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management accountant / 26 posts found

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6 Reasons To Look at Your Financial Reports

by mike tombs
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Making time to look over your financial reports each month is an important task for any business owner. If you are not taking the time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend that you should start to. But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following: The Profit [...]
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Surround yourself with champions

by mike tombs
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It’s human nature to be influenced by the people in your inner circle. In fact, the odds of being successful are a lot higher if you’re surrounding yourself with people who are also successful. In a business context, consider very carefully the people and friends you associate with. Who plays a role in influencing your life? Who are your role models, mentors, and supporters? “You’re the average of the five people you spend most of your time with”. It really pays to think about who your top five are. These people play a part in determining how you think, how [...]
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Increasing stock turn in a slow-moving economy

by mike tombs
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If you sell stock or inventory, it’s essential you understand stock turn and how to increase it. Obsolete, or ‘dead’ stock will harm your cashflow and your ability to increase profit, particularly in a slower-moving economy. The longer stock takes to sell, the longer you have your cash tied up in the stock before it can be sold for a profit. The older the stock, the less likely it is that you’ll be able to sell it for its original retail price. Use the below formulas to calculate your stock turn: Stock turn = cost of sales / average stock [...]
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Understanding your working capital to maintain business success

by mike tombs
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If cashflow is the lifeblood of your business, then working capital is the health check you should regularly undertake to keep your business alive. Regularly checking working capital will play an essential part in maintaining business success during these times of greater economic insecurity.
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8K – Recurring Revenue

by mike tombs
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Onto week 5 of the 8 Key Drivers of Business Value: Recurring Revenue! Having a reliable and consistent source of income without having to fight for every sale tooth-and-nail will not only make your business more valuable, but also far less stressful. There are six main types of recurring revenue, which I will put in order from worst to best: Consumables - disposable products like toothpaste Sunk-money consumables – a customer invests in an item (called a platform) and buys supplementary items along with it. Razorblades are a good example. Renewable subscriptions – fixed-term subscriptions such as with magazines Sunk-money [...]

Should you invest?

by mike tombs
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For most of us in business the recent, and continuing, Brexit fiasco has meant that making meaningful investment decisions has proved to be problematic. What will our future trading relationship with Europe look like and how will that affect our own trading results? However, despite Brexit we still need to continue to operate and expand our businesses, which will require investment. It would be foolhardy to forget that in the UK we have an extremely generous tax allowance, aptly called the Annual Investment Allowance (AIA), that means we can write off the full cost of qualifying assets against our profits [...]

Capital Gains Tax liabilities

by mike tombs
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Capital Gains Tax (CGT) is defined by the Government as: "Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive." So, you will pay CGT on an item such as a painting, but not on your house, provided that it is your primary residence. You are liable to pay CGT at certain times of the year. If you personally disposed of an asset that is subject to a CGT charge, at any time during [...]

Don’t despair of your debt

by mike tombs
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Being in debt can be scary, and you can feel helpless. But help is at hand. The most important thing is to talk to someone. This can be your accountant, or it can be a debt charity such as StepChange. A Debt Relief Order (DRO) can help people to improve their debt situation, though it is important to understand the consequences of such action. The first DRO was approved 10 years ago in April 2009 with the aim of assisting people with small levels of assets and little surplus income deal with their debts. Since then, the Insolvency Service has [...]

Child benefit tax trap

by mike tombs
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This post is a reminder that a family claiming the weekly Child Benefit (currently, £20.70 a week for eldest or only child and £13.70 a week for additional children) may get an unwelcome tax bill if either parents’ income exceeds £50,000 during a tax year.   If either parent had income over £50,000 for the tax year 2018-19, and:   either partner received Child Benefit, or someone else received Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.   Then part or all of the Child Benefit received may [...]

How are dividends taxed?

by mike tombs
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Dividends received from shares held in UK companies form part of a tax-payers self-assessment. The payments are made by the paying company without any deduction of tax and therefore the amount received is the sum that needs to be declared. Dividends are paid out of the company’s retained profits – these are profits after any corporation tax has been paid – once these reserves are exhausted, it is illegal to declare or pay any further dividends. Tax payable on dividends received by shareholders is not payable at income rates (20%, 40% or 45%), but as hybrid rates. The rates for [...]