7 ways to incentivise your employees and make them happy!

7 ways to incentivise your employees and make them happy!

Employee retention is incredibly important – as is creating a pleasant and happy work environment. One of the ways in which we can do this is by offering incentives to our employees – making them aware of just how much you value them.

  • Throw staff parties

At certain points in the year, it’s nice to offer your employees the chance to celebrate their achievements. You can throw 1 party a year (on a recurring basis) and be exempt from paying tax if the cost is under £150 per head. You can throw more than one party without needing to pay tax on it, if the combined cost of all the parties is under £150 per head. Summer BBQs and Christmas parties are popular ways to give back.

  • Offer company cars

In a variety of companies, employees are offered a company car. Many employees look for companies which offer this incentive as it’s an easy way to save money on their outgoings.

  • Allow flexible working hours

Growing in popularity, flexible working hours allow employees to ‘flex’ their days. This might mean taking a morning off and making it up over the week, or shifting their working day an hour earlier or later. Plus, 87% of professionals think having a flexible job would lower their stress and 97% say a job with flexibility would have a positive impact on their overall quality of life. Offering flexible working means your workforce will take less time off, because they can fit their job around their appointments.

  • Open up remote working

It is predicted that half of the UK’s workforce will work remotely by 2020 – why? Because it’s great! Employees love the freedom and save money on costly commutes. Not only that, but it’s a great benefit to company owners too. Save money on overheads such as office space, catering, utility bills and services.

  • Establish an employee rewards scheme

Keep staff motivated with regular awards and rewards. Whether that’s by offering them profit-shares or giving prizes to the employee of the month, you’re simply providing a benchmark for staff to aim for. Rewards for great work encourage more great work – which is all the incentive you need as an employer.

  • Offer training opportunities

You know the saying, “the only thing worse than training an employee and having them leave, is to not train them, and have them stay.” By investing in training for your employees, you’re investing in your company’s future. Poorly trained employees aren’t going to do a perfect job – so why would you expect them to?

  • Prioritise a good work-life balance

Check in on employees who are staying late, offer mindfulness or yoga sessions once a month, offer a good rate of holiday and don’t give employees work to do in the evening or on weekends. Burnout isn’t just their greatest fear – it should be your gravest concern.

As an employer, it’s easy to prioritise profits over culture. However, a positive working environment will have an incredible impact on your employees productivity. High staff turnout, burnout and a tense office vibe is not conducive with great work.

If you’re looking for ways to free up capital to reinvest in your staff – we can help. At gHawk, we’re not just accountants. We’re here to make a real difference to our clients. Take a look at our business development services and let’s start incentivising!

I’m making a profit, why don’t I have any money in the bank? – Difference between profit and cash

I’m making a profit, why don’t I have any money in the bank? - Difference between profit and cash

You’re working like crazy and sending out invoices left, right and centre. However, the money doesn’t seem to be piling up in your bank account – why is that? Usually, it’s poor cash flow understanding and a lack of processes that leaves business owners confused about where our money is.

Breakeven point…

In order to know how much money you need to make to make a profit, you need to know the cost of producing your services – this is called the breakeven sales point. The breakeven is the point at which you’ve covered all of your expenditures, so you’re left with pure profit.

To work out the cost of producing your product or service, you need to take all of your expenditure into account. This might include materials, labour, rent, wages etc. Once you’ve documented all of these costs, you’ll have a better understanding of how much you need to sell in order to make a profit.

Timing your cash flow…

Cash flow is all about timing! If a load of bills land on your desk beforethat big invoice has been paid, you might be in a spot of bother. Poor cash flow is a big reason why one in every four businesses doesn’t make it past the first year. In order to combat poor cashflow and cashflow issues, you need to ensure a constant stream of income. This doesn’t mean you just have to sell more, you have to be savvy with your payments. Try to keep invoice terms as short as possible and try to invoice as soon as the work is completed. If you use suppliers, do the opposite. Negotiate the longest possible payment terms to allow for money to come in, before it must go out.

Preparing ahead of time…

Another reason that there may not be a build-up of cash in your bank account is because you aren’t preparing for big bills. Plan ahead and put money aside every month to cover taxes. If you save 20% of your earnings, you’ll always be ready to pay your tax return when it’s due. Failure to pay your tax return on time can result in fines and penalties – further damaging your pocket.

Putting your prices up…

If you’ve carried out the above steps and you find that you’re still struggling to make ends meet, you may simply not be charging enough. In order to work out how much your prices need to go up by, try calculating preparing a cashflow forecast with different percentages of prices increases e.g. 5% higher, 10% higher, 20% higher etc. You may not need to up your prices by much to see a return.

If you are genuinely working as many hours as you can, but you’re still struggling – something has to give.

The number one thing to remember when trying to increase profits, is the difference between profit and cash.

Cash = The money you make on sales i.e. the money that comes in to your bank account.

Profit = The amount left over after you deduct all of your expenditure and costs.

If your cashflow is positive, you’re bringing in more money than you’re sending out. If your cashflow is negative, this means you are making a loss and no profit.

If you’re still struggling, check out some of our resources or speak to us about a complimentary client review where we can assess the holes in your business plan, cashflow and money management.

7 ways to avoid Construction Industry Scheme pitfalls

7 ways to avoid Construction Industry Scheme pitfalls

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) is a compulsory scheme for contractors in the construction industry. Under the scheme, contractors pass money from the subcontractors payments, to HMRC – as an advance payment towards the subcontractor’s tax and National Insurance contributions. The scheme was established to ensure proper tax compliance within the industry.

