Intelligent CXO Issue 11 | Page 38

INDUSTRY UNLOCKED
amount for businesses to pay , that is usually only the start for business owners .
WORKING WITH A GOOD ACCOUNTANT , ALONGSIDE A FINANCIAL PLANNER SHOULD HELP PROVIDE BUSINESS OWNERS WITH CLEAR FINANCIAL FORECASTS AND PROJECTIONS ON TAXES WITHIN THE BUSINESS .
Keeping cash in the bank is , of course , a necessity for cashflow but in times of high inflation , such as the one we are in currenty , it could be a poor way for a business owner to store their profits .
This is particularly topical given the intended rise in corporation tax for companies with business profits of more than £ 250,000 from 2023 . So , the idea of seeing large sums of cash on the balance sheets may not be quite as appealing given that up to a quarter of the profits within the business could be lost in tax !
Working with a good accountant , alongside a financial planner should help provide business owners with clear financial forecasts and projections on taxes within the business . These forecasts should help enable business owners to judge how much to set aside each month , ideally in a separate account so it can ’ t be touched , for example corporation tax can be planned for at regular intervals . corporation tax bill in order to allow for any unanticipated expenditure .
Tax efficient products
The next step is for business owners to potentially look at tax efficient products such as pensions and investments in order to plan for their own future and retirement .
By exploring investment opportunities , the company may also add to their revenue streams , as if the investment is successful , the business could reap the benefits in the medium to long term . The money is , in effect , working hard for the business .
Pensions could be seen as a good option to increase personal gain and with a wide range of products available this is one area that expert advice should be sought to ensure the best return is seen .
Capital and planning
If you ask the average small / medium size business owner , with large amounts of capital consistently on their balance sheets , what they are doing with that money ( aside from the usual working capital of course ) in my experience many are unable to give a definitive answer .
In my experience , business owners sometimes need to be reminded what they are actually working for and to always ensure that they pay themselves first . Many business owners baulk at the income tax , increased dividend tax and National Insurance which they have to pay to extract money from their businesses .
This is where a good financial plan comes into its own . When business owners work with experts , they should be able to plan in advance the amount of working capital they anticipate will be needed over the next couple of years in order to grow the business . A percentage buffer should then be added on top of the expected
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