One advantage of a price cutting strategy is it can be implemented immediate and not many customers will complain. However their are dangers which often get overlooked.

Many business owners and managers fail to realise the impact of cutting prices. If a company has a gross margin of 50% and reduced prices by 5% it would need to increase sales by 11% to stand still, a 10% price cut would demand a massive 25% increase in sales to offset the price cut.

Yes, by implementing a price cut businesses may increase sales, but often not enough to make up for price cuts. Taking the example above a 10% cut needing a 25% increase in sales, that would mean a business with £1million sales would need £1.25million just to stand still. Sales would increase but profit wouldn’t until sales grew higher than £1.25million. This may not be achievable, and staff would need to work 25% harder to achieve the same bottom line.

Far too many businesses, both small and large use price cutting as their strategy to address problems of sales reducing or losing customers, often as knee jerk reactions, but often the problems lie elsewhere, usually in customer service, but also sometimes failure to communicate the value and benefits of their products or services, quality of products/services, etc. The company itself is often more concerned with price than customers, who may value other things such as customer services, so thought needs to go into what the real problem is instead of reaching for the price cut strategy as it is likely that price cutting won’t delivery the planned objectives and lead to people being busy fools.

The client in Ainsdale, who’s in the events and entertainment industry, was looking for a helpful and flexible accountants in Ainsdale or accountants in Southport that would give advice and support on the financial side of his business, help with VAT returns, annual accounts, and self assessment tax returns. Basically take the financial headache away!

He had researched the market and found lots of accountants and bookkeepers, but everyone seemed very prescriptive in how they wanted him to work. It all seemed like too much hard work. Sounds like the same old problem, people in the financial profession providing poor customer service. Where have we heard that before?!

Accountants Ainsdale, Southport

On a visit to the client’s premises we discussed his business, what he needed and found the right solution that would get the job done. Hassle free and affordable was the request, so that’s what we gave him. The starting point was where he was at and what worked best for him rather than the other way around, which was music to his ears (he is in the entertainment industry!).

If you are a sole trader or small limited company looking for Accountants in Ainsdale, or Accountants in Southport then get in touch, we’d love to make you a happy customer too!

Although always a challenge, running a business used a lot easier, less red tape, less competition etc, but things have changed and will continue to change. In general people are finding it harder to run a business regardless of the size of business, but especially so for small businesses.  The challenges include:

• Employment laws
• Employment costs – NI, holiday, maternity, sick pay etc
• selling products and services in competitive markets,
• ensuring the operations and projects are running smoothly,
• ensuring the bookkeeping and accounting is up-to-date and providing the correct information
• ensuring the legal obligations of running a small business are met
• etc, etc

Having seen what works for small business and what doesn’t, it’s clear that the best strategy for small business owners to take in order to succeed is to specialise in what they do and obtain support for the rest, otherwise they will be sidetracked into time-consuming none revenue generating tasks and that will not help the business.

With the business environment being uncertain employing staff is often a risky option, and expensive. Therefore small businesses are more suitable for outsourced business support, but business owners sometimes do not obtain support as they think it would be too expensive. They are often pleasantly surprised when they learn that bookkeeping and accounting support is available even for the smallest of businesses. Rates are affordable and charges only apply to actual work done, as appose to for a set number of hours when employing people which leads to large amounts of downtime. Outsourcing the bookkeeping and accounts also means small business don’t have to pay for sick pay, holiday pay, NI etc.

Also, by outsourcing the bookkeeping and accounting the business owner and or internal have more time to do what they do best and make money for the company.

Small Business Accountants in Liverpool and Southport

As bookkeepers and accountants in Liverpool and Southport we provide a range of financial management services specifically designed for small businesses including bookkeeping, Sage Accounts, management accounting, payroll, tax advice, profit analysis etc, which help our clients grow sales, cut costs and increase profits.

Don’t struggle alone, contact us today and explore how we can help you and your business in the future.

When is came to choosing accounting software, businesses used to choose from 2 main dominant players, Sage Accounts and QuickBooks. In the UK Sage is the market leader. However the past few years has seen the rise of online accounting and with it the rise of many new players, three being Kashflow, Xero and FreeAgent. All of which have their strengths and weaknesses.

