Minerva Accountants Bristol and Somerset
Fully digital Xero accountants taking the hassle out of your business
The company must pay tax on overdrawn loan accounts if not repaid within 9 months of the year end (and there are clauses that stop you repaying and immediately withdrawing!)
If the amount is over £10,000 then the individual director will have to pay a tax on the ‘benefit in kind’ of a beneficial loan
So please check your management accounts before taking money out of the company and ensure that you leave enough in to pay VAT, corporation tax, and any other bills.
As an athletics coach for endurance events, I’m used to planning training loads that include elements of fast work, long slogs, technique work and recovery.
In your business life this would equate to sprinting for deadlines, putting in sustained effort for maintenance, improving your skills and automation, and resting.
Business owners always seem to forget the resting bit but, if it’s good enough for top athletes, it’s good enough for you too.
Personality profiling is often criticised as it is not an exact science. However, as long as you understand the limitations, it can be very helpful.
We use DiSC profiling but there are other systems based around colours or you could use Myers-Briggs.
This helps us to understand our preferred communication style and also how our colleagues and clients like to communicate. For instance, my brief bullet points are probably great for somebody who likes to get straight to the point but there are other personality types that would prefer something longer with more descriptions and examples.
So here’s an example of how we use it in practice:
In my previous practice we had an art gallery as a client. The owner was a business person who liked direct communication (like me). However many of their artists joined us and preferred a gentler style. I had to adapt my communications and use a more verbose style to get my message across. It is up to us to speak to clients in plain English and also in a way that they can understand.
On the other hand we had another wonderful client who was even more direct than me which intimidated one of our junior staff. Fortunately I was able to explain that this was just the client’s usual style and not a criticism of the work and their professional relationship flourished from there.
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.
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.
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?
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?
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?
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?
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.