Accounting Firm in South Manchester and Manchester City Centre
Are You Too Automated?
Thanks to advances in technology, there is a constant drive towards the automation of processes within businesses. From running the monthly payroll to producing reports for customers, there is usually a process that can be automated by a system. Managers are focusing on doing more with less in this constant drive towards increased business efficiency.
However, too much automation can actually lead to a dead end in terms of increased productivity. Removing people from the day-to-day production of goods and services removes the one facet that machines cannot (yet) replace: the ability to innovate.
Innovation is driven by human interaction with, and frustration with, the existing process for creating a useful good or service. Automating a process reduces this interaction and limits the extent to which improvements can be identified.
Companies with automation initiatives therefore have to take extra steps to ensure that the creative involvement of humans stays high in every one of their business and production processes. Feedback loops must be built and nurtured. Management must foster active process observations and seek constructive criticism.
If your business is highly automated, you should assign a small group of people to focus on productivity improvements. For example, they should try and identify any gaps in your processes, and seek feedback from other employees. Your customers are also equipped to tell you where you can improve on your product or service quality, efficiency etc.
Make sure that this information is fed back into a continuous improvement process. The idea is to innovate and create better solutions, as well as to make the better use of technology.
R&D TAX CREDIT RATE INCREASED
Companies that are Small and Medium sized Enterprises (SMEs) carrying out qualifying Research and Development can currently claim a corporation tax deduction of 225% of their qualifying spend. This means that £100,000 spend would result in a £225,000 reduction in taxable profits, potentially saving £45,000 corporation tax (at 20%). However, if the company is loss making this benefit may not be received until future years when profits are made.
In order to improve the cash flow of these loss making SMEs the tax rules allow the company to surrender the loss attributable to the enhanced R&D spend for a tax refund. This has been increased from 11% to 14.5% with effect from 1 April 2014. So the £225,000 (based on £100,000 spend) would result in a refund of £32,625. Contact us if you would like to discuss whether your company could qualify for R&D tax relief.
Are You Taking Advantage Of The £2,000 Employment Allowance?
The new £2,000 “employment allowance” that provides relief from paying employers NIC on the first £2,000 of contributions starts 6 April 2014. For many employers the benefit of the £2,000 relief will be obtained in month 1 by reducing employers NIC payable, for others it could take several months before credit for the £2,000 is obtained on a cumulative basis.
This new relief appears to be available to most employers, including one man band companies, and leads us to consider a change of profit extraction strategy from 6 April 2014 as it will be more advantageous to increase directors’ salaries to £10,000 instead of the NIC threshold of £7,956.
The extra £2,044 will save £409 (20%) corporation tax (£818 for two directors) whereas the additional employees NIC would be just £245 each.
Husband and wife company – from 2014/15:
Salary – £9,755 net = gross £10,000
Dividend up to BR band £28,678 net = gross £31,865
Top of BR band £41,865
Net cash extracted (each) £38,433
Total extracted £76,866
There would however be 20% corporation tax payable.
Profits before tax £71,695 @ 20% = £14,339 corporation tax, thus profits before salaries and tax would be £91,695.
This results in an overall tax and NIC rate of just 16.2%.
A salary in excess of £10,000 would attract income tax (at 20%) and employee’s NIC at 12.2%.
Could the UK Economy finally be on the up?
According to revised projections of the International Monetary Fund (IMF). IMF have successfully elated their predictions of UK growth by more than any other G7 economy, claiming that cheaper credit and increased buyer confidence has unexpectedly effected growth in an more positive way than originally expected.
It’s the first time since April 2008 that the UK economy is forecast to grow faster than the US or Germany, with growth now forecast at 2.9% for 2014, revised upwards from 2.4% in January and 1.9% last October. In comparison, the US economy is forecast to grow at 2.8%, Canada at 2.3% and Germany at 1.7%.
Olivier Blanchard, chief economist for the IMF, said:
“It is fair to say that our forecast was too pessimistic, and indeed growth has been much stronger than we had forecast. II think it has to be said that we are in the business of forecasting. Forecasting is an imperfect science and sometimes we over-estimate or under-forecast.”
The IMF also praised policies announced in Budget 2014 to boost capital spending, including doubling the annual investment allowance for businesses to £500,000.
However, it also warned that the UK’s recovery was “far from assured”, due to its unbalanced nature.
Are you making the most of significant tax reliefs?
As a forward thinking accountancy company we pride ourselves on finding ways to save you time and money. We love helping our clients find the best ways to become more tax efficient, and the proof is in the pudding, with most of our clients saving more money on tax then they do on our fixed fees.
With this the a&c Team would like to introduce to you the Enterprise Management Incentive Scheme.