For contractors who do not follow the rules, there are financial penalties. If you want to ensure compliance, look out for these potential pitfalls.

1. Not registering for CIS

Firstly, make sure that you are required to register. If you carry out any of the following works, you must register for CIS: site preparation, alterations, dismantling, construction, repairs, decorating and demolition. This scheme applies to companies carrying out work in the UK – whether the company itself is UK based or not. Companies, partnerships and self-employed individuals are all eligible for the scheme.

2. Not verifying subcontractors

Before paying a subcontractor, the contractor must check that the subcontractor is registered. This allows HMRC to inform the contractor of the correct level of deduction that must be made – to avoid over or under reducing the subcontractors rate of pay.

3. Not deducting the payment properly

In order to calculate proper deductions, the contractor must take the subcontractor’s tax status into account. A record of the details of the payment must be made and the subcontractor must receive a statement that reflects this.

4. Not submitting a return

Each month, the contractor must complete a return which details: all subcontractors used, details of all payments made, a declaration that the employment status of the subcontractor has been considered, and a declaration that all subcontractors have been verified.

5. Not paying the deductions to HMRC

It goes without saying that once the monies have been deducted from the subcontractors pay, they must be passed to HMRC. Failure to do so could result in a serious fine.

6. Not deducting payments for mixed labour subcontractors

In some cases, a subcontractor may carry out a mixture of works – some which are within the CIS remit, and some which are not. All labour costs must have a CIS deduction applied, unless operated under individual, separate contracts.

7. Adding employees to the scheme

Employees of a construction company are not under the remit of CIS. An employee is a member of staff who is paid through PAYE. PAYE covers the employees tax responsibilities and, therefore, negates the need for CIS.

What is a contractor?

According to HMRC’s official guidelines on CIS terminology, a contractor is:

A contractor is a business or other concern that pays subcontractors for construction work.

Contractors may be construction companies and building firms, but may also be government departments, local authorities and many other businesses that are normally known in the industry as ‘clients’”.

What is a subcontractor?

According to HMRC’s official guidelines on CIS terminology, a subcontractor is:

A subcontractor is a business that carries out construction work for a contractor.”

If you are ever confused or concerned about your CIS obligations, it’s best to consult an expert. You can find HMRC’s detailed guidance on CIS on the HMRC website or speak to your accountant about filing appropriate CIS declarations and returns.

How to raise capital for your new business

How to raise capital for your new business

Starting a business can be costly. If you require premises, manufacturing or staff, the start-up costs can mount up quickly. A 2016 Moneywise survey suggested that it costs in excess of £27,000 to start a business – an amount that most small business owners don’t have lying around.

So, how can you raise capital for a new business if don’t have access to the funds you need?

Grants

HMRC provides numerous schemes to encourage enterprise in the UK. The money for these grants and schemes is gathered from taxpayers money, so competition can be fierce. To find out if you’re eligible for most of these grants, you’ll be required to apply with detailed information on how you will use the investment. For more information on finance and business support for UK businesses, check out the HMRC database and enter your funding criteria.

Start-up Loans

The likes of HMRC, Richard Branson and many more have begun lending to start-ups, aspiring business owners and entrepreneurs. Of course, it’s worth remembering that loans do have to be paid back. The Start Up Loans scheme is an HMRC initiative that can lend funds from £6,000 to £25,000 with an interest rate of 6%. Most loans needs to be paid back within 5 years. Branson’s answer to start-up loans, Virgin StartUp, offers both financial training and loans that average around £5,000.

Angel investors

We’ve all seen Dragon’s Den – that’s angel investing in action. An angel investor will normally invest their own personal finance in exchange for a share in the company. This means that they will take the same percentage of the company’s profits – once it starts trading successfully. Angel investors often offer their expertise and guidance under the assumption that they will begin to see a return on their investment within the first few years.

Crowd-funding

A fairly new phenomenon, sites such as KickStarter encourage crowd-funding. This is the process of publicly asking for money to help you start your business. There are 3 main types of crowdfunding: donations, equity and debts. Donations do not have to be paid back, whereas equity crowd-funding requires you to sell percentages of your business to investors and debt crowd-funding means that the money must be paid back, with interest.

Bootstrapping

This is the colloquial term for funding your own business. If the upfront costs are minimal, you could take out a 0% credit card to get you started, or borrow money from friends and family.

How to prepare – before trying to raise capital for your new business:

In order for you to attract investment to your new business venture, there are few things you should bear in mind.

  • Identify the type of funding you need – Would an angel investor be great from an educational point of view? Would you be more comfortable applying for a start-up loan? Consider the pros and cons for your personal situation.
  • Create a financial model – No one will lend to a business with no plan, or no idea how much capital they need. Seek out help if you need to put together a cash-flow forecast or business plan. Show that you have prepared for different outcomes to ensure that any investment is safe.
  • Be realistic – Target your funders carefully. Whilst there might be investors who will part with millions, are they likely to invite you in? Or would you be better off looking into something like the Angel Investment Network?

With investment, it’s a case of ‘fail to prepare, prepare to fail’. Start by having a watertight business plan and work outwards from there to decipher the amount and type of investment you need. As with all financial advice, it’s best to discuss your own personal circumstances with someone in the know.