Kashflow

Kashflow is a UK based company that offers all that’s needed for most small businesses, it has extensive reporting, the ability to manage stock with low stock warnings, different VAT schemes along with the ability to submit VAT returns from inside Kashflow, and invoicing with a quote to invoice conversion facility. At the moment Kashflow doesn’t allow different users to have their own password, which may put some companies off but this might be changed sometime in the future.

Kashflow has the facility to upload a Sage backup which makes moving off Sage to Kashflow a lot easier than with the other systems.

Xero

Xero is based in New Zealand but is expanding worldwide at a fast pace, including the UK. The software supports automatic bank feeds and automatically matches many payments to invoices to help speed up ban reconciliation, leaving the user to match the remaining transactions. You can create invoices to be sent to customers, but at the time of writing you don’t appear to be able to create quotes and convert them to invoices. However another advantage of online software is the manufacturers can easily add updates without having to launch new versions, so small improvements can be continually made, so don’t be surprised if converting quotes to invoices comes soon, especially if enough users request it.

Xero doesn’t have project management or time billing built into the software, but these features and many others can be added via its API at a cost. With Xero you can produce many reports including the usual P&L, Balance Sheet and many more.

When buying Xero you have a few option, the cheapest restricts the number of transactions, the mid version which is probably the most popular for small businesses has all the functions available less multiple currencies, which is the reserve of the top priced version.

FreeAgent

As with Xero and Kashflow, FreeAgent does the accounting with its own additional features, in this case FreeAgent comes with Project Management and Time Tracking features, which could prove useful for its target audience freelance sole traders and small businesses as it keeps track of project expenses and budgets, and different users can have their own login with different permissions. It lacks stock control but it does allow you to add prices of stock and add them to invoices. It has a range of reports suitable for most small businesses and can be used to produce most of the self assessment figures. The invoicing tool allows you convert quotes to invoices.

SageOne

SageOne is Sage’s answer to online accounts. It has received mixed reviews and most say it’s too simple with not enough features, however like mentioned above improvements will probably be made as time goes on. One positive is Sage’s support, all the other systems only come with email support, whereas Sage offers telephone support too which can be useful for sole traders and small business owners with little bookkeeping  knowledge.

Converting from Sage

The only system that allows the user to export data from Sage to other system is Kashflow. It comes with a wizard which should enable users to import data directly from a Sage backup file. It is surprising that the other systems do not have this kind of feature as their aim must be to win customers off Sage, so the least they could do is make the job of moving to them easy. So hats off the Kashflow for getting this right.

Accountant Liverpool – Another about to become happy client!

This is another story of a bad a Accountant Liverpool . But it’s a good news story because we’ve gained an about to become a new happy client.

The usual complaints – poor communications, lack of customer service, missed deadlines etc. The client told us that they have been asking their accountant for their accounts to be completed since early autumn. Here we are 20th December and still no sign of their accountant Liverpool completing the accounts and they need to be submitted by the end of December. Given the holiday season is approaching there isn’t much time left! Not only is there little time for the accountant to complete the figures, but there will be no time for the accountant to sit down with the client, explain the accounts, let the client consider the figures etc. All of which should be done before submitting to Companies House and HMRC. Not only are they not happy about the service, they are also unsure about the quality of the figures that they have been getting in the past.

Accountant Liverpool

It’s amazing how many people have problems with their accountant. All businesses these days need to be customer focused or people will vote with their feet, like the person mentioned above. I bet the accountant expects good customer service when he uses other services, goes to restaurants, buys products. Why should accountancy and the business support that should go with it be any different? It should be even more important because small businesses rely of the support so livelihoods are at stake.

The other good news attached to this story, is the client actually runs two businesses, so in a way the accountant has lost two clients, and we’ve gained two. One mans loss is another mans gain!

Accountant Liverpool

What to experience good customer service? Give us a call, you might be pleasantly surprised!

The two key things to keep in mind is that all staff need to be invited and the limit per head shouldn’t exceed £150. If the party is just for say management then there is no tax exemption and all the money will be counted as a perk and taxed. If the company spends even £1 over the limit then all the £151 will be taxed, not just the amount over the limit. The limit can be spread over more than one party, so for example a company may have a summer and winter party then both can apply as long as both together don’t got over the £150 limit, so if both cost £75 per head then it won’t attract tax.

