Tag Archives: money

Cashflow Forecasting

Anyone who has ever studied anything to do with business will probably have heard the saying ‘Turnover is vanity, profit is sanity but cashflow is king’.  This saying is very true and poor cashflow management is the number one reason why over 50% of British startup businesses fail within the first 5 years.

It doesn’t matter how great your turnover is, how amazing your are at what you do, how brilliant your ideas are, if you haven’t got the money in your business to pay your suppliers, rent, staff etc you are going to fail.

So what is cashflow – it’s ensuring the amount of money coming in to your business is greater than the amount of money going out.  In business, as in personal life too, this needs to be monitored constantly so you can plan ahead for any shortfalls.

Having to rely on overdrafts and credit cards can lead to large charges making cashflow worse and an ever increasing downward cycle is created.

You need to pay particular attention to cashflow before any large purchases are made or new ventures entered in to.

Having a contingency fund (savings) of one months expenses will help ease cashflow when unexpected costs arise or money due in is late.

Don’t take it for granted that you will be paid on time.  Be very proactive when it comes to chasing money you are owed.  If possible have a contract or ‘terms of business’ with every customer detailing when payment is due.

Allow for fluctuations in income, do you close for Christmas, is your business seasonal.

Ensure you have good relationships with suppliers and financiers as they could help when your cashflow runs into problems.

The Cashflow Forecast

This is nothing more than a simple list but the more complex your business, the more complex your cashflow forecast will need to be.

Across the top will be 2 columns for each month (or week if needed).  One column for forecast and one for actual so you can compare results.

At the side you will have a row for each item of income and then each item of expenditure.

You can find many examples of cashflow forecasts on Google to give you an idea.  We can help set up a spreadsheet to do this for you but when it comes to applying the figures, you as the business owner are best placed to forecast your figures.

 

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A Bit On The Side

A Bit on the Side

No, not what you’re thinking, I’m talking about the Side Gig, Side Hustle, Moonlighting, Homers, whatever you want to call it, it can be a very good idea.

Initially I built up my accounts practice on the side of my day job before leaving that job to grow my business full time.

More and more people are moonlighting on the side of their day job – so why is this such a good idea?

Test the waters

If you eventually want your side job to become your full time job, growing it on the side gives you time to test the waters, experiment and learn.  It lets you try out different strategies to see what works and allows you to fail, all whilst keeping the financial security of your day job.

Not having to rely on your side gig for income allows you to focus on the long term success rather than short term income.

Extra Income

You’ll no doubt make some money from your side gig to compliment your full time income.  Whether you use this extra income to grow the business, save or dig yourself out of debt is up to you but the extra cash will always be nice.

Cash lets you fund your own start up or take a pay cut when you eventually want/need to ditch the full time job and make your side job the full timer.

Money can make you feel that you have options, that you have some backup, that you can afford to fail.  In other words it makes you feel safe, and if you feel safe you are more likely to take the small risks necessary to start up.

What to do

You need to establish what your side gig is going to be – what are you good at, what do you know how to do, what would you like to do, what would others pay you to do.

Getting started

Once you’ve decided what you are going to do you need to work out how you are going to get clients/customers.  How are you going to get the word out about what you are doing and what platforms are you going to use to do this.

Keeping it going

Office management – even if your side job is something low tech such as dog walking, don’t think you don’t need to get involved in office management.

A side gig doesn’t have to be about money.  It can be for fun, to gain experience or self education.   However, if money is the main objective you need to take it seriously.  Dealing with administrative tasks, paperwork, income, expenses, taxes and marketing all need to be done.  If you are making money you have a legal obligation to declare this for tax which requires some record keeping.

Stay Organised

If you’re working 9–5 and then moonlighting on the side, you are going to be busy.  You must stay on top of the admin and if you are making money you need to stay on top of the finances.  Keep track of all income, expenses, bank and paypal accounts.  You may need to develop systems for tracking this, customer/client relationship management and other items relevant to your line of work.  These systems can be anything from notebook scribbles or spreadsheets to specialised software.  The more you have going on, the more you need to attend to these back office tasks.

Word of warning

If your side gig is something that could tread on the toes of your full time employers business, you should get their permission first as there may be clauses in your employment contract to stop employees setting up in competition against them or stealing their clients.

