To give you a head start, here is a step-by-step guide showing what you can do now to bolster your business for the year ahead.
1. Look back on the previous year
Ask yourself these three questions:
• What worked well?
• What worked OK?
• What didn’t work well?
Apply these questions to any activities that you felt went well, whether it was carrying out a job more efficiently or gaining new customers. You can then build upon these successes over the months ahead.
After looking at your successes, it is worth examining activities that were OK as, with a few adjustments, they could transform into successes during 2022.
And, while it may be a little dispiriting looking at what didn’t work so well, it is important to understand why so you can avoid these pitfalls in the future.
2. Refresh your business plan
A business plan doesn’t need to be a complicated document packed with facts and figures; it just needs to be clear overview about what your goals are for your business in the future.
If you already have a business plan, all you need to do is check that it is still accurate and relevant to your business. You may need to adjust a few points, but you will have a solid starting position to work from, so refreshing it shouldn’t take up too much of your valuable time.
This will ensure your business stays on course to where you want it to go, as well helping you and your accountant discover future tax planning opportunities that could be converted into tax savings.
The more information you have available to you will mean you can make smarter business decisions for the year ahead.
3. Budgets and cash flow forecasts
Whether your business is a start-up or is well-established, a good budget is essential to safeguard your assets and maintains its profitability. Have another look at your existing budget or start from scratch and update it where necessary and – most importantly – think about what cash flow you think you will need.
If you need to approach a lender then doing this in advance and being organised here will give you a greater chance of seeking the finance you need, in a timely manner.
4. Map out your business’ future
Now, you have a plan and a budget, you can work out how to achieve your ambitions. Cutting down your goals into smaller chunks will help make them seem less daunting and ensure success is more likely.
Quite often it is best to start with the goals you know you can achieve as completing those first can spur you on to work on the more challenging items.
5. Know your business
Do you know where your biggest costs are or what your sales are this month? Being aware of your business figures and understanding where the money is coming from and where it is going, is crucial as it allows you to make swift and accurate decisions.
But don’t forget that it’s not all about the figures so look at how your business is performing. How does it compare to competitors? Could your processes be more efficient? Are there areas you could improve? These help you make informed decisions.
6. Use technology to your advantage
Are you making full use of technology to make your business as efficient and future-proof as possible? Are you using an online bookkeeping software such as QuickBooks or Xero to manage your business’ finances. Doing so will ensure you have the correct real-time financial data at your fingertips to make important business decisions, as well as prepare you for Making Tax Digital.
If you wish to make your bookkeeping more efficient then we can offer you receipt scanning apps that will digitise your finances making it less of a chore.
Adopting the right technology not only helps with the smooth running of your business but can also give you an edge over your rivals.
7. Human resources
It might just be you in the business at present, but 2022 could be the year that you decide to recruit people to help you take it to the next level. Whether it is administrative support, marketing help, technical support or salespeople that you need, it’s a decision not to make lightly.
Businesses do need the right people to grow but finding the perfect staff can take time and money. Therefore, you will need to figure out exactly what you want from your new employee and make sure you take your time to find the right person for the job.
8. Examine your funding options
Whether you hope to grow or need to shore up your finances, find the funding that meets your requirements.
The past couple of years have been especially difficult for businesses because of forced lockdowns, reductions in demand and many more issues that have outside of our control.
As it is unknown how long the effects of these issues may continue, it is therefore vital that you have access to the funding you need to get you through.
You should explore what is available and liaise with your local councils to find out if there are grants available.
9. Manage any debts
Using your budgets and cash flow forecasts helps you ensure your business has the money to repay your debts as and when required and thereby avoid unnecessary penalties.
As with any business expenditure, debts have a cost. Normally this comes in the form of interest. So, like other costs, you should always shop around and find the best deal to ensure you are not overpaying in interest charges.
10. Tax management
In these challenging times it is wise to be aware of your business’ tax liabilities so you can prepare for your business’ upcoming tax bill. You will not want to find yourself having to try to manage your cash flow in the wake of an unexpected tax bill. Make sure you discuss with your accountant about future tax liabilities and timing of payments.
Working with your accountant to submit your personal tax returns as soon as possible from April 6th onwards can also bring you more financial information about the year ahead. You will not have to pay your tax bill until 31st January next year and there may be opportunities to defer payment through Time to Pay arrangements, but by submitting your tax return early you will have more time to plan this into your budgets.
There may be tax planning opportunities for you and your business. A dip in trade or short-term losses may mean you could be eligible for a tax refund. Your accountant may also be able to highlight additional tax planning opportunities, such as Research and Development (R&D) tax credits, which may help lower your overall tax bill.
Give your business a head start today
Dedicating time now to look ahead at 2022 will mean you will have a comprehensive plan in place for the coming months. If you need any help or advice with the financial aspects of running your business, please call us today on 0800 0523 555 or complete our online enquiry form.
Date published 20 Jan 2022This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.