Common Mistakes

Business Finance Common Mistakes

• A director of a company who has a personal mortgage outstanding and also a Director’s loan account running with the company.

• Timing the sale of a business asset wrongly (even by one day).

• Not having a clear message as to who you are, where you are going and what you do to both employees and customers.

• Holding your business property in a taxed environment as opposed to a non taxed environment.

• Paying staff in a taxed environment as opposed to non taxed methods.

• Not paying a spouse in the business correctly and falling foul of regulation.

• Having dormant companies in a group and wasting tax as the small companies’ rate is spread between them.

• Providing a company car in the least tax efficient way.

• Wasting employee money by not setting a pension up on a salary sacrifice basis.

• Setting your firm up incorrectly thinking that limited liability is the answer to all problems.

• Not planning an exit strategy within your business.

• Not realising the value of your business when negotiating rates with lenders.

• Keeping all the “eggs in one basket” approach and not spreading debt over multiple lenders. This gives the sole lender too much control over the business

• Relying upon companies to give independent financial advice who are not independent.

• When arranging finance on expansions/consolidation issues not researching the wider market on lenders or funding options available, just relying on current business bank to fund. (This can be more expensive).

• Not working sufficiently closely “together”with advisers, bankers, solicitors and accountants to achieve the best concensus solution for the business needs.

• Managing by crisis as opposed to planning ahead.

• Not allowing/making time to review existing financial arrangements to see if they can be improved by saving money.

• Being sold inappropriate financial solutions for your business by product driven salesman rather than using advice-driven-consultants.

• Not using the assets in the business effectively, (property, fixtures and fitting and the debtor book etc).

• Not having an effective credit policy in place when chasing debtors, or where there is one, not all employees know what it is.

• Not having a partnership agreement or a business will/cross options/share protection or by having the old buy/sell agreement which can cause an Inheritance Tax problem.

• Believing that the business is your pension.If it all goes wrong towards the end of the road, you could end up with nothing.

• Losing your top person due to death or sickness, could mean you losing your clients if you cannot afford to retrain or replace them. Do you have sufficient keyman insurance?

• Having a pension scheme that just meets the regulatory requirements and adds no real value to staff or company alike.

• Not knowing or visualising where the business will be in 2, 5 or even 10 years time can make you a rudderless ship subject to every wave and gust that comes along.

Discover some useful business finance tips.  Find out how we can help you.  If you need to talk to one of our award winning business finance advisers please complete the business finance enquiry form or call 0800 0112825.