Running a business is difficult at any point in the year, let alone when the nation is experiencing economic difficulties like we are facing right now as a result of the Covid-19 (Coronavirus) pandemic. So as a business owner what practical steps can you take to protect your business and help it weather the current financial storm?
1. Check Your Insurance Policies
It is highly unlikely that any insurance policy you have in place for your business will cover you for this kind of unprecedented situation, but it is always worth checking your documentation and calling your insurance company to find out. You might be surprised to find that you are actually covered and can receive some money to help you through the interim period.
2. Check Your Entitlement to Government Grants
The Government grants in place to help small businesses are being announced and amended on a daily basis. Make sure you are keeping up to date with the changing situation to see if your circumstances make you eligible for any of the grants being offered. If you do find that you are eligible then do some research to find out how to make your claim. Bear in mind though that these are unprecedented times and although Central Government are making announcements daily, the mechanics behind the scenes are not happening as quickly, so you may need to wait a few days following an announcement to be told how to actually make a claim.
3. Put Non-Essential Business Expenses On Hold
Have a review over your business finances and see what can be frozen or cancelled to help you through the next few months. If you are paying subscriptions for software or services that you won’t be using over the next few months, then if your contract will allow, cancel those payments. This will help you retain the income you have got and make it last a bit longer.
4. Collect Outstanding Debt
If you have been waiting to be paid for work you have previously completed and invoiced, then now is the time to collect. We are all struggling to get by at the moment, so you will inevitably be getting people telling you that they can’t pay you in full right now, but then you have the option of giving them a payment plan, which will at least help you recover some money in the short term.
If you feel like you want to recover your debts using a slightly more forceful method, then you should consider enlisting the advice and services of a debt collection agent, like our friend Martin Kingman of Professional Legal Collections Limited.
5. Defer Tax Payments
On 20 March 2020 the Chancellor, Rishi Sunak, announced that self-assessment payments on account that were due for payment on 31st July 2020 could be deferred to 31st January 2021. This means that if you had money put aside to make the payment then you can use that money to fund your business activities in the short term until the storm passes.
Similarly, if you are VAT registered, you are able to defer your next VAT payment for 3 months, thereby also allowing you some extra funding to get you through the short term.
6. Adapt Your Revenue Stream
Social distancing has now made it extremely difficult for some businesses to provide their services to their customers in the traditional way. The businesses who adapt are the businesses who will weather this economic storm. Adapt your service to a virtual platform so that you can provide your services and make money remotely from home. There are a number of platforms to choose from that will allow you to do this, and you may find that it becomes part of your business plan going forward.
7. File Your Self Assessment Early
This may seem like a bit of an odd suggestion, but in fact it does make perfect sense. If you are anticipating that you are due a refund of income tax for the 2019/20 tax year, then the sooner you file your return the sooner HMRC will pay it back to you. The people most likely to receive a refund are:
- People who work within the CIS scheme
- People who have had a mixture of employment and self-employment during the year
- People who have made self-employment losses
The 2019/20 tax year comes to an end on 5th April 2020, and although you technically have until 31st January 2021 to prepare and file your return for that period, getting it in early will mean:
- If you are entitled to a refund you will get the money back in your bank earlier, thereby giving you an instant cash injection to help you through the current tough period.
- Once you know your actual liability to income tax and national insurance you can then compare this to the money you have put aside to see if you have any excess available to help you right now.
8. Apply For A Business Interruption Loan
If you have taken all of the steps above and are still struggling to keep your business afloat then you may want to consider applying for a Government-backed business interruption loan from the British Business Bank. These loans are instantly available from 23 March 2020 and are interest-free for 12 months.
Please do keep in mind that this is a loan and not a grant, hence the money will need to be repaid at some point in the future, so you need to think very carefully about whether this is a financially viable option for you in the long term.
By following these practical steps we are confident that your business will weather this storm. Please do continue to be considerate to other small businesses owners who are no doubt struggling as much as you are. This is a terrible and unprecedented situation, but as a small business community we are stronger together.
If you or anyone you know needs help preparing and filing their self-assessment for 2019/20 then please don’t hesitate to contact us on [email protected] or 01634 540340.