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Covid-19 - Help for business

In a series of articles we are keeping you up to date with the latest developments arising out of the economy and the effects of Covid-19. They range from the latest government advice and support for the economy to some tips and traps in running businesses in uncertain times. We at Wincham are dedicated to supporting our clients.

Please contact us for further information or any discussion around these articles.

During this latest outbreak many companies will be under strain on finances and having proper accounting information is key to controlling your business and ensuring you have the correct information to make decisions, be it applications for funding or corporate restructuring. Wincham Accountants can help you with this. All of our clients have access to our free digital cash book and accounting system and, through our unique online portal, we can ensure that your record keeping is fully compliant with your duties as a director.

The requirement of directors to keep proper accounting records is enshrined in Company Law

There is no legal definition of what constitutes such documents. Be it basic cash books or sophisticated computerised ledgers, the overriding principles are that:

  • they should be able to give an indication of the state of the company’s affairs at any time,
  • they should also satisfy the criteria that the directors have adequate information with which to manage the business,
  • they must disclose information in a prescribed format.

The accounting records should comprise a timely and accurate collection of receipts, payments, assets and liabilities and form the basis of a profit and loss account and a balance sheet. The important point is contained in the first bullet point above with the phrase ‘at any time’ which means that your records must be kept up to date.

It is equally important during the present crisis that you have this information at your fingertips because failing to have a clear plan which is based on out of date accounting information is a recipe for disaster = Fail to plan, plan to fail. The choice is yours.

Non-compliance is also criminal offence and may be a basis for prosecution. You can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records.

Wincham is able to offer specialist software and advice to ensure you have the best possible alternatives to consider for your business. It starts with decision making and accurate accounting detail so your decisions are based on the best possible information. The Wincham approach works - please complete the enquiry form on the right side of this page or telephone a member of our Team on +44(0)1260 299 700. Our dedicated team are available and willing to help you through this crisis.

The status of a company director is established in company law and there is a wealth of information about duties and responsibilities, most notably from Companies House.

The recent debate about furloughs and Company director’s roles have thrown this topic into focus.

Company directors can be furloughed provided they comply with the rules of the scheme and have taken their remuneration out under PAYE. The rules of furlough establish that the directors should not be in a position to be direct fee earners, but nevertheless the legal responsibilities enshrined in law means that they still have to carry out their legal duties as directors. These can be summed up below:

In conclusion always be effective in your job or business every day and at the end of each day review your activity and achievements and criticise yourself if you have not worked your plan, be resolute the next morning with new vigour and direction from your personal and business PLAN do not be a "Tomorrow Person" waiting for the world to save you.

  • You must act in accordance with the rules set out in the Articles of Association – your Company’s rule book – and once adopted these rules must be followed. The standard rules can be found following the link below:
  • They typically describe how directors conduct the business of the company, their permitted duties and rights attached to directors and shareholders. When Wincham assist you in setting up a company we ensure these articles are appropriate and amend as necessary.
  • You must promote the interests of the company and act in its best interest. You must exercise sound judgement in carrying out your duties and must also exercise reasonable skill and care based on your experience and knowledge. If you have professional qualifications this duty is somewhat higher because of your specialist knowledge. Remain independent, distancing yourself from decision making in which you may have a conflict of interest, and consider all possible consequences of your actions.
  • Record keeping – All agreed actions should be recorded and retained for a period of ten years where minutes of important meetings and capital restructuring are concerned. This is part of the service that Wincham offers to ensure all legal meetings and resolutions are properly recorded through our company secretarial services. In addition there are legal obligations of Directors to maintain ‘proper books of account’. Wincham offers a fully compliant accounting and record keeping system on our CRM database which all clients have access to and which complies with the definition of proper accounting records.
  • Any furloughed Director still has a duty to comply with the law regarding company administration, this includes regular record keeping, compliance with filing deadlines of Companies House and HMRC and also ensuring that decisions about the future of the company are made in the best interest of the company. Wincham Accountants are able to assist Directors in assessing the limit of their duties and the survival of the company whilst the current crisis exists.
  • It is absolutely vital you have a clear understanding of the financial position of your Company at any one point in time to fulfil your legal duties.
  • Call us now for an initial consultation. It is also important that you respond to our reminders concerning accounting records and compliance deadlines, otherwise fines and penalties will be levied.

Why write a plan?
Because, I personally know plans work, so when you start to write your plan; you’ll really start to understand that it does work. You start to think deeply and then by transferring those thoughts to paper the entire year opens in front of you.

Do not be a tomorrow person and put it off until tomorrow that day never comes.

This opens a structure and through that structure you’ll know exactly what you want during this COVID-19 lockdown! Here is a way you’ll tie it together so even on down days when you feel lazy and unmotivated, you will remember why this plan really matters!

A course of action to take would be to imagine starting your week knowing that each day matters therefore, having a plan laid out means you know what you must do each day! "Think, Formulate and Do" should be your slogan.

Clarity creates control:
Unfortunately, many of us get swept away in the increasingly busy world we live in, where we are being asked to "do more with less". So the environment we now find ourselves in means a lot of us are working from home. It’s more by default than by design! I have found that there are now fewer people who know what they DO want, than those who know what they DON'T want. Now there are a large amount of people completely unmotivated, therefore becoming disengaged with their life and work. In other words, their "work life balance" is totally out of sync.

Personal planning is a structured process creating in you a “call to action” on your learning, performance and achievements. It is a plan for your personal, professional and educational development. Understandably, if you’re running your own business it will be very challenging, things like personal development planning seem small in comparison to some of the tasks you need to complete. However, setting an amount of time into your personal development will have many benefits for your business as well as yourself.

You may think of new avenues of revenue and new services you can provide. Look at the present adversity as an opportunity to develop new ideas and new ways of doing business.

