Can you help me prepare a business plan and forecasts for the bank?

A business plan can be used as a route map for the business and the business owners - to help them meet their needs. Our system for strategic planning is specifically designed for entrepreneurs and ensures that the business owners and managers aims are considered as a fundamental part of the plan.

Our trained facilitators will work with you and your team to help arrive at an action plan with milestones to ensure progress is measured throughout. We can then help to create the financial forecasts matched to the business plan. Being able to demonstrate that your business has a specific plan to achieve the forecasts will give the bank comfort that the forecasts are robust.

Do I need an audit?

As a rough guide, you will not need an audit if you are a private limited company and your turnover is less than £6.5 million and your assets are less than £3.26 million (for accounting periods commencing on or after 6 April 2008).

You will need an audit:
If the company was at any time part of a group requiring an audit.
For companies below the £6.5 million threshold, if any member or members holding not less in aggregate than 10% in nominal value of the company's issued share capital, requests an audit for that year in writing no later than one month before the end of the year.

If the company was at any time during the financial year a public company, a banking or insurance company, an e-money issuer, an ISD investment firm, a UCITS management firm or carries on insurance market activity.

How do I value a target company?

There are four main methods used to determine the value of a business:

  • Price earnings. This method involves assessing future maintainable after tax earnings using a price earnings ratio that would fit the risk profile of a willing buyer/seller.
  • Discounted cash flow. This method calculates the value of the business by discounting the future cash flows by an appropriate discount rate.
  • Asset-based. This method values the business based on the fair or open market value of its assets and liabilities.
  • Dividend yield. This method calculates the value of the business by assessing the future dividend steam and a dividend yield which would fit the risk profile of a willing buyer/seller.

How much money can I give to my (adult) children without paying inheritance tax?

Currently inheritance tax is only an issue if your entire estate is valued at more than £325,000.

Each year, you can make gifts of up to £3,000 in total without worrying about inheritance tax. Gifts totaling no more than £250 per annum are ignored. More substantial gifts to your children can be made when they get married. Above these limits, inheritance tax won't be payable when you make the gift, but may be payable if you were to die within 7 years of making the gift.

How should I structure my business?

Each circumstance will be different and needs to be considered individually. We will always work with you to firstly understand the commercial needs of your business and also your plans and aspirations. Only once we understand fully what you and your business need will we be able to begin to design the best structure to meet those needs whilst ensuring maximum tax efficiency and structural flexibility is achieved.

I already pay top level salaries. What other options are available to reward employees?

Share schemes, which give the employee a stake in the future success of the business, are popular. For owner-managed businesses, the enterprise management incentive (EMI) scheme is particularly suitable and is not too expensive to implement. You can also reward your employees by offering a flexible benefits package, which provides a menu of benefits for the employee to choose from. They may include:

  • Pension schemes, life insurance, income protection, critical illness, private medical insurance (PMI) etc.
  • Allowing an employee to purchase extra days holiday, or even sell back to the business some of their holiday entitlement - subject to minimum holiday entitlement regulations
  • Providing vouchers to help with the weekly shopping or with the cost of childcare
  • Allowing a more flexible working pattern, for example finishing work at lunch time on a Friday.

Flexible benefit structures need not be expensive to implement and can greatly increase employee commitment and motivation. However, schemes must suit the business. It is no use all employees leaving at lunchtime on a Friday if there is no one left to answer the phones!

I have a small business - when do I need to register for VAT?

VAT is triggered by turnover, not profits. You must register:

  • at the end of the month in which the value of your supplies in the past 12 months has exceeded £77,000
  • as soon as you expect the value of your supplies in the next 30 days to exceed £77,000
  • you take over a VAT-registered business as a going concern

The threshold changes - usually once a year announced in the Budget - so you should regularly check your turnover against the current threshold. In some circumstances, it may be beneficial to register before it is compulsory to do so. This would apply, for example, where you are incurring substantial VAT on your purchases, which is only recoverable once registered. In many cases being VAT registered gives a new business credibility in the eyes of their customers.