The Enterprise Management Incentives (EMI) Scheme is an HMRC-approved share options scheme designed to incentivise key management personnel – it is low risk, low cost and highly tax efficient. Recent legislative changes in this area have made much more tax efficient, meaning that there has never been a better time to put an EMI scheme in place.
Some of the key benefits are as follows:
- Aligns the interest of key management personnel with those of the company
Options are granted to employees to purchase shares in the company at present day values, though they may be used when the company has grown significantly.
The employees are thereby incentivised to increase the value of the company so they can benefit from the capital growth in the shares, which due to recent changes in legislation would be taxed on the employees at only 10%, which can be significantly more efficient than a payment of a bonus.
Neither the company nor the employee incur any cost for the granting of the options, meaning that the only cost incurred until their exercise is the initial fee to set up the scheme.
The employee need only exercise the options and purchase the shares if and when they want to do this. This means that there is little down-side risk to the planning as, if the options are not exercised – if for example the share value has not risen – the employee is in no worse a position. However, they will
continue to be motivated to add value to the company due to the ownership of the options.
EMI schemes are highly customisable, meaning that the documentation can be drafted with the company’s specific requirements in mind. The options can be drafted to have performance criteria that must be met before they can be exercised, or it may be the case that you would like a minimum employment period, or a buyer to be in place, before the
options can be exercised. It may be the case that you do not want the employees to have voting rights, and therefore would like the shares that are granted to be non-voting. The scheme can be implemented such that a purchaser would buy the employee’s shares in loan notes, thereby keeping the employees in place for substantially reduced cost over a bonus, and increasing the attractiveness of the company for a potential purchaser. Alternatively, it may be the case that you want to create a market for the shares to be purchased from the employees through the establishment of a trust.
All of the above can be possible and we will work closely with you to ensure that the EMI scheme is designed with your specific requirements in mind.
For additional information regarding EMI, and to hear about the benefits of this scheme please contact the a&c Team, and we will be more than happy to guide you through all aspects of the scheme.
Tel: 0161 962 1855
Email: paul@ac-accounts.co.uk
A&C’s Top 5 Xero User Tips
We are bringing you our top 5 tips to make Xero even easier to use! We have collected our 5 top tips that our a&c account managers use every day.
1. Shortcuts
There are plenty of little shortcuts that we could share with you, but here are our top 5 shortcuts our account managers mostly use.
| Shortcut | Shortcut key(s) | Example |
| Day in the next week | next [day] | If today is Monday, using shortcut: next fri enters the date of the next Friday |
| Date in current month | (number) | Enter 15 for the 15th of current month |
| Months after today’s date | +[number]m | In the date field, enter +1m for 1 month after today’s date |
| Weeks before today’s date | -[number]w | Enter –1w for 1 week before today’s date |
| First of any month in any year | [month]/[year] | Enter July 2012 for 1 July 2012 |
For all Xero’s shortcuts click here
2. Add a Shortcut to Your Desktop
a&c Chartered Accountants are all about time efficiency so all our account managers have added a direct link to Xero on their desktop.
To do this go to www.xero.com, and drag the blue Xero logo on to your desktop. Xero hassle!
3. Use Payment References
Reconciling your statement lines, make life easy and be sure to put in a reference code/number in the Reference field on the Awaiting Payment invoice or Bill when recording the payment. You will thank yourself later!
4. Inbuilt Calculator
Our account managers use the inbuilt calculator to calculate simple equations using a few quick shortcuts:
Use + to add
Use – to subtract
Use * to multiply
Use () to group e.g. (19.95*.80)+30
5. Utilise the Help Centre
The help center is like the Google Search of Xero, enter anything and you are sure to find the answer. Not only are there helpful articles, but screeds of informative videos too. Here’s a few videos to get you started.
Send To A Friend!
Remember you receive 20% of your referrals first year fee when they sign up with us!
Why not send your referrals this flyer today!
Why Not Wednesday
Sure Why Not!! Is One Way To Start An Adventure!
Today is #whynotwednesday! A day dedicated to trying out something new! Why Not!
We are giving you the chance to take full advantage of our FREE Xero tutorials & our FREE data transfer from Sage to Xero only on Wednesdays.
If you haven’t heard or seen the future of accounting in action then there is not time like the present and the present is FREE!
Why Not book yourself in with our marketing director Chloe, who is more than happy to work around your busy schedules, to make time to show you why you should be using Xero!
Its #whynotwednesday guys, Why Not!
Call 0161 214 7984 or email chloe@ac-accounts.co.uk.
For more information on how a&c Chartered Accountants make the transition from your old accounting software to the revolutionary Xero follow the below link!
https://www.ac-accounts.co.uk/news/199-gold-members.html