a mixture of profitability, work-life balance, and final valuation on exit. But you might have a specific aspiration to drive a particular car whereas I’m happy with my battered old Skoda when it’s too far to walk/cycle or public transport isn’t suitable.

When we take on new clients the first thing we discuss is what motivated them to set up their business. We do this for coaching clients as well as for Minerva Accountants clients so that we can give the best advice. Not everybody wants to grow an empire. Other people are happy to put in longer hours short term in order to accelerate their new startup.

We run Vision and Values sessions for business owners and/or their teams. But you can read ‘Start with Why’ by Simon Sinek to ensure that you are clear about where you and your business are heading.

You can order ‘Start with Why’ here.

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The value of certification

There are all sorts of certifications to ‘prove’ that you run a good business. B-Corp, ISO, free range farming, CPD approved etc
 
Getting certified for all of these can cost a great deal of money for a small business.
 
But that shouldn’t stop you doing the right things. You can use these programmes to put systems and processes in place to improve your sustainability, quality, health and safety etc. Once you are running a good business doing the right things you can choose whether to apply for certification.
 
You might want the formal certification because they are an explicit requirement from your customers or you might want to use it for marketing purposes. If you’ve already done the preparation this can be done relatively quickly and easily.
 
What certifications will you prepare for?

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