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Finance General Rescue, Restructuring & Recovery

Documents, filing and systems – business housekeeping

business insuranceIn order to be ready for changes in the market and economic outlook a business needs to be organised and confident of its current position.
No, this blog is not about business plans or cash flow, but about reviewing the documents, filing and systems that support a business.
This includes insurance cover, asset registers, supplier agreements such as IT support, inspection certificates and service plans for vehicles, plant and machinery, PAT testing, asset finance agreements and many more.
If insurance cover is approaching renewal time it makes sense to review what is covered and whether any additional cover is needed so that the business has time to shop around for the best rates and deals and to investigate the fine print of any new policies it may be considering.
While the Health and Safety Executive (HSE) regulations do not make Portable Appliance testing (PAT) an annual legal requirement, the HSE does advise regular testing of any electrical appliances that have the potential for harming users.  However, the guidance is that frequency of testing depends on the type of appliance and the environment in which it is used, so that power tools used on a building site, for example, should be tested more frequently perhaps than a bedside lamp in a hotel room.
While there is no requirement to keep records of testing it makes sense to hold such records not only to know when appliances have been tested and to have a regime for regular testing, but also to demonstrate that the issue is taken seriously since such records will be looked at in the event of an accident.
Many businesses rely on outside support for their IT systems as well as for protection from attempts to hack into their information.  Reviewing the service, its costs and the availability of support in an emergency is also something that is worth looking at regularly.
If a business owns vehicles, plant or machinery, it may be that certain items need inspection certificates and regular maintenance.  As part of any review it may be worth considering the replacement of equipment to reduce costs or increase efficiency.  There may also be grants and incentives to replace capital items instead of repairing old equipment.
These are just a few examples of the annual review that businesses should be doing as normal housekeeping but just as pertinently should be in place so they are ready for the post-EU referendum opportunities that will emerge in due course.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting Finance General Turnaround

Understanding allowable business expenses is important

get organisedThis month is a good time to look at all aspects of your business “housekeeping” for two reasons.
Firstly, it will be some time before businesses have a clear picture of the effects of June’s EU referendum result on the UK economy and on trade so businesses can use this period to bring systems, process and records up to date and develop a clear picture of their current position.
Secondly, late July and most of August are traditionally the time when many people take a break and with the housekeeping done it is much easier to relax and to use the time for thinking and reflection to be reinvigorated for the return to work.
First on our suggested housekeeping list is business expenses and what can be claimed.
A key issue for many businesses is understanding what items are allowable business expenses and this can be important for ensuring a business does not pay out more than it needs to in tax.
It should be said at the outset that the regulations on what can be claimed as a business expense are complex and businesses would be well advised to consult their accountants or tax advisors.
What follows is therefore an overview.  The general rule is that most business expenses are likely to be allowable for tax relief.
This would cover accommodation, use of private cars, meals, repairs and renewals, business rates, energy and other overheads.  The devil, however, is in the detail.
Accommodation of staff is a good example.  Hotel stays would be allowable, but a company renting a flat for staff is only allowable if the journey is considered by HMRC to not be commutable. Travel expenses are also conditional.  Most people are aware that travel from home to work cannot be claimed as a business expense.  However, in some circumstances use of a private car for work is eligible for a mileage allowance at 45p per mile for the first 10,000 miles and at 25p per mile thereafter. In most cases a company car is likely to be more tax efficient.
Meals are allowable if staff are likely to be away from their normal place of work for more than five hours but be aware that there is a lot of HMRC advisory guidance on the details. There is no tax relief for entertaining clients.
Repairs and equipment replacements are allowable as capital expenses if the value of the items is more than £100.
Business rates and overheads are allowable provided the business is occupying business premises. For the self-employed and people working from home the regulations for claiming overheads changed in 2015-16 to a new flat rate allowance graded on how many hours are worked.
The lessons are to seek advice about the details, to understand what precisely can be claimed for and to maintain meticulous records just in case HMRC wants to inspect them.