We have touched on tax finance before in this blog, notably in December where we outlined some of the benefits of this service and what one needed to qualify for it.
With the January deadline just past and April’s looming it is a good time to revisit this subject and re-affirm it’s potential importance to small and medium sized businesses. It would be interesting to hold a ‘straw poll’ to see just how many companies have struggled with payments on January the 31st, perhaps even more interesting to find out just how many companies are aware that finance even exists.
It’s certainly not uncommon for businesses to be surprised by the size of their tax bill, nor that they may suffer from a lack of working capital should they pay it in one lump sum. It’s uncharitable to always put this down to poor financial management – as we all know, the intricacies and details of running your business can be overwhelming. There are, however, a number of ways that you can deal with bills (and even arrears) from HMRC and tax funding is becoming a more common method of being prepared for payments.
Here are a few more examples where funding can help:
- Corporation tax. Most limited companies usually pay tax once a year. It’s quite commonplace to be caught out by the bill however, if you’ve not been putting money aside for it – perhaps into a separate account. And let’s be honest, sometimes that account get’s dipped into. Tax funding is ideally suited to solving this problem and staged payments are available.
- VAT. Value added tax is, of course, paid quarterly – and again you should always set money aside for these payments. Of course, as touched on above, those funds might not always be there when you need them. VAT financing is available.
- Payroll. It is always useful to assess your company’s finances in relation to payroll. There are periods in the year where paying your staff can be more difficult than others (holiday’s etc). At Christmas for example, many firms will bring payments forward for the benefit of staff. Funding is available through such tricky periods.
- Overheads, creditors et al. It’s a minefield out there! Unexpected overheads arrive, creditor’s ‘forget’ to pay their bills on time, business environments change. Remember that there is a funding solution for almost every situation that arises.