The importance of being disciplined is based on qualities that will lead to your personal achievements and, of course, your happiness and long-term success with your life. Self-discipline now with COVID-19 around is going to be so important to all people who are having to work from home. I have worked from home for many years and so I am very disciplined with my working habits. The first thing I always tell people is to get up as usual “get dressed for work” if you look smart, you will feel smart. Therefore, you will behave in a business-like manner.

Discuss your business and financial situation with advisors capable of helping you through this time. Look at building lifeboats and reserve structures to give you an ongoing business when things get tougher. If you do this now you will have these structures in reserve when you need them.

This disaster or opportunity will go on for months and the effect will be there for years. What you do now will show you have the ability to survive and to plan for the future even if it ends in the destruction of your business you will be ready and able to resurrect your business going forward without the mountain of deferred debt that will inevitably be the case.

Choose your business advisors carefully: many professionals can provide accounting services but lack the ability to provide good business strategy and advice at this time.

In conclusion, always be effective in your job or business every day. At the end of each day review your activity and achievements; criticise yourself if you have not worked your plan. Be resolute next morning with new vigour and direction from your personal and business PLAN. Do not be a "Tomorrow Person" waiting for the world to save you.

The Chancellor has issued an amended statement regarding terms of the scheme to clarify issues that have arisen

  • Interest rates to be charged have been clarified – applications under CBILS will match the commercial rate of interest to reflect the current low Bank of England interest rates
  • CBILS is not a last resort but can now be sought alongside other commercial sources of finance
  • Personal guarantees are banned for loans under £250,000; loans over £250, 000 will be subject to personal guarantees
  • Faster processes for loan approval are being put in place
  • The scheme is being widened to include larger firms with greater than £45 million turnover
  • The Government will be responsible for the first years’ interest and fees
To date more than 1,000 small businesses have had a formal loan offer with 130,000 enquiries.

Not all Banks have been allowed to participate in this scheme, which is supervised by the British Business Bank, so check with your bank first. The newer challenger banks like Starling or Tide have yet to become eligible to lend under this scheme. I has also been suggested that other types of funders such as IWOCA, Esme and Funding circle may get accredited, but the stumbling block appears to be their insistence on personal guarantees.

We will keep you updated on progress.

Turning your business into a Limited Company can give you with a measure of personal protection and can be arranged in an efficient manner to provide protection from your creditors, ensuring your family can benefit from your accumulation of capital within the business. If you are currently self-employed the process to incorporate is quite simple.

What does it mean to become a Limited Company?

Becoming a Limited Company means turning your sole business or general partnership into a separate legal entity. The business - not you personally - is responsible for the debts of the business. When a company incorporates, it becomes its own legal business structure set apart from the individuals who founded it. Your stake in the business is recognised as share capital.

What are the benefits of being a Company?

Once the business generates more income than you need for your living expenses, a company structure can save you money.

There are certain administrative issues around running a company which Wincham can attend to. As a company requires certain conditions to comply with Company and Tax Law, it offers significant advantages as follows.

  • Protects Your Personal Assets
  • Has Easier Access to Capital raising
  • Enhances Your Business' Credibility
  • Ownership/Sale can be easily transacted
  • Taxation planning around Salary/dividends, PAYE , pensions and NIC contributions
  • Lower tax on profits of the business (currently 19%)
  • Specialist Insurance available for directors
How easy is it to form a company
Wincham offers a complete company formations service. Your business can be incorporated quite quickly. You simply have to sign up as a client and comply with the usual Anti Money Laundering and identity checks, and we can assist you in opening a bank account, register you with the statutory and regulatory authorities - i.e., PAYE, VAT and Companies House – and leave you to run your business.

How do I extract my take home pay from the company?
First, it starts with an Employment contract between you and your company: Wincham is able to offer a low-cost contract which fulfils statutory requirements and provides a measure of protection between you and your company. This will establish a rate of pay which is tax efficient for your personal circumstances and will also be part of your own personal pension planning.

Secondly, regular monies or benefits-in-kind can be extracted from the company via the registered PAYE scheme.

Thirdly, there are measures of protection in the event of redundancy.

Wincham can offer payroll services. This means you tell us each month how much you want to be paid (subject to affordability of the business) and we provide the necessary payslips (monthly or weekly).

Where your living expenses and cash requirements each month are covered by a minimum wage from the company, we can also advise on the level of dividend payments which would not attract National Insurance contributions.

How to choose a company bank account?
You can open a company bank account at your usual branch, but there are other bank accounts that specifically deal with corporate solutions and business customers. There are challenger banks such as Tide or Starling which offer great deals for small companies. We can help you shop around for a suitable bank account to get the best deal for your company.

Such features would typically be
  • Get 1 year of FREE Transfers/li>
  • Free account opening in as little as 5 minutes/li>
  • Get a sort code and account number straight away/li>
  • No Monthly or Annual fees/li>
  • Free contactless MasterCard/li>
  • Sync up with your accounting software/li>
  • Participation in Government loan schemes/li>
  • A range of borrowing types

What are the additional requirements of HMRC?
Surprisingly very little. You will still have to complete a self-assessment return as well as an annual set of accounts. Wincham are able to assist with this and take the headache out of online filing and accounts preparation via our unique CRM system, where you can view any statutory returns we have submitted on your behalf.

What else will I need?
In addition, Wincham can set you up with a website, domain name and email address which will be bespoke and differentiate you from your customers. We will advise on basic web design and content - prices on request - subject to your requirements.

We can also put you in touch with specialist Insurance brokers who can advise on any necessary cover.

How do I get started?
Please complete the enquiry form on the right side of this page or telephone a member of our Team on +44(0)1260 299 700.

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