2010 Budget Reaction for Franchise Business
Carl Reader, Dennis & Turnbull Ltd
The Chancellor gave his Budget on 24th March 2010 and the changes announced will affect all franchise businesses.
50% Tax
It was confirmed that the new 50% rate of income tax will come into effect from 6th April 2010 for those with income over £150,000. Personal allowances will also be restricted for individuals with income over £100,000.
Capital Gains Tax
Capital Gains Tax rates have remained the same. However, the lifetime limit for Entrepreneurs’ Relief has doubled to £2m for disposals made from 6th April 2010. The Inheritance Tax nil rate band has been frozen at £325,000 until 2014/15.
Stamp Duty
It was announced that no Stamp Duty Land Tax will be payable by first time buyers on completion of the purchase of homes below £250,000. This takes effect immediately for 2 years until 25th March 2012. The rate of Stamp Duty Land Tax charged on purchases of properties over £1m will be increased to 5% with effect from 6th April 2011.
Corporation Tax
There will be no increase in the rates of corporation tax for 2010/11 which will remain at 21% for small companies and 28% for large companies.
Capital Expenditure
There is a boost to franchises purchasing plant and machinery. The annual investment allowance has increased to £100,000, giving a 100% first year allowance on capital expenditure up to this level. Any additions over this amount will also receive capital allowances of 20%. This applies to equipment bought after 1st April 2010 for companies and 6th April 2010 for unincorporated businesses.
VAT
The VAT registration threshold has been increased to £70,000 with the deregistration limit increased to £68,000. The fuel scale charges have also been increased for periods starting from 1st May 2010. It is worth noting that payments made by cheque to HM Revenue & Customs will now be treated as being received once the amount has cleared through their bank account and not when the cheque is received.
Business Rates
With regard to business rates the government will fund a temporary increase in the level of rate relief so that small firms occupying properties with a rateable value up to £6,000 will pay no business rates for 1 year from October 2010.
Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.
The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.
Tags: budget 2010, carl reader, finance, franchise accounts
Franchisees should be mindful of Tax deadlines
Carl Reader, Dennis & Turnbull Ltd
Franchisees should by now be aware that their Self Assessment Tax Return is due for filing by 31 January of each year, through online filing. The deadline for this is fast approaching and it is essential that this deadline is met to avoid penalties and surcharges.
Sarah Walker of HM Revenue and Customs (HMRC) said: “If you haven’t yet sent in your 2008-09 tax return, you need to start thinking about it now.”
You can file your tax return online at http://www.hmrc.gov.uk, or if you have an accountant they should be able to deal with this for you and ensure that the return is submitted correctly and in time.
Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.
The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.
Tags: carl reader, finance, franchise, franchise business, franchisee, taxation
Cash Management Tips for Franchise Businesses
Naz Daud - Owner, CityLocal
In today’s unhealthy economy, one can’t help but wonder how small franchise businesses can effectively achieve cash management. In fact, even medium scale and large scale business are struggling to cut back on their expenditure during the current economic situation.
Everyone is tightening their belts, both customers and consumers. Imagine the consequences if no one wanted to purchase goods other than the essentials. What will happen to the restaurant industry? What will happen to the retail industry, particularly those marketing electronics and those gadgets that people can manage without? It’s not just a matter of reducing expenses. Small franchise businesses need to survive and compete with the lower prices that are offered by their competitors, and good cash management is a must.
Here are some tips to help you to save money and manage your business and cash flow. These will also help individuals to better manage their home expenses.
1. Energy Consumption
Electricity is an expense we can’t avoid, but if you are able to keep your energy consumption lower than normal, you can save a fair amount of money. One way to save energy is through the use of laptop computers. Sure, they can be more expensive than desktop computers, but imagine the great savings you’ll get when it comes to energy consumption. A laptop or notebook computer consumes around 90 percent less energy than desktop computers. Most small businesses use computers, and if these are replaced with laptops when the time comes, energy expenditure will be less. The more computers your business uses, the more money you will save.
2. Telephone Costs
The telephone is essential to all small businesses, whether franchised or otherwise, and many use mobiles as well as land lines. Check up on your monthly plan and negotiate a better deal. As competition is increasing, many businesses are stuck on a deal they started off with, and if they renegotiate they can save a lot of money. Use mobiles only where necessary since they are significantly more expensive to use than land lines. Good cash management involves keeping a close eye on communications costs, especially those that are non-essential.
If you use multiple telephone lines in your business, consider VoIP as an alternative. This can allow you to make huge savings, particularly if you have more than one location for your business. Skype offers a completely free service between Skype users, and it is less expensive than normal to phone non-Skype users.
3. Save on Your Ink
Ink for printers can be another expensive item, particularly when calculated over a year. Try to go paperless and print only what is essential. Use recycled cartridges or buy in bulk to save money. Printer sharing on a network can save on the cost of the hardware and also on ink!
4. Save on Lighting
Most people turn off the lights in their homes when they leave the room, but strangely they rarely do so at work. Make a point of doing so. Switching to energy-efficient light bulbs can save a lot of money over a year.
5. Use the Internet
Small businesses should use the internet as much as possible. It is amazing how many tasks can be carried out online, including business calls, sales calls, online business conferencing, video conferencing, live meetings, instant messaging, seminars and so on.
Owning a small franchise business involves almost constant communication with customers, suppliers and other employees. This can be expensive, particularly if it involves travel. It is just as easy to communicate online as by telephone, and video conference is cheaper than a transatlantic flight! Online seminars can be arranged for training purposes, and advertising costs can be slashed through online advertising. Websites are becoming easier and cheaper to put up with every day that passes. The internet offers many opportunities for you to improve your cash management and improve your overall cash flow.
6. Assess your Office Space
Perhaps you have too much office space and you can afford to let some of it out until you have expanded enough to need it. If you are renting, share the rent with another small business that only needs a desk or two.
7. Bulk Buying
A lot depends on your cash flow situation, but it is sometimes cheaper to purchase office items on a quarterly rather than a weekly or monthly basis. This is particularly true if bulk discounts overcome the problem of tying up your capital in stock. You will save on delivery charges, but make sure that you budget the use of such supplies, since there is sometimes a temptation to use more materials or supplies when stocks are higher than normal.
Although times might seem bad, those with the ability and desire to make savings will come through in a much stronger position than small business owners who do nothing. Don’t let that be you, and by following these seven cash management tips for small businesses, you should be able to make significant savings.
Naz Daud is the founder of CityLocal. This Franchise Opportunity is for people who would like to work from home and be their own boss – Read more about the CityLocal Franchise Opportunity.
