STARTING A FOOD BUSINESS?

When you start a new food business or take over an existing business, you must register with your local authority. You should do this at least 28 days before food operations start.

This applies to food businesses trading:

• from physical customer-facing premises
• from home
• from a mobile unit or temporary premises
• online (for example via social media or a website) or through distance selling (distance selling means any selling that happens without face-to-face contact with the consumer)

You will need to register if you:

• sell food.
• cook food.
• store or handle food
• prepare food.
• distribute food.

Companies involved with food distribution, brokerage or food supply that operate from an office should also register as a food business.

Additionally, registration is free and cannot be refused. It’s essential to keep your registration details up to date, notifying the local authority of any significant changes to your business, such as a change of address, business activities, or ownership.

Failing to register can result in fines or other legal consequences, so ensure compliance to avoid disruptions. Registration helps local authorities conduct necessary inspections and provide support to ensure your business meets food safety standards.

For more detailed information and assistance with the registration process, contact your local authority or visit their website for guidelines and resources.

This applies even if no food is kept at the premises. If you operate in more than one location, you need to register each premise with the local authority in which they are located.

You can register here: https://register.food.gov.uk/new

Baxterworld offers accounting and financial guidance to companies in both the UK and Ireland. If you’re unsure of this week’s topic or you’re interested in learning more, feel free to contact is today!

#food #foodandbeverage #foodforthought #foodsupplier #restaurantowner #foodtruck #foodtrends #foodvendor #cafe #fastfood #finedining #trading #foodbusiness #foodbusinessowner

Collecting debts in 12 easy steps

• When onboarding a new customer and offering credit terms, make sure you have details of the person to contact about payment.
• Always send a statement electronically at each month end (if monthly terms). This should be easy with modern software.
• Delegate someone other than the salesperson to contact the customer for payment. The salesperson has a different relationship with the customer, and this should not be compromised.
• Ensure your sales ledger is updated daily with cash received. It is not a good look to be chasing debts that the customer has already paid.
• Send an electronic reminder for unpaid debts immediately they become due under your agreed credit terms. Again, this task can be automated.
• If still unpaid follow up with a stronger email in maybe a week. Record the dates of all communications on their file.
• The next follow up (maybe another week) should be by telephone. This call is to establish if there are queries on price or quantity which is preventing an invoice being paid. If you agree to give a credit note, then do it promptly. If the query cannot be settled quickly, ask the customer to pay any other outstanding invoices. If there are no disputes, then note what they said about payment. This could be a promise to pay in “the next payment run” or “when the boss returns” or “next week”.
• If still outstanding after another week has passed, call the customer, and refer to any promises made last week. It may become apparent at this stage that the customer is tight for cash.

Continued…

• Advise your salesperson to temporarily hold new orders until the account is brought up to date, advising the customer of the reason. They can blame the credit controller without upsetting the customer. This is a standard and effective way to get paid.
• If there appears to be a reluctance to pay, this will usually be due to cash flow issues, it is important to realise that there may be other suppliers also trying to get paid and they who shout loudest get the money soonest. Bombard the customer with payment requests. Phone calls are by far the most effective at this point because when the recipient is embarrassed by their broken promises, it will give them a personal incentive to pay you.
• This is a process to be followed routinely and it continues while you give credit terms. Don’t let the timings slip just because you are busy with other things as part of the process is to train the customer to pay on time without being pushed.
• Review the credit terms of customers who make you work hard to get payment. Be aware of the cost in time and the effect on your own cash flow. Consider insisting on the customer signing a DD mandate or paying in advance.

We hope that this weeks blog has made collecting debts a little clearer. If you have any questions, please contact us via our website or social media!

Company Law Changes on the horizon The white paper on reform to the Company Register, sets out a series of adjustments for businesses for 2023 to “safeguard our national security and reduce the economic and social costs of fraud,” the white paper laid out that small and micro businesses will potentially have to publicly file their profit and loss accounts which they are exempted from at present, having only to file a simplified balance sheet. Most of our clients are happy with this potential change as it makes their business more transparent and easier to keep suppliers onside. Those who value their privacy however have strong objections and are considering their options before the reforms kick in. The only real option available is to disincorporate, which means transferring the business assets to one or more individuals as a Sole Trader or a Partnership. In that way, public filing of accounts is not required. This is a big step and not many will want to do it.

View the white paper here, take a look: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1060726/corporate-transparency-white-paper.pdf

 DIRECTOR’S LOAN ACCOUNT, WHAT IS IT?