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Photo Credit: Splitshire.com

All About Poole

I recently saw a blog from a follower giving 40 reasons to move to Toronto, so I thought I would take inspiration from this and compile a list of things about Poole. Now Poole is a lot smaller than Toronto and our Mayor is not known internationally for taking crack and using inappropriate language, in fact, I have no idea who our Mayor is but let’s see what we can come up with.

    • We have one of the largest natural harbours in the world.
    • We have Blue Flag beaches

      • A Chain Ferry
      • Not one but two lifting bridges.
      • 4 Tides per day
      • It’s where the Scouts were founded by Lord Baden Powell – dib dib dib
      • The home of Sunseeker Yachts

      • The home of Lush – they make our industrial estates smell lovely

        • Head Quarters for the RNLI – they have a fancy new college building where you can even get married.

          • The Sandbanks Pennisular has the 4th highest land value in the world – you need serious millions for even a scrap of land.
          • Poole Quay – where several of the pubs date back to the 1600’s
          • The Dolphin Shopping Centre – an incredibly ugly 1960s concrete monstrosity, how did they ever think that looked good.
          • We have cross channel ferries.
          • Rainfall is well below the UK average.
          • Population (at the last census in 2011) is 147,600 with 22% under 19 and 20.5% over 65.
          • In 2006 a National Housing Federation study claimed Poole was the most unaffordable town to live in, in the UK.
          • The castle on Brownsea Island was originally a fortification built by Henry VIII in 1549 – now its owned by the National Trust who lease it to John Lewis for their staff holidays.

            • Ryvitas are made here – you can smell it when they burn them.
            • The heathland at Canford Heath is an 850 acre site of special scientific interest.
            • We have ‘Bikers Night’ on Poole Quay every Tuesday.
            • Polo on the beach.

            • It’s home to Diane Hudson Accountancy Ltd.

 

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New Annual Tax Statements

So October is just a handful of days away, and this October not only allows us to throw our car tax discs away but for some of you lucky folk October also brings you the New Annual Tax Statement.

One of the Coalitions promises back in 2010 was that every tax payer would be sent a statement of their tax position, including National Insurance and where the money is spent. Four years on and they are nearly here – but not for everyone.

Initially the statements will only cover your tax position for 2012/13 and will only go out to those paying tax under self assessment and are registered for HMRCs online services; or if you pay PAYE and receive a P2 Notice of Coding or a P800 tax calculation.

If you do receive one of these you don’t need to do anything with it, as it’s just for information purposes but it would be good to check through it.

One very handy use for this statement will be to check your NI contributions. There are new State Pension rules coming into effect in April 2016 and to receive the full State Pension you need to have paid the correct amount of NI contributions for 35 years. You will be able to check that you have paid enough with these statements.

We await their arrival!!

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Funny Tax Laws from around the world

A collection of amusing tax laws, past and present.

Peter the Great introduced a beard tax. Any Russian wanting to remain beardy had to pay an annual amount and was issued with a beard token which he had to carry with him in public to prove he had paid.

Roman Emperor Nero introduced a tax on the collection of urine. Back then it was used to prepare animal skins – and you thought today’s taxman was taking the piss!

In Canada children’s breakfast cereal is tax exempt if it includes a free toy. The free toy must not be beer, liquor or wine – yes, they actually thought they needed to clarify that, imagine Coco Pops with a free beer toy!!

In Sweden there is a tax for naming your baby something that is not already in use. It is also applied to the misspelling of names and names like ‘Apple’ regardless of income, status and tax bracket.

Scaredy-cat tax was introduced by Henry I for English knights that didn’t want to go to war. It was originally very low and meant as a deterrent but King John later raised it by 300% and even collected it when not at war. This led to the formation of the Magna Carter.

In 1988 a stripper in the US called ‘Chesty Love’ successfully claimed her boob job as a business expense. This paved the way for anyone in the adult entertainment industry to claim cosmetic surgery expenses if it would lead to more work.

In UK tax law biscuits and cakes are deemed necessities and are exempt VAT but cover biscuits jaffacakein chocolate and they are luxuries that have 20% vat added to them. So Jaffa Cakes – are they biscuits or cakes? McVities invented them and they make biscuits so they were forced to go a tribunal and prove they are cakes – they won so they are non vatable chocolate covered cakes.

In the Netherlands tax deductions are allowed on training in magic and witchcraft after an actress claimed £1500 tax relief for a year long course in potion making, spell casting & crystal ball reading.

