According to research by the Institute for Family Business, the UK is currently home to 4.8 million family-owned businesses. This accounts for a whopping 88% of all enterprises in the UK and of this number, 16,000 are medium to large businesses.
The study also revealed that businesses generate more than 25% of UK GDP and in 2016, contributed £149 billion in tax which accounts for 21% of UK government revenues.
Other significant statistics included:
Family businesses currently employ 12.2 million people in the UK
They cover 47% of private sector employment
63% of family-owned SMEs expect to see growth over the next 3 years
All of this quantifies the substantial impact family-run companies have on the country’s economy and entrepreneurial landscape which is why we’re always keen to offer our support within the sector.
How to manage finances for a family business
By their nature, family businesses are often laxer when it comes to the nitty gritty of running a business. The dynamic between family members is much more relaxed than that of standard work colleagues so rules and regulations can sometimes slip, no matter how good your intentions.
Leniency isn’t always an issue but when it comes to finances, even family-owned businesses need to stay on top of the finer details. This type of business introduces an extra element of risk for the future of the family but these three tips will help you stay on top of things.
Stay strict when it comes to salaries
One of the biggest sabotages to the success of family-owned business finance are sympathy jobs and unnecessary pay rises. When dealing with offspring, spouses, siblings or any other close relations, it’s easy to find invalid reasons to justify unnecessary spending but this can be catastrophic for your business bank balance.
Make sure you remain tax efficient
Don’t avoid the paramount importance of ensuring you stay tax efficient in a bid to protect your inheritance pot or family nest egg. Doing so will only leave you vulnerable to potential tax liability problems and penalties from HMRC which could be fatal for your business.
The best thing you can do for the future of both your business and family is to play by the rule book and leave a healthy, thriving business for coming generations to reap the rewards of. Family businesses are renowned for their longevity and endurance and tax efficiency is an integral part of maintaining this.
Enlist the help of a professional accountant
Recruiting the expertise of a third-party professional will offer a much stricter, more pragmatic approach to finances and bookkeeping. An external accountant will not have the same sentimental attachment to your employees as you do so will be more willing to cut costs and reallocate budgets when necessary.
If you’re looking for an experienced accountant to help with the financial running of your family-owned business, use our free quote service today and one of our experts will be in touch.
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About The Author
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!