subject: An Accounting Guide To Business Protection [print this page] As businesses grow, some of the accountancy fundamentals are left behind making the business, and its individual employees, vulnerable. We discuss five steps to business protection.
1. Tax reporting and disclosure
Whether you file your own tax returns or use an accountant, organise your financial information and records throughout the year. Start completing your tax return at least two months before the filing deadline to allow time to locate missing information or seek specialist advice and check your current return against the previous year.
2. Business Protection Insurance
Medium to long-term succession planning is important to help identify the risks and determine whether Business Protection Insurance is necessary. Seek advice from your business advisor or your chartered accountant.
3. Tax planning
For anyone with a firm grip on their business accountancy, the fact that tax is the second major overhead of a business after direct costs won't come as any great surprise. Yet, I am constantly amazed by the number of businesses for whom an unexpected tax bill at the end of the year still causes panic in the ranks and has CEO's wondering what has to be sold or who has to be fired to pay it. I should state here that none of these are our clients!
Tax planing requires clear, up-to-date financial reports reviewed on a regular basis. The minimum frequency for review is six months, ideally quarterly, and should include the head of the business, the FD and external accountants.
4. Protecting your cashflow
Don't be afraid to say 'no' to more business from a customer until you have received payment or to alter their payment terms in the future. Encourage the use of Direct Debit where possible, or payment via credit card of PayPal which offer protection for both purchaser and vendor. For larger companies, consider early payment discounts, factoring or invoice discounting.
5. Protecting your bank relationship
Protect the relationship you have with your existing bank. Dialogue is a two-way process and it is often useful to schedule an annual review with you Business Banking contact, even if you have nothing significant to say. If you don't feel that your bank is supportive, shop around.