If you go over the limit then it could be costly as demonstrated in an article written in the Telegraph titled How to avoid the Christmas party tax trap , the article gives an example where a company spends £160 per head, all the staff are in the higher rate tax band, so the tax bill will come to approx. £140, meaning that the £160 per person party will rise to around £300 ! Quite a difference!

Need help with your bookkeeping or accounts. We are accountants in Liverpool and Accountants in Southport. Give us a call!

Travel & Subsistence

As a guideline you can claim expenses for business journeys for example to see clients, and also for travelling to a temporary workplace which could be a client’s office. The travel doesn’t necessarily need to commence from the business premises, it can commence from other places, like from your home. Employees travelling to work are not allowed to claim expenses to get to work.

Expenses relating to Travel & Subsistence could include:

• You can claim mileage expenses for when you use your own car (or van)
• Parking, toll roads, congestion charges
• Any public transport – train, plane, taxi etc.
• Subsistence – lunch when you are out of the office or at temporary place of work
• Hotels including food and £5 per night for incidental expenses in the UK rising to £10 per night for when you stay overnight overseas

Business Mileage (using your own vehicle for work)

If you use your own vehicle for business travel you can claim rates set by HMRC, from 2011/12 the rate for cars has risen from 40p per mile to 45p for the first 10,000 miles, then it drops to 25p.

More information can be found at this link http://www.hmrc.gov.uk/rates/travel.htm

Business Entertaining

Generally, entertaining isn’t and allowable expense by HMRC. When drafting the annual financial accounts, your accountant will disallowed entertaining expenses when calculating Corporation Tax.

It is allowable if you provide an employee with expenses for entertaining clients or if you pay directly. In general, entertainment is business-related and allowable if it is to discuss business, maintain an existing business contact or win a new business contact.

Entertainment isn’t business-related if its social – even if some business is discussed.

VAT can’t be reclaimed but according to HMRC there are two specific exceptions to the rule

• Recognised sporting bodies. VAT can be reclaimed if the body provides through necessity free accommodation and meals to amateur sports persons and officials who attend an event.
• Airlines. VAT can be reclaimed if an airline provides catering and accommodation for passengers who have been delayed.

Fore more information:

http://www.hmrc.gov.uk/paye/exb/a-z/e/entertainment.htm

http://www.hmrc.gov.uk/vat/managing/reclaiming/entertainment.htm

Home Phones, Internet and Mobiles

The cost of business calls made from your home phone can be reclaimed as a business expense. No claim can be made for the phone line rental as this was going to be paid anyway. A second line can be installed and allowable for tax if the company pays and it’s in the company name not yours.

For mobile phones it depends on ownership – business owned phones are fully allowable but only the business calls of personal mobiles can be claimed.

Home internet can be claimed if it’s in the business name and personal use is minimal, but if it’s a personal internet paid by the employee then just claim the business usage.

Professional Subscriptions and Memberships

Subscriptions to professional bodies like the CIMA or CMI or Institute of Directors are allowable expenses. Check with HMRC to see if your body is allowable. If the subscriptions isn’t relevant to the employment then it may be disallowable.

Use of Home as an Office

HMRC recognises many people work from home these days so a small amount can be claimed for using home as an office.

For minor use the HMRC guideline is £2.00 per week if you still do most of your work out of your home.

To claim anymore than this and if you deem the cost of you working at home is significant, then you must be seen to be a home worker, with a dedicated office. If the sum you claim is large then the office could be excluded from your principal private dwelling allowance and on a sale of the property the proportion would be deducted and you may have to pay Capital Gains Tax.

Equipment Purchases – fully allowable when for the business.

General Office Purchases – fully allowable.

Training – Allowable as long as its relevant to the employment.

Eyesight Tests – Buying glasses isn’t allowable as a business expense but eye tests are if it’s necessary for the use of visual display equipment in your duties.

Disallowable expenses

• Business suits and clothing for work, except safety clothing and clothing with the company logo included
• Glasses
• Only the mileage is allowable, service, MOT and repairs are disallowable
• Training not associated with your job
• Golf club membership
• Items that are mostly used personally unless it can be proven they are for business use only – TV, Music Player.

Need a Good Accountant in Southport?

Accountants in Southport – Over the past couple of years I’ve spoken to lots of local business owners in Southport, Ainsdale, Formby and the surrounding area about their businesses, how they manage their business, how they are doing in the current economic climate given all you hear is doom and gloom on the media, and what support they currently get from their Accountants in Southport.

