Chartered Accountant Shares 5 Ways to Strengthen Your Business This Year

Many of us set ambitious New Year’s goals, often focused on personal health, well-being, or exploring new hobbies, but what about improving your business?

As January draws to a close and motivation for your personal resolutions is dwindling, now is the perfect time to refocus on sustainable strategies for your business. Take this opportunity to set steady plans, reevaluate your approach, and gradually work towards your next milestone. To help guide you, accounting experts from Ridgefield Consulting, a chartered accountancy firm based in Oxfordshire gave their insight on how to set achievable goals and streamline your business for the coming year.

1. Re-evaluate Your Budget and Focus on Forecasting

The new year is a clean slate and many businesses will benefit from a fresh budget for the year. It is important to forecast for the year and to do this you should reflect on the previous year and review your previous year’s spending. Looking back at previous years is vital to identify trends and patterns in income and expenses, which can help you plan for slow cash flow periods. While business can be unpredictable, flexibility in your budget and a rainy-day fund can safeguard against surprises. This will ensure it stays aligned with your goals and adjusts to internal and external factors, providing valuable insights to keep your finances on track throughout the year.

2. Take Control With Accounting Software

Accounting software is a crucial asset for your business. Not only does it streamline your finances, but it also helps you stay compliant.
With the second phase of Making Tax Digital (MTD) coming into effect soon, sole traders and landlords earning over £50,000 will be required to keep digital records of their income and expenses and submit quarterly tax returns through HMRC-approved software.
Learning how to use accounting software now ensures you stay compliant ahead of the deadline while also making your bookkeeping more efficient and accurate. It can reduce your reliance on external accountants and help prevent costly errors.
If your business is VAT-registered, you are already legally required to use accounting software for MTD.

3. Improve how you are managing your cashflow

Healthy cash flow is the backbone of any thriving business and can keep your business running smoothly and out of trouble. According to a QuickBooks study, 57% of small businesses have cashflow issues and this can be one of the leading causes for insolvency.

This is why it’s important to understand your cash flow to be able to manage it effectively and create a cash flow forecast. Some key points to consider to help master your cashflow would be:
● Have you provided your business with a rainy day fund to act as a surplus buffer?
● Review your payment terms for invoices and clients, and consider shortening them if necessary.
● If you have plans for any big purchases, have you considered whether it would be better to lease or pay through a payment plan to make it more cost-effective?

4. Is it time to rethink your business structure?

If you started as a sole trader and have experienced significant growth, it may be time to consider transitioning to a limited company. This change can provide tax and legal benefits, allowing you to retain more profits and help encourage investment if ever needed.

Operating as a limited company can also offer protection, as it creates a separate legal entity, shielding you from personal liability.
Transitioning will not only allow you to keep more of your profits but it’s is a good idea to transition when the tax savings outweigh the additional accounting costs of running a limited company.

5. Is it time to upskill yourself or your employees?

Did you know you can enhance your skills by further training and reduce your tax bill?
Regardless of whether your business is set up as a sole trader or a limited company, you can deduct the cost of any training or development course that is in direct relation to your business as an expense. This includes:

● Course fees for professional development.
● Equipment purchases associated with training.

Investing in upskilling not only enhances productivity but also strengthens your competitive edge. As a bonus, these expenses are tax-deductible, making it a win-win for your business.

Implementing these strategies such as re-evaluating your budget, adopting accounting software, managing cash flow, re-assessing your business structure, and investing in upskilling yourself, can not only position your business for growth but also bring advantageous tax benefits.
It is important to remember navigating these improvements can be complex and that is where professional expertise can make all the world of difference and help you identify opportunities for tax savings, strengthen your financial strategies, and remain compliant with evolving regulations.
Taking proactive steps now will help you start the year with confidence and the right support to reach your goals.