Five top tips on how to get your finances in check for 2023
After almost three years of Covid restrictions and lockdowns, 2023 looks set to bring a fresh set of challenges for businesses across the UK. With inflation hovering around the double-digit mark, an energy crisis in full swing and the country officially entering recession, business owners certainly have much to think about going forward.
Despite this, the business community has repeatedly demonstrated its remarkable resilience in recent years, becoming increasingly flexible and adapting to the various curveballs the economy has thrown at them. There is still plenty of room for enterprise to thrive as we look to the year ahead. Here are five top tips for businesses looking to start 2023 off on the right foot.
Evaluate your expenses
As always, the start of a new year presents the perfect opportunity to do some number-crunching and minimise any unplanned expenses. A good practice to get into at the beginning of any new year is to check to see if any of your machinery, equipment or technology needs updating as this will need to be factored into future budgets. The same should be done for any anticipated costs, including facility renovation, training initiatives, and investing in your labour force. Ensuring these costs are fully accounted for is a vital step in planning for your firm’s future.
Furthermore, with the ongoing war in Ukraine continuing to severely hamper European supply chains, evaluating your supplier options - which may include renegotiating costs or even seeking alternative providers - remains an important consideration.
Refine your goals
Whilst uncertainty continues to loom over the UK economy it’s still vitally important that business owners plan ahead and consider where they want to be in the future. Setting both short and long-term objectives can not only give a business a sense of purpose, but also ensures that employees know the direction the company is headed. Examples of objectives could be as simple as purchasing additional facilities and equipment, or longer-term goals like expanding into new markets and increasing market share with a particular customer base.
Sustainability continues to climb higher on the agenda for businesses including SMEs, and should be part of business planning and decision-making processes. Not only will reducing your company’s carbon-footprint and seeking out lower impact supplies help to demonstrate your business’s commitment to sustainability, but with the higher energy prices we have experienced in the past year, the business case for energy efficiency and renewable energy generation has never been more compelling.
Take a look at our partners over at Staveley Mill Yard, who recently installed 1,533 solar panels to their business park roofing. Once energy use of the business park has been met, the estimated daily surplus energy of 400 kWh can be used in the local village, making a difference by bringing green energy to the community.
Pursuing these goals will very often require some additional upfront investment. However, including operating costs (including energy) and any sustainability objectives into all investment decisions will ensure that you optimise your business for the future through planning and budgeting in 2023.
Deadlines for tax filing
The end of the Tax Year falls on 5 April 2023, so it is important that record keeping does not go amiss during the day-to-day handling of business. Keeping one eye on the books throughout the year will ensure there is no last-minute panic when it comes to filing your taxes. Remember, there are financial penalties for late submissions, and consulting a tax specialist is advisable to ensure nothing is overlooked that could cause potential difficulties down the line.
Political turmoil in the Autumn has also meant there were several changes to the UK tax code, so it is crucial that you are aware of these changes and know where you can benefit from any subsidies or tax breaks that are available for SMEs operating in your sector. For example, it’s likely that a lot of SMEs might not be aware of the SME Research and Development tax relief scheme. Funded by the Government, this allows smaller businesses to claim tax relief on up to 33% of their qualifying R&D expenditure – a significant amount that could be saved to support further growth.
Obtaining protection cover is important not only for giving yourself and your family peace of mind, but insurance policies such as life insurance are critical to your company's future legacy. Losing key personnel is challenging emotionally and financially and can impact business continuity. Protection policies, such as key person coverage, provide protection for the business in the event of the death or terminal illness of an employee who is considered crucial to the businesses operation - this type of cover can extend all the way to the business owner themselves.
Navigating the mortgage process
Securing a mortgage as a self-employed individual is famously difficult. Lenders have strict guidelines when lending to small business owners and meeting the extensive requirements they demand is challenging and paperwork intensive. Mortgage lenders typically demand proof you can produce consistent earnings – a necessity made all the trickier given the uncertain economic climate that enshrouds the UK. The determining factor in this equation is often how long an individual has been self-employed for, meaning those who have been self-employed for less than six months may struggle more. That being said, even individuals who meet this prerequisite are often required to produce a three-year proof of income. It is vital self-employed people keep strict records of their earnings and outgoings and are able to produce these documents when needed as proof of income to reassure lenders that they will be able to afford the mortgage. It is also advisable to seek out the counsel of a mortgage broker who specialises in this field as they are best placed to guide you throughout this process.