If your business is set up as a Company rather than a Sole Trade or Partnership, it is important to remember that the Company is a separate legal entity. It is “Corporate” from the Latin “corpus” meaning body and has its own legal existence. It can own property, be sued, or sue others through the Courts and pay its own type of tax (Corporation tax). To “incorporate” a business means to give it an independent legal standing as a Company.

An individual can have three types of relationships with a Company.

They can be a:

• • SHAREHOLDER – they own all or part of a Company

• • DIRECTOR – a person legally appointed to direct and safeguard a company’s affairs

• • EMPLOYEE – a person with an employment contract with the company

A person can wear one, two or all three hats and in small companies the “owner” is usually all three.

A person is entitled to be paid by the company in different ways depending on the hats they wear as follows:

• • Shareholder – Can be paid a share of the profits by means of a Dividend

• • Director – Can receive remuneration for acting as a director, normally via PAYE

• • Employee – Can receive a salary for work performed, always via PAYE.

It is probably clear by now that money in a company’s bank account, unlike a sole trade, belongs to the company, not the individual. If therefore money is taken out of a company other than by the above methods, it’s a loan. Therefore it will eventually have to be repaid to the company. The Directors Loan Account (DLA), sometimes called the Directors Current Account (DCA), is the interface between the human and the company. Any transactions of a personal nature are recorded in the Company’s books in an account with that name.

Some typical transactions in this account would be:

• • Expenses paid by the company which are personal rather than business. For example in a restaurant, the value of food or beverages removed for personal use, or the cost of travel for a partner on a business trip.

• • Money taken from the business to cover an emergency personal expense.

• • Money taken over and above the Director’s PAYE salary with the intention of repaying this out of profits (via a dividend) later. This is the most common entry in a small business DLA because, unlike a PAYE salary, there is no National Insurance charge on dividends. This can therefore be a more tax efficient means of remuneration as opposed to paying a higher salary. This however is not always the case and depends on may factors. Your accountant will advise HMRC will frown on monthly drawings which are salary in disguise.

• • If a director pays the company an amount of money as a temporary loan (as opposed to an investment in shares) then this will appear as a credit in the DLA.

• • When a dividend is declared at the end of a year when the profits are known, this is usually credited to the DLA. The director can draw on any DLA credit balance without any further tax, funds permitting

Cont…

There is a tax law called section 455 of the 2010 Corporation Tax act. This which charges 33.75% tax on any DLA balances not repaid within 9 months of the company’s year-end. This s455 tax is refundable when the loan is repaid. If the directors loan increases the following year, only the increase will be subject to the 33.75% charge. Any partial repayment will allow part of the s455 tax to be refunded. The rate was 32.5% up to 5.4.22.

Another tax issue to consider is that if the Director’s loan is interest free and exceeds £10,000, then HMRC will demand tax on the benefit-in-kind. Ensure that the company charges the participator a reasonable amount of interest on the DLA balance if it exceeds £10,000.

If you have any questions about a potential director’s loan,  Baxterworld is always happy to help. Contact – [email protected].

#accountant #dla #director #directorslife #businessandmanagement #hospitalitymanagement #businessowner #savetax #lowercosts #help #tax

Most small companies (thought to be six million) pay their owner-managers a basic salary through PAYE and a chunk of the profit by way of a dividend. Accountants, including my company, usually advised their clients to remunerate themselves this way over the last number of years. In most cases it meant less tax and NI compared to than paying all as salary. Before 2016 when dividend rules were changed, no tax was payable on dividends from your own company on the premise that the profits had already been subject to corporation tax, so being taxed twice did not seem fair. The corporation tax rate for small companies fell from 42% in the 1970’s to its present 19%. Next year the rate increases to 25% for profits over £250,000. It stays at 19% however for profits up to £50,000 with a sliding scale in between. Last tax year the income tax charged on money withdrawn from the company by means of a dividend was 7.5% with £2,000 tax free. This tax year it is 8.75%. Sunak and Hunt are considering a further increase of 1.25% for next year taking it to 10%. They are also considering reducing the tax-free amount to £1,000. A basic rate taxpayer will pay £700 income tax this year on a £10,000 dividend. Under the proposals the amount will rise to £900 in 2023-24. Higher earners will pay much more in both income tax and corporation tax, up to possibly 55%.

Once the budget details have been announced I recommend that you have a chat with your accountant to re-evaluate the most tax efficient way to draw income. Call us today at Baxterworld for advice on this week’s blog. We’re open 9-5 throughout the week, so feel free to call or email. >> Need a new accountant? – email Ray Baxter at [email protected] <<