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The political and financial climate of the UK may be more uncertain than ever as we steam into 2017, but the indicators you need to track to ensure your small business is in good financial health remain the same.

Here are the five financial factors you need to monitor this year to ensure your business stays financially healthy:

Payroll

If you employ staff, be aware of their age and entitlements, particularly regarding the National Minimum Wage and the National Living Wage. If you’ve completed your financial forecasts using their current category of pay and it hasn’t occurred to you that they turn 21 or 25 this year, the wage bills could be a nasty shock – as will the penalties if you don’t ensure you’re conforming to the legal requirements regarding minimum pay.

 

Late Payments

Don’t let unpaid invoices slip past unnoticed. Always ensure you know exactly when they’re due for payment and how overdue they are so that you can send reminders, track persistent late payers, add the appropriate amount of interest to unpaid bills and take legal action when necessary.

 

Increasing Costs

It’s very easy to ignore a small price increase here and there in materials, supplies, transport or postal charges, energy bills and rent without realising how much impact all these ‘small’ increases are having on your finances when they’re added together.

Maintain a keen awareness of your costs and take action when required. Perhaps you need to change suppliers, renegotiate your rent, find new premises or change your pricing to accommodate your increased costs?

 

Record Keeping

It may sound obvious, but it’s essential to keep track of all your finances – not just for the taxman, but for yourself. A good accountant (feel free to check out our accounting services!) can save you more than their fee in expenses you weren’t aware you could claim and methods of retaining more of your heard-earned profit. We’re not talking tax evasion here, but just making use of the legal rules regarding tax.

 

Outgoings – and ensure you record all of them. It’s scarily easy to substantially subsidise your small business without realising (or maybe admitting) you’re doing so, purchasing items here and there for the business using your own money or cards. Those ‘here and there’ items can add up. To get a clear idea of the financial health of your business, you need to see how it’s coping without your help.

 

Turnover

 

Business and VAT Status

As your business grows and evolves, you may find it’s to your financial advantage to register or deregister for VAT and to change your business registration status. What suited your company when it was a start-up may not be the best approach now, legally or financially. Your accountant can advise you what’s best for your situation.

 

Here’s to a prosperous New Year for your business!

 

 

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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