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Whenever I take on a small business owner as a new client I make it my business to try and find out as much as possible about their business, their aspirations and their domestic arrangements.
It’s probably obvious to clients that the more I understand their business the better able I am going to be to offer relevant and helpful advice.
But why do I also want to delve into their aspirations and domestic set up? It’s important that I explain the reasoning for my asking in case clients think I’m just a boring accountant who gets his excitement from being gratuitously nosy.
Any qualified accountant can deliver a competent transactional service preparing accounts, processing payroll and completing tax returns without getting to know the client too well.
But for clients to really receive value for their fees, I need to go beyond that and provide tax planning and business advice.
The more informed I am, the more informed and fit-for-purpose my counsel is going to be.
Susie and Joe
To illustrate, Susie, a current client, is a recent victim of the public sector cuts and is using her redundancy money to fund fulfilling a lifelong passion – starting up her own bike tours company.
The business is early stage and she anticipates it will take a couple of years before she is able to generate a profit.
In talking with Susie about her aspirations and domestic arrangements, she revealed that her long term partner, Joe, is currently meeting their domestic bills from his income as a self-employed painter and decorator.
It transpires that Joe is also a keen cyclist and once the new business can sustain it, they would love him to get off the tools and into the cycling business.
Armed with this information, I was able to suggest that Susie and Joe might wish to consider operating both the cycling and decorating businesses from within an incorporated company. This would allow immediate offset of the cycling tax losses against profits generated from decorating work.
Additionally, Susie can draw an income from the company sufficient to use up most of her £8,105 annual personal allowance, which would otherwise be wasted in the start-up years.
The net impact of this approach will be a significantly reduced tax bill for the couple, releasing much needed funds to invest in accelerating the new business’s growth.
So don’t be alarmed if your accountant is asking questions which may appear to be beyond his remit. Hopefully, he too is merely seeking information to enable him to provide you with a holistic accounting service.
If you think you might also benefit from a free holistic financial consultation, contact us at Certex Accounting Preston.
Susie and Joe are pseudonyms used to protect the clients’ identities.
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