Small businesses can never be safe from the possibility of getting in to debt. Often, it’s not even the fault of the business owner – the late payment culture prevalent in the UK can tip a company over the edge. According to UK Debt Collection News, virtually 60% of small business invoices are paid late (and it won’t surprise any small business owners to know that the worst offenders are blue chip companies, high street retailers and supermarkets).

Whilst small business owners are perfectly justified in complaining about how unfair this is, without government intervention, there’s very little they can do to overturn this damaging practice. However, there are steps they can take to help tackle any debt before it gets out of control.

• Alternative funding: the bank isn’t your only source of funding. Since the recession, alternative ways of funding and dealing with small business debt have risen, such as crowdfunding, peer-to-peer loans and invoice financing. Invoice financing is where you hand over your company’s invoices to a third party who will process your invoices. Your business can then receive loans based on the expected invoice payments.
• Free up cash: increase your efforts to chase your debtors to try and get the money you’re owed in the first place. After that you could: sell off unused equipment – even if it’s broken or out-of-date, you may get scrap value for it; get rid of unnecessary expenses; rent out office space to other small businesses or sole traders.
• Look at your budget: create a new, realistic one based on your current financial situation. Once you know what your fixed costs are, you’ll know how much you can apportion to debt payment. There are many inexpensive accounting software packages designed to help you keep track of your budget, so if you don’t already use one, look at what the market has to offer.
• Prioritise debt payment: don’t just pay off the bare minimum each month or it’ll take too long to get back into the black. Check your interest rates and pay off the debts with the highest rates first.
• Communicate: talk to your creditors, explain your situation and ask if they can help with a realistic payment plan.
• Ask for help: contact a confidential helpline like Business Debtline which specialises in free debt advice for SMEs. They can advise you on many financial aspects, including whether you might be eligible for benefits to help you through the lean times.

If you’re looking for confidential financial advice from approachable specialists please get in touch with the HB Accountants team.

There are two major property-related changes in the Budget statement which will affect “buy-to-let” investors in residential property (whether in the UK or oversea). Investors in commercial property are unaffected; as are investors in furnished holiday lettings.

The first change relates to “finance costs” such as mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. Starting from 6 April 2017 (and phased in over 4 years) tax relief for these costs will be restricted to the basic rate of income tax, this restriction applying to individuals only. Instead of deducting finance costs from rents to arrive at taxable profits, landlords will instead receive tax relief by deducting an amount equal to tax at the basic rate on the finance costs from the tax chargeable on the profits.

The second change relates to “wear and tear” allowance for furnished lettings. This applies to companies as well as to individual landlords. At present, the costs of replacing furniture and fittings are not tax-deductible. Instead, a notional deduction is given for tax purposes equal to 10% of rents. From April 2016 the 10% deduction will be abolished and instead tax relief will be given for the actual costs of replacements. This change does not affect tax relief for expenditure on routine repairs to the property, including furniture and fittings in it, which will continue to be tax-deductible in full.

FRS 102 defines investment property as property (which can include land or only part of a building) held by the owner or by the lessee under a finance or an operating lease to earn rentals or for capital appreciation or both.

SSAP 19 required investments properties to be carried at open market value with no depreciation, whilst FRS 102 refers to fair value (with no depreciation); although this change in wording will not lead to many differences in practice.

Under FRS 102 where there is a mixed use property, the fair value of the proportion of the area let should be quantified and accounted for as an investment property. So this will be one property with an element of it being depreciated and held at cost (being property, plant and equipment) and another element being held at fair value and not depreciated (being investment property).

Gains or losses on investment properties will be recognised through the profit and loss account in future, rather than through the Statement of Recognised Gains and Losses. It will be necessary to keep track of these amounts as they will not be distributable reserves.

When setting up a company it is easy to assume that a bright future lies ahead.

You have a great, profitable idea and you have chosen a business partner you trust. So what could possibly go wrong? A shareholder agreement will protect you from arguments resulting in costly and acrimonious legal battles that could leave you with nothing – in effect, a business pre-nuptial agreement.

Some key reasons for setting up a shareholder agreement are as follows:

1. The shareholder agreement sits alongside the company’s articles of association, which includes the main provisions defining how the company operates. However, the shareholder agreement can be more dedicated to the particular needs and concerns of shareholders. It is also a confidential document as it is not a public document, unlike the articles of association.

2. You can reduce the potential for future disputes between shareholders. The shareholder agreement defines how decisions should be made and outlines the responsibilities and obligations of different parties. If a dispute does occur, it can include procedures for dispute resolution which is a cheaper alternative to legal action.

3. The agreement can force shareholders to give up their shares when they cease to be a director or employee of the company, if they die, if they are made bankrupt or they breach contain terms. It can also stipulate how the shares are valued in such circumstances.