Sectors >
Family Business
At Morris Wheeler & Co we recognise that no two businesses are the same. That is why we tailor our services to suit you.
With extensive experience in advising family businesses, we can support your firm and help to add value wherever possible.
Our dedicated team can assist with bookkeeping, accounts preparation, audit, taxation, payroll management, VAT compliance and much more.
If you are an owner managed business and are looking for a firm of friendly, reliable and trustworthy accountants, why not contact us today?
- Corporation Tax
- Pensions
- Motor Cars
- Company Valuations
- Cash Flow Management
- Statutory Matters
- Extraction of Profits
Corporation Tax
Companies pay Corporation Tax at 21% on the first £300,000 of profit, 29.75% on the next £1.2m of profit and 28% thereafter.
If the company has associated companies then these bands will alter.
Only those items which are wholly necessary and exclusively for the business may be deducted in arriving at a company's profits and invariably there are items which directors consider to be purely for business use which do not necessarily qualify for Corporation Tax relief.
Capital allowances may be claimed on equipment and specialist advice is needed to ensure claims are accurately made and up to date.
Pensions
Pensions are highly tax efficient both in terms of reducing a company's liability to Corporation Tax and in providing a fund which is outside of the business for the benefit of directors and employees.
If you are considering the purchase of a property for your business then you should examine the arrangements that can be made with the use of pension schemes.
Companies that employ 5 or more employees have a responsibility to make their staff aware of stakeholder pensions and offer those schemes.
Motor Cars
Motor cars are a sensitive issue and the Chancellor is always trying to increase the tax payable by persons having company cars.
Basically the amount that an individual is taxed on is based on the CO2 emissions from the vehicle.
Companies and company employees should always consider the advantages of charging the fixed profit car scheme rates for their car's use in the business and also review the possibility of paying increased salary or dividends rather than the provision of a motor vehicle.
Company Valuations
There are a number of ways of valuing companies, depending on individual circumstances and the future income stream which may arise from the company concerned.
Companies are chiefly valued either on an assets basis or on an earnings basis. If an assets sale is to take place then up to date valuations are required for property and other assets of value, together with an accurate balance sheet as to the liabilities of the company and the recoverability of its debtors. It always pays to groom a balance sheet prior to sale so that any inconsistencies cannot be challenged by potential purchasers.
On an earnings basis the valuation is completed on the basis of profits that the company can generate or is foreseen to generate on a recurring basis. Stockmarket companies are frequently valued on their price earnings ratio and this is discounted in connection with smaller companies in similar trades to reflect the lack of public information which may exist and future prospects.
The taxation implications of any sale always need to be considered both in terms of corporation tax within the company and in terms of the personal tax liabilities of the shareholders.
Invariably when a company is sold there are warranties to be given in relation to the company’s affairs and, together with your legal advisers, Morris Wheeler & Co can ensure the whole sale process runs smoothly.
Cash Flow Management
Growing companies incur growing pains which invariably involve good profits being generated but no cash being available at the bank.
The phrase over-trading is referred in the situation when there is just insufficient working capital to fund the day to day requirements of the business.
Quite often we find that family companies do not appreciate the requirement for cash planning and they believe that profitability gives rise to cash funds. This is not always the case as payments may need to be made to creditors before debts are collected and a good process of credit control needs to be in place.
We are pleased to advise in connection with cash flow management and budgeting and in addition can assist with bank facility reviews.
Statutory Matters
Companies have to file accounts to Companies House within 22 months of the date of their incorporation or within 9 months of the company's year end.
Advice may be needed in connection with the start up position and the company's year end date to ensure that filing penalties are avoided.
An Annual Return is also required to be completed each year, which details the directors and shareholders, together with the company secretary.
Directors have a responsibility to act in the best interests of the company and should conduct their financial affairs in accordance with the behaviour of a reasonable person, bearing in mind the knowledge that they possess. Clearly an accountant or a solicitor would be deemed to have far greater knowledge than a non-professional in these matters.
Board minutes should be maintained in relation to the company's affairs, which evidence that good conduct and discipline has been adhered to. It acts as a true record of business affairs, should evidence be required. Minutes are occasionally requested by HM Revenue & Customs to prove transactions in earlier accounting periods.
Morris Wheeler & Co can assist with a full secretarial service including a registered office service in Bishop’s Stortford.
Extraction of Profits
Shareholders can only extract profits by way of dividends.
A dividend can only be paid when the company can demonstrate that profits have been made as it is against the Companies Act to make a dividend distribution when profits do not exist.
At the time a dividend is paid appropriate dividend documentation needs to be completed, which should be provided to each shareholder. No tax is payable at the time the dividend payment is made to shareholders but the company will need to account for tax at a later date. The shareholder will need to report dividends on his or her Tax Return which may give rise to additional liabilities.
Directors can obtain monies from companies via additional bonuses or salary which gives rise to additional PAYE and National Insurance. Directors therefore should extract any money they may have lent to the company by way of directors loan account before considering the taxable routes.
Directors and employees should examine their benefits package and pension contributions as tax efficient methods of acquiring funds.
If any person sells an asset to a company, e.g. a computer or a motor vehicle, they are entitled to be paid for it. This may assist in extracting funds.
