The festive period can be hectic. For most people the time is filled with Christmas parties along with multiple obligations and deadlines. However, for SMEs, it can also coincide with managing peak customer demands, chasing overdue invoices and getting ready for year-end. Robinsons Accountants, an established London firm, has come to the rescue with a business owner’s checklist to help prepare, not only for Christmas trading but also the dreaded year-end and tax return periods:
The annual Christmas party is something most employees look forward to but accountants and bookkeepers do not. Navigating the accounting rules can be tricky but they are straightforward.
You can claim limited tax relief if your event is an annual fixture but the cost must not exceed £150 (inc. VAT) per employee or director. Just one penny over leaves the total amount liable to tax and national insurance (NI) deductions. As a bonus, employees’ plus ones are all eligible for tax relief as long as the cost is under the £150 limit. Remember, this is an expense not a flat rate allowance so keep your receipts and only claim what you have spent.
Treating staff throughout the year
Don’t forget that employers can treat staff up to £50 on multiple occasions without incurring tax liabilities as long as the treat is not cash or a cash voucher, not related to work or performance and isn’t in the terms of their contract. In comparison directors are limited to six of these ‘trivial benefits’ per year.
Gifts for clients
Had a successful year? Want to treat your clients to a special treat? If you want to put the gift through the company books it must cost less than £50 and food, drink, tobacco or vouchers are not allowed. The purpose of the gift must be to promote the business and not influence the business relationship. Many companies have very strict rules on accepting gifts so check in the first place to avoid offence.
Make note of Christmas bank holidays
Banks can be shut more than they are open due to bank holidays and weekend clashes. Make sure you know their working days so that there is no impact on cash flow and processing of expected invoices or direct debits.
Deal with invoices
Make sure your invoices and payments are not held up to avoid cash flow issues and potential penalty fees. Get your invoices in early to and try and get your business paid before customers close for Christmas. Or make sure you invoice payment is at the front of the queue when accounts payable reopens.
Do your housekeeping
Make sure your files are organised and easily accessible – whether physical or digital. This means all your invoices, receipts and statements are at hand, simple to understand and stored securely.
Start getting ready for year-end.
Ensure your accounts are up to date and your figures correspond with all your invoices, bills, paying-in books and bank statements.
Update your employee data
Christmas can mean a high turnover of staff if you use temporary staff. This is likely to result in a lot of complex tax and NI obligations. Ensure your calculations for every employee are correct to make sure your business and employees are not liable for incorrect tax and NI deductions.
Get employees involved
Let everyone know what to expect. Brief employees on the fact that year-end is soon after Christmas and encourage them to do everything they can to tighten spending, collect and send invoices, file their expenses and importantly, fulfil every order.
Start your cash planning for next year
The new year can bring changes to your finances such as new clients or new requirements from HMRC. It is best to start planning early how to incorporate these changes into your business and where you can act to maximise profit and minimise outgoings.
Joseph Robinson, managing partner of Robinsons, says, ‘Running a business in the run up to Christmas can be stressful. By following these simple tips, it can take away a lot of worry up to and over Christmas so you can relax with your family and friends. If you are unsure or how to get through the run up to Christmas, don’t hesitate to talk to a business planning to an expert, such as your accountant, who can be an invaluable resource to make finances one less stressful thing to think about over the festive period.’