Feedback is a mixed bag but in general many business are finding it tough. Whether business are doing well or not when asked about the support they need from their business advisers or Accountant in Southport, and about the support they get, a common theme is both questions get different answers.

Most business owners say they would benefit from having more support from their accountant in Southport as and when they need it to help with:

Accountants Southport

• Bookkeeping
• Accounting
• General support
• Guidance and advice
• A shoulder to cry on
• Sounding board, etc.

When asked what support they currently get, their faces often go blank. Their accountant and other advisers don’t seem interested unless they are getting a big fee. Accountants in Southport seem to just want to crunch the numbers and like lots of accountants they are not good at communicating or supporting local businesses in the Southport, Ainsdale, Formby area.

Armed with this knowledge Strong Financials set out to fill the gap in the market and provide the support local businesses in the Southport and Liverpool area need, and the client list has been growing as the word spreads. Having been told the support required, our team of Chartered Accountants and MBA qualified business support specialists have been working closely with local businesses helping them with a wide range of tasks from Sage Accounts Bookkeeping, Vat Returns, Management Accounts and Year End Accounts, to more basic admin and office support, and also acting as a critical friend providing the sounding board and support that all businesses benefit from once in a while.

Are you, like many other business owners in the region, having trouble finding a flexible and affordable Accountant in Southport for your business? Then why not give us a call today? Phone: 0845 838 7101

Don’t worry if your answer is no, you’re in the same boat as lots of small business owners and managers.

Research carried out by Intuit, the owner of QuickBooks accounting software, and published on the Business Matters website, found that less than a quarter of business owners have a business plan, less than 20% know what cash flow means, and less than a quarter know the VAT taxable turnover.

As well as the above research, when working with self employed sole traders and small businesses in Liverpool, Southport and Preston we find that other financial terms are not fully understood, e.g. profit and loss, balance sheet, and also a lack of knowledge about tax issues. Not knowing how Accounting terms and being unable to properly understand things like the profit loss and how this can be used to help your business can have a negative impact on finance performance.

Another question to add to the list could be does your accountant help you understand the bookkeeping and accounting side of your business? The answer here is often no too.

Small business owners often don’t have the time or inclination to get a grasp of accountants jargon or compliance issues. This is why we chose to specialise in helping small business owners in the North West of England. We are Accountants in Liverpool, Accountants in Southport and Accountants in Preston. Rather being distant and poor at communicating, which is the typical experience small businesses have with their accountants, we work closely with clients helping to make the complicated very simple!

We help businesses with Bookkeeping, Accounting, Accounting Software including Sage Accounts, self assessments tax returns, limited company year end accounts and more.

Whether it’s cashflow in small businesses, large businesses or in our personal finances, the same principles apply. Larger companies will of course have more inflows and outflows than a small business, but the system is similar.

The illustration below shows inflows coming from debtors, cash sales, deposits, shares and loans, and outflows going to pay creditors, cash payments to suppliers and for expenses, to pay overdrafts, loans, assets and dividends.

When thinking about cash flow for your businesses bookkeeping and accounting, it’s important to understand that if customers/debtors are slow paying and the business paid its suppliers/creditors promptly then it could suffer cash flow difficulties unless is had enough cash in the bank, it could raise some money from loans or from shareholders, or if delayed paying suppliers until customers paid. Delaying paying suppliers can sometimes cause problems with the relationships e.g. they could stop supplying you until your balance has reduced or cleared, they could raise prices to take into account the risk, etc.

In your accounting the same problems could occur if the company paid its suppliers too quick, e.g. if the company couldn’t get supplies on credit but had to give customers credit. Construction is sometimes like this in that the company has to buy products but might not get paid until the project is complete. They may negotiate interim payments to help with cash flow and reduce the risk of the customer owing too much, but these types of businesses often have more cash flow problems than most.

Some companies have overdrafts or loans to help with cash flow in their accounts, others use factoring as a cash flow solution. Factoring can be good in that businesses get paid a large part of the invoice e.g. 85% straight away, however it can be costly so costs need to be taken into consideration when considering this method and compared with the cost of other sources of funding.

We are Accountants Southport and Small Business Accountants Liverpool, that specialise in working with small companies in the Southport and Liverpool area.