Cow Flatulence Tax – This is a new tax being introduced in EU countries. Cow farts cause 18% of global warming. Large clouds of methane hang in the air over slaughter houses where they store thousands of cows causing negative effects on air quality. Ireland tax $18 per cow while Denmark charges $110.

Clean up your Finances

Tips for sorting out your personal finances.

There is a philosophy that says you should ‘spend a third, save a third, invest a third’. For most people this is unattainable but it is something to aspire to!

The last thing I want to do is tell people how to spend their money but if you are interested in spending a bit less or saving a little bit more or paying off debts here are some tips. Mostly common sense things that we’ve all heard before but sometimes we can all do with a reminder to get a grip on the situation.OLYMPUS DIGITAL CAMERA

Here goes:-

Change your attitude towards spending your hard earned cash. Aim to consume less and cut unnecessary expenses. Place less value on material things and more on experiences.

If you’ve ever done a car boot sale you’ll know what an awful experience it is, standing in a damp field at 5am on a Sunday morning with people refusing to pay 50p for something that cost you £20 only a few months ago. A good thing to come of this awful experience is that it makes you look at things differently. When you go to purchase something, think ‘will this go in the car boot pile in a year’s time?’ If the answer is yes then you really don’t need it. It’s usually impulse buy decorative ornamental nick nacky cheap plasticky kids gimmicky toy type things that fall into this category.

Set financial goals for motivation – what are your priorities and what dreams do you want to turn into reality? Create a plan and make it happen.

Try to save something each month then aim to increase the amount every so often.

Track your spending, including the little things like Costa’s and newspapers as they really add up. Create a budget, then stick to it.

Go through every item of your expenses and try to reduce them where/when possible. For example never just renew insurances, always shop around. Change your mobile phone contract as soon as you are able, I changed mine from £37 per month to £11 per month for better usage allowance with the same provider. Our AA contract had gone up year on year, when it got to £230 (including our ‘valued customer discount’) we looked online to see they were offering the same deal to new customers for just £99. When we queried this with them they told us you should phone and cancel every year and then renew online to get the best deal.

Again, look at the little things, Costa’s – buy a flask, newspapers – get the Sky or BBC News apps and read the important stuff for free, everything else is pure trash (although I also have the ‘OK’ app to keep up to date with the trash/gossip). I don’t think I’ve ever bought a newspaper. I could go on and on with things like this and it depends on how much disposable income you have or how much you want to save. If you are seriously strapped for cash you can save loads on the little things.

Move your credit card balances to get better deals.

If you have debt you need to decide whether you should still save or put more into paying off the debt. The general rule of thumb is to first save an emergency fund and keep it for real emergencies. Then start paying off debts with the highest interest rates. If you are left with debts with interest rates of less than 5% it may be better to invest rather than pay off. If you debthave several debts it can be motivating to pay off the smallest ones first. As each debt is paid off use the money you are saving each month against the next debt to create a snowball effect. The more you get paid off, the more you have available to pay off the next debt.

Cancel any payments you no longer need – subscriptions, extended warranties, unused gym memberships.

Don’t pay for things twice, e.g., when you bought your freezer did they sell you extra insurance to cover your freezer contents if it breaks down, this is usually covered on your home insurance.

Don’t be afraid to change your current account even if it’s with the same bank, it’s not as difficult to do as you may think. Try to get a better deal for your circumstances, e.g., I pay £2 per month for my account but I get back around £12 per month in cash back (partly because my mortgage is with the same bank and I get cash back on the mortgage payments). But beware if you regularly go overdrawn this type of account can be very expensive.   It has to suit your circumstances.interest-rate

Check your savings accounts interest rates, including ISAs. Banks are forever lowering the rates for existing accounts and then bringing out new accounts with higher rates. It’s usually really easy to stay with the same bank but just switch to their latest offering.

Just one final point, a friend of ours is a mortgage advisor and he is on a crusade against payday loans. We all know they cost a fortune if you don’t repay in time but what you may not know is that even if you repay every penny on time it will seriously dent your credit rating. If you try to apply for a mortgage after you have had one of these loans, most banks will not touch you with a barge pole because you are deemed to be not very good with your finances if you have had to resort to that type of loan. It is stereotyping people and unfair if you did repay on time but that is how it is.