Let’s say we have a business which is good at what it does. New technology means lower costs, so more profits are re-invested in still better technology, staff training, promotion, lower prices and a generally better deal for the customer. The business is expanding steadily. This is called organic growth and it is something for businesses to think about.
Many businesses will want to be able to use assets such as machinery, vans or a shop which they cannot afford to purchase outright, and so they will need some sort of business finance in order to assist with the use of the asset. The cheapest source of finance is usually your bank. There are two ways to borrow money from a bank, namely by an overdraft or by a fixed-term bank loan.
Most businesses these days have a website, and websites can often be bought off-the-shelf and customised quickly so that at least they give a few basic details about your business. If you are setting up a new business, it can be a good idea just to have a simple website with an address which you can add to your business stationery and advertising material. You can always upgrade the website later.
Let’s say a company listed on a Stock Exchange has made a decent profit and wishes to pay a dividend to its shareholders. For the sake of argument the profit is £10 per share. What should it do?
Greece is asking for a loan extension. What does this actually look like? Let’s say we borrow £100,000 over 25 years at an interest rate of 4% per year and with the intention of repaying a constant amount each year, which is the typical mortgage. The repayments needed can be calculated on an Excel spreadsheet as £6,401.20 per year.
Our business strategy is to be a product development strategy. We will use new technology so we can offer a service which is cheaper than anyone else. Once we have some clients, we will introduce more new technology (a spreadsheet for everything for example) so we can better meet the needs of our clients. Then we will stop undercutting (but protecting the position of clients who came in early) and concentrate on being good accountants.
If you’re in business and you want to be paid for some goods or services you have supplied, you need to issue a document called an invoice. This will provide details of your business, what you have supplied, the amount, any other charges, and any Value Added Tax. The bottom line of this invoice will show what you are owed.
If you inherit a stamp collection and sell it on eBay as a one-off transaction, then no tax is likely to be payable. There might be a theoretical charge to Capital Gains Tax, but in practice this is a relatively lenient tax and often the charge turns out to be nothing. However, if you make a habit of buying stamps as and when you can and selling them online, then you are now engaged in a trade and your profits are chargeable to Income Tax.