New and growing businesses – ten key issues

Starting up or expanding a business comes with many challenges, including funding, maintaining cash flow and retaining key employees. Here is a round up of ten key tax and funding considerations:

1. Structure: adopting the most appropriate tax, legal and operational structure for your business is vital. This could be influenced by many factors including profit levels, availability of tax reliefs, sources of funding, limitation of liability and future plans.
2. Funding: in addition to traditional methods, such as loans, consider what alternative methods are available. Schemes such as the Enterprise Investment Scheme, Seed Enterprise Investment Scheme and Venture Capital Trusts offer attractive tax breaks for investors seeking to invest in small companies.
3. Commercial property: a substantial tax deduction via a capital allowances claim may be available for qualifying fixtures when a commercial property is purchased for use in the business.
4. Capital allowances: a significant amount of capital expenditure may be incurred by a new or expanding business. Any capital allowances available could help to reduce tax liabilities and therefore aid cash flow.
5. Loss relief: where losses arise, tax relief may be available to reduce liabilities or even generate a tax refund.
6. Research & Development tax reliefs: these may be available where a company is involved in developing innovative techniques, processes and products. For an SME company, this can result in as much as 43.7% of the relevant expenditure being funded by tax relief.
7. Recruiting and retaining high calibre employees: this can make a vast difference to the success of a business. Approved share remuneration schemes and employee incentive schemes can provide a tax efficient method of doing this.
8. Employment allowance: where available, the business could save up to £4,000 per tax year in Employer’s NI Contributions.
9. Accounting systems: a good accounting system will not only help the business to comply with accounting and taxation laws, but will also allow real-time monitoring of performance so that potential issues or opportunities can be identified at an early stage.
10. Exit strategies: whether the ultimate plan is for the business to be sold, bought out by management or handed down to future generations, it is important to start the tax planning process early to ensure that significant tax advantages are not lost.

Rennie Welch LLP accepts no liability on the basis of this article and professional advice should always be sought based on specific circumstances. For advice or assistance please contact Lynn Miller at Rennie Welch LLP either by email at lynn.miller@renniewelch.co.uk or by telephone on 01573 224391.