VAT, Cashflow Planning, and Holding Companies - March Newsletter😊
Happy new tax year our lovely Anlo community. Everyone worked hard to get all the 2021/2022 tax returns submitted and paid on time.
We start a new tax year, and working towards getting financials and returns calculated early so that we stay on the good side with HMRC but also have some time to do some cashflow planning.
If your situation has changed or you have moved or have new contact details, please get in touch so that we can update your details where it is appropriate.
We can start your personal tax return as early as the 6th of April, so if you want to be an early bird, then send your information on 😊
VAT Registered Businesses
Remember that if your turnover exceeds £85 000 or you expect your turnover to exceed £85 000 you might need to register for VAT.
We want to remind everyone to make sure that they stay compliant and ensure that
All transactions must have a VAT invoice where VAT should be claimed – we can attach the invoice to Xero, Quickbooks or Freeagent and it is very easy to do, so please get in touch if you don’t know how this is done
Certain transactions don’t have VAT on, and the easiest way to see this is to refer back to the invoice.
Please send all Amazon invoices to Hubdocs or your accounting software. Not all transactions have VAT on and we might need to apportion the transactions.
You can double check if a supplier is registered for VAT by using the following link Check a UK VAT number - GOV.UK (www.gov.uk)
Did you know that there is only VAT on the admin fee or text message fee on your parking expense? This means there is only a small portion of the expense that has VAT on. But please send invoices to Hubdocs if you think that this is appropriate.
There has also been changes in the penalties and interest that will be charged on late submission of VAT returns and/or the late payment of VAT amounts.
Cashflow Planning
We have thought of five things that you can start doing which should help you get payments in more quickly.
Hope this helps 😊
Set out your payment terms in writing. Make sure your payment terms are in writing and accessible to your team and to your clients. It might be assumed that everyone knows payment is expected in for instance 15 days. However, make a point of getting it in print and making people aware of it. This will make the rule more concrete and remove any doubt about what’s expected. It will also help ensure your customers are getting a consistent message.
Offer an early payment discount to your customers and make it easier for customers to pay you by using Paypal, stripe, worldpay etc. Stripe is free to link with Xero.
Promptly send out invoices as soon as the work is done and make sure the automatic payment reminders are set-up.
Take quick action on unpaid invoices. Phone your customers and make sure you get in contact to make sure you have the correct details and that they did receive the invoice.
Make sure you check your bank transactions and follow up on outstanding invoices. If you don’t do this regularly then you will find it difficult to allocate payments accurately but also it will feel like a task.
Please feel free to contact us if you have any questions.
Holding Companies
A Holding Company is perfect for entrepreneurs looking to branch out to new business prospects that don’t quite fit into their existing companies. It’s also great for business owners who want to compartmentalize different departments, services, or products.
A group structure is created when a company (directly or indirectly) owns one or more other companies. The company at the top of the structure is called a parent or holding company and can have many subsidiaries under it. All companies in the group are under the ultimate ownership and control of the parent company.
Anyone looking to limit the financial, reputation and commercial risk of having various trades within one company can opt for a holding company to keep risky elements limited to specific divisions or company.
A Holding Company also makes it less risky to team up with business partners in new ventures because you won’t have to expose your existing company to the risk of failures of the new business.
The dividends paid from the subsidiaries to the holding company is also exempt and will only be taxed as dividends when it leaves the group to be paid out to the shareholders.
Another tax benefit can be that certain tax losses can be utilised across the group rather than just in the company in which the loss originated from. These reliefs do not generally apply to sister companies.
The disadvantage of a holding company The paperwork and start-up costs and will be slightly higher. You will have to register every business you’d like to run as a Subsidiary Company to your Holding Company.
Also, if the Subsidiary Companies to your Holding Company have various owners, it can be difficult to close a Holding Company, as there are multiple owners to consult.