Cash is king as the saying goes. By understanding your cashflow, if something changes in your business you can quickly assess the impact on your cash. Speaking to the bank manager in advance is a much easier conversation to have, rather than trying to deal as it happens, whatever the reason might be.
Making Tax Digital for VAT means that many more businesses now have up-to-date digital information which can help make cash management less challenging. MTD is an opportunity to take control of your financial information and use it to your advantage.
Businesses usually get into difficulties because of a lack of cash rather than a lack of profit.
Causes of this can include:
Fluctuating tax bills are another factor that can impact upon cashflow. Depending on the level of capital expenditure, taxable profit can be totally different to accounting profit:
Company tax bills are a single payment nine months after the end of the accounting period. Furthermore, a company pays tax at a single rate so tends to fluctuate less than for an individual.
An individual’s tax bill consists of two payments on account followed by a balancing payment. An increased taxable profit can also push an individual into a higher rate of tax. Payments on account can be adjusted so it’s important to plan ahead and be aware of the issues.
For more information and advice on cashflow for your farming business, please get in touch with Steven Brown on 07772 812274 or email on email@example.comContact Steven
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