Soaring prices can affect businesses of any size, but the impact is definitely greater on the small business owner. However, there are some simple steps you can take to reduce the effects of inflation on your company. Jonathan Sidlin, Financial Planner and Managing Director of HSC Financial Advisers is a standout financial planner whose proven track record helps his clients build wealth in order to achieve long term financial success. We loan Jonathan’s expertise on the subject.
Cash in the bank
Take a look at the amount of cash you are holding in business bank accounts – is it a necessity or could it be more for personal comfort or pride than just ‘rainy day’ money? While it is necessary to have sufficient cash available for cashflow, in times of high inflation, such as we are experiencing at the moment, it can be a poor way for a business owner to store their profits. There are a number of ways that could make better use of that money such as driving it back into the business so that it can be used to streamline processes and increase future profits, replacing outdated equipment, or investing in a tax efficient product.
Grow your pension
Your pension can provide an excellent way to ensure that money generated by your business is funnelled back into your personal prosperity. By committing to paying regular or lump sums into your pension funds through the business it is possible to maximise the potential to grow wealth over the medium to longer term. Because of the wide range of products available, this is one area where you really should seek expert advice to potentially ensure the best return is achieved.
Financial forecasting
With corporation tax running at 19%, it is good practice to keep a close eye on your forecasts and projections with regards to tax. Accurate financial forecasting will help you to decide how much to set aside each month, ideally in a separate account so that it is ring fenced, helping to give you the comfort of knowing that you should be able to meet your tax demands. Forecasting will also give pointers as to how you can manage expenditure and plan spending on overheads.
Find other revenue streams
Keep your money working for you by looking into investment opportunities as these can be great way for a business to reduce its tax bills. # By using investment opportunities your company has the potential to add to its revenue streams if the investment is successful.
Remember why you work
In my experience, business owners can often forget exactly why they are working and can be so wrapped up in the business that they forget to pay themselves first. Improving financial habits and committing to regular savings to increase personal wealth should remain a priority. Although many business owners baulk at the income tax, increased dividend tax and National Insurance that comes with taking money out of their business, having a good financial plan helps business owners to make the most of their income.
Disclaimer:
This is information only and does not constitute advice. Pensions/investments are medium to long term plans and are not guaranteed as past performance is not necessarily a guide to future performance. The value of units can go down as well as up. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
