Five Tax Breaks You Did Not Know About For Your Business

Managing your business accounts can be very complicated, but it is worth having a full understanding of your company’s finances, as there are a number of tax breaks you might be able to take advantage of that you did not even know existed.

Here are five tax relief schemes that might help you:

  1. Capital Allowances

With this tax break, some of your company’s assets can be written off against the profits it is taxed on. You can claim this when you buy equipment, machinery or vehicles, or pay for daily running costs and interest payments for buying assets.

These are all tax deductible, so it is worth finding out exactly what you can claim before completing your tax return.

2. Patent Box

This applies to companies that make a profit from patented inventions and pay Corporation Tax.

Your business has to own or exclusively license-in patents that have been granted by the UK Intellectual Property Office, the European Patent Office, or some countries in the European Economic Area. It is worth noting you will also need to prove your company has made a significant contribution to the creation or development of the invention or an item that incorporates the invention.

If this applies to you, you will be able to pay a lower Corporate Tax of 10%.

3. Research and Development Expenditure Credit (RDEC)

Any small or medium-sized enterprise that is liable for Corporation Tax can claim tax relief for spending on research and development (R&D). They are able to receive 230% of relief on R&D costs.

This means that your business will have the income that Corporation Tax is deducted from reduced by £230 for every £100 earned.

4. Tax reliefs for the creative industries

You are eligible for this tax break if you have to pay Corporation Tax and are involved in the creation of specific films, ‘high-end’ TV shows, video games, theatre productions, and animation programmes.

The amount of relief you receive depends on what creative industry you work in. For example, you could be entitled to a tax deduction of 80% of qualifying expenditure if your business produces limited budget films.

Alternatively, if you run a theatre production company, you could receive relief of 80% of the total expenditure of producing the show. Find out what you are eligible for here.

5. Entrepreneurs’ Relief

Businesses qualify for entrepreneurs’ relief when they dispose of their company as a sole trader or partner, when they have shares and own at least 5% of the business’ shares, or when they have assets lent to the enterprise.

 

With this tax break, you can pay tax at 10% on qualifying assets, as opposed to the normal rate of 18% or 28%. Therefore, if you are considering moving on from your business, it is worth finding out whether you are eligible for this tax reduction.

 

To find out more about tax relief schemes in the UK, take a look at www.gov.uk.

Money coins fall out of the golden tap

Funding For Your Business

Whether you are starting your business or are looking to expand it, most companies need additional finance at some point. However, funding is not easy to come across, particularly as lending from banks has tightened over the last few years.

This list will provide a comprehensive overview of what types of finance are available for businesses, so you can receive monetary assistance when you need it.

Government grants

Many enterprises can secure a grant from the government, as it wants to support entrepreneurs and British-grown businesses. There is a wide selection of the types of grants available, depending on the industry, size of your business, and even your age.

For instance, The Prince’s Trust provides small grants, loans of as much as £7,500 at a rate of 6% APR, and business support for those aged between 18 and 30 running their own company.

Direct grants are also typically given for projects that encourage employment, education and capital investment. You can find a list of grants available here to see whether one may apply to you.

Loans

Traditionally, when businesses needed financial help, they went to a bank for a loan. Indeed, this is still possible, with financial services providers lending tens of thousands of pounds to companies they think have a good chance of being successful.

However, borrowing has become increasingly limited recently, which can make it difficult to get a loan, particularly if you have a poor or short credit history. You will also have to provide security against your loan, so risk losing belongings if you are unable to pay it off. Something that puts many businesses off is the steep interest rate on the finance (up to 15%), which would eat directly into their profits.

Additionally, it is difficult to borrow more than £500,000 – and the more you borrow the better your credit history, cash forecast and business plan have to be. Some companies want much greater investments than this if they have huge ambitions for their enterprises.

Investors

This is why many look for private investors who will have a share in the business and its profits by putting in a considerable amount of money to get it off the ground.

Angel investors

Angel investors are wealthy people who invest in small businesses to help them grow, as well as offer professional advice, skills and market contacts. Angel investors can make considerable returns with their cash, while businesses benefit from the additional finance and expertise.

This type of investor will typically put their money into many projects, taking a small share of each business with a long-term view for financial gain.

Venture capital

Alternatively, you could seek assistance from companies that invest large amounts of money in enterprises they believe will grow quickly, and in return they receive a private equity stake in the business. Venture capital firms find companies when they are starting out, and their five to seven-year investment plan helps them develop and grow.

If you have a business concept you think could be really successful, this might be the investment avenue to pursue.

Finding an investor

Increase your chances of finding an investor by having a strong concept or product. Without this, no investor will put money into your business.

As well as good ideas, you need a solid business plan, so make sure you know your numbers thoroughly, your cash flow projections, and how you plan to use the investment to boost growth. You need profit predictions, and have realistic expectations of what value the business will have for them in both the short and long-term.

Once you have got an investor, use them wisely. They can often provide great advice, contacts and professional experience, so take advantage of this, particularly if they are knowledgeable about the sector you are breaking into.

