Running a small business can be tough especially when income is not always guaranteed. COVID-19 has literally brought the whole world to a standstill and this is having massive impact on businesses. As most people are either losing jobs or being asked to take a pay cut, they are going to spend less and this will affect most businesses. Here is what you can do to prepare yourself and your business, and the support currently available in the UK
Check-in with your clients
It’s important to stay in touch with your clients. Understand what their cashflows challenges are and when they are likely to pay your outstanding invoices. Also understand if their current and future plans i.e. do they still require additional services or are they cutting back. This will help you in your cashflow forecast and making the necessary plans for your business.
Consider delaying or stopping any asset investments or one-off projects
During times of uncertainty it is important to preserve any cash that you may have. If you were considering buying an asset for the business, assess if this can be delayed or cancelled. If not, it is important to revisit the investment appraisal and insure that the cash inflows and outflows truly reflect the current situation.
Prepare a Cashflow Forecast and check payment days for suppliers
Once you know when your clients are likely to pay your invoices, prepare a Cash Flow Forecast for the coming year. You can start by listing what you actually received and spent in the last 3 months. Adjust the numbers for the coming year accordingly. Check your creditor payment days and if possible try and negotiate the days so that they line up with when you receive your money from your clients. It is important to have open communication with your suppliers regarding cashflows as this builds trust. Once the Cashflow has been completed highlight any months where you have income shortfalls. If there aren’t any retained earnings available to use consider applying for the support available.
- Self Employed Income Support Scheme
This is a grant that is available for the Self Employed or those in a Partnership. You can claim a taxable grant of up to 80% (capped at £7,500) of your trading profits. This is a temporary scheme. To qualify you need to have submitted the 2018 – 2019 tax returned by 23 April 2020. For more information and to apply use the following link; https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#check
- Deferral of Self-Assessment Income Tax until 31 January 2021.
Click on the following link for further information; https://www.gov.uk/pay-self-assessment-tax-bill
- Deferral of VAT
Businesses that have VAT that was due in March and June 2020 have been given the option to defer the payments. Click on the link for further information; https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
- Grants for Business that pay little or no rates
This scheme is being delivered by Local authorities to businesses that qualify. Click on the link for further information; https://www.gov.uk/government/publications/coronavirus-covid-19-business-support-grant-funding-guidance-for-businesses
- Business Interruption Loan Scheme
Financial support for small to medium size business. The loan is interest free for the first 12 months. Click on the link for further information; https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme
- Bounce Back Loan
This loan is available to small to medium size businesses. The maximum available to borrow is £50k. The loan will be interest free for the first 12 months. Click on the link for further information; https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
- Universal Credit
If are unable to receive any of the above support or be furloughed you can claim for support via the Universal credit. https://www.gov.uk/universal-credit
- Job Retention Scheme
This scheme helping businesses with employee wages. https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
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