Do not forget that as an investor, they have a share in the running of your company, as well as your profits, so they might well expect to voice strong opinions on future plans. Always include them in meetings and keep your relationship on good terms, otherwise they may be tempted to sell their share and pull their investment out of your business at a crucial stage of development.

Five Ways To Grow Your Business

You have spent time and effort creating a successful business, and now you are looking for means to expand your enterprise to achieve further growth and accomplishments. There are many ways you can do this, depending on the type of business you have.

Here are some ideas to help you:

1. Invest in marketing

If you want to take your business to the next level, this does not necessarily mean looking for other products or services to sell. You can simply focus your efforts and money into trying to attract more business for your current company.

One way to do this is put more investment into your marketing strategy – particularly your online campaigns. According to eDigitalResearch, 64% of smartphone owners use their mobiles to shop online, while 20% of Facebook members have bought something as a result of comments or ads they saw on the site (Ipsos).

Therefore, whether you are a retail company or not, having a presence on social media and the internet as a whole is hugely important, and investing money into improving your online marketing strategy and boosting your website rankings on Google will definitely pay off.

2. Increase or diversify production

If there is a huge appetite for your product or service, the most obvious thing to do would be to increase your supply. Look at finding additional funding or using profits to invest in a greater production of your goods.

You might also be interested in diversifying your product by selling other similar or complimentary items, attracting interest from either the same market or a different group of people entirely to expand your potential customerbase.

3. Invest in another location

Businesses that have offices or commercial sites could expand by opening a second location. This will allow you to attract a new set of clients or customers and grow your target market.

Alternatively, you can look at exporting your goods to another area instead of opening a separate outlet yourself, enabling you to extend beyond your region and attract more sales.

4. Offer your business to franchise

If your company is so popular there is an opportunity to expand exponentially but you do not have the funds or time to really put into this, you can open it up for franchise.

This is a particularly useful strategy for businesses that offer a service, for example a baby class, and one that has a format other people can follow. This will allow you to take your enterprise to the next level, and potentially market your concept to thousands of people.

Alternatively, you could license your product by making contracts with other companies or individuals that want to be associated with your brand, enabling you to reach far more people than you would on your own.

For instance, Zumba started off as a dance concept created by Columbian choreographer Alberto Perez in the 1990s and now more than 15 million people take Zumba classes worldwide.

5. Get the right people on board

When you are reaching a crucial stage in your business and are looking to expand, it is important to have the right people behind you. That might mean getting a new director who has experience in growing companies in this industry, forming a business alliance, seeking help from a business adviser, or simply creating a good relationship with your bank.

Having useful and productive advice, support and experience will make all the difference in helping you to achieve future ambitions when it comes to your business.

Buying Data Services – Your Guide

Businesses who want to target as many people as possible with their products or services may be interested in buying data that allows them to email, call or send promotional literature to more contacts.

However, the world of data services can be complex, so read this guide for a better understanding of how you can buy a list to promote your business.

The benefits of buying data

  • Purchasing data helps you connect with potential customers you would not otherwise have been able to contact.
  • You can then direct e-marketing campaigns, leaflets and sales calls to new names, with the intention to lead to more awareness and sales for your business.
  • It is very difficult to build up data organically, so having new lists you can target regularly will see you reach thousands more people than you could with your own.
  • List companies will enable you to create reports on your data and marketing strategies by assessing the bounce rates of e-mails, conversion figures and click-through-rates. This will enable you to tailor your campaign to really target your market.

How to choose a data list

More than 200 companies offer mailing lists, making it very difficult for businesses to know how to choose one that will benefit them the most. Here are just some things to consider when picking data:

  • Targeting businesses or consumers? – You first need to ascertain whether you are targeting other companies or the general public, as there will be thousands of lists available for each. Your decision should be based on what service or goods you are selling.
  • Breakdown data to really target your market – There is no point sending your email or letter to 50,000 people if only a handful of them will be interested in the subject. That is why it is so important to really analyse the data carefully to only send it to people who are relevant. You can split the data based on their geography, company size, industry and job title, and it is worth finding out as much information as possible about the list to make sure it is the right one to be targeting.
  • Choose fresh data only – Do not buy data and sit on it for a while, as data decays at a rapid rate. Indeed, 30% of your list will be irrelevant within 12 months, so you will need to refresh it constantly to get good conversion rates.
  • Compare data lists – Spend time comparing data lists and companies to ensure you are getting addresses that are relevant to you and are dealing with a company you can forge an ongoing relationship with.
  • Avoid dodgy data firms – Make sure the business is a member of the Direct Marketing Association so you know they are reputable, and ask to see a sample of the data beforehand to get a good idea of what you can expect. Make sure the data is legally compliant and up to date.

Watch out for hidden costs

You can expect to pay from 10p to 40p per contact, but what you get varies significantly between each company. If you choose the cheapest quote, you should be aware that they may make you pay extra for phone numbers, addresses, delivery, company data and names.

For the higher end of the budget, you will receive most, if not all, of this, depending on whether you want to use the data once or repeatedly.

Once you have a good contact at a data services agency, you might be privy to new databases or discounts before anyone else.