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  • How can a financial model help me?

    Business plans formalise the goal of an organisation and, if they are prepared collaboratively or shared creatively, can engage teams and individuals in achieving those goals. But how realistic is the plan?

    Financial models from WMT help you with:

    Testing your plan on paper – before you commit resources to delivering it.

    Forecasting – by using multiple data sources from across the business to predict financial outcomes such as production capacity and debtor days, to expected incomings and outgoings, plan future investments and predict shareholder returns.

    Testing scenarios – such as how will your business finances be affected by opening or closing a site, acquiring a new business or increasing sales? This will help you choose between options.

    Planning capital expenditure – your financial model will help you decide if the investment will be worthwhile for your business and when to time the investment.

    Calculating the true cost of projects – by gathering data from multiple sources.

    Fundraising or preparing to sell your business– a robust financial model, especially one you have worked with over a number of years, will give confidence to potential investors or buyers.

    Mergers and acquisitions – estimating the performance of the new business.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • What is an employee ownership trust?

    Employee ownership trusts (EOTs) provide a way for privately owned companies in the UK to allow employees to become co-owners. Businesses that have gone down this route have seen improvements in staff motivation, customer satisfaction, stability and business performance. It also provides the most tax-efficient exit route currently available to business owners.

    A sale by one or more shareholders of more than 50% of the ordinary share capital of a trading company or trading group to an appropriate employee ownership trust will qualify for maximum tax exemption. In this situation, the vendors will receive an exemption from all capital gains tax in the year in which the trust acquires a majority holding. This level of tax exemption is even more favourable than Entrepreneurs’ Relief.

    Most importantly, there is no obligation on the part of the trustees to distribute shares, creating the possibility of a stable, long term trust holding.

    The trust must operate for the benefit of all employees. You can limit the extent to which employees may benefit from the trust based on a qualifying period of employment, employee pay, length of service or hours worked. Employees can receive a cash bonus of up to £3,600 a year free of income tax (although they will have to pay national insurance contributions). For many employees, it is the opportunity to have a say in how the business is run that is the biggest benefit.

    Financing the transaction can be a barrier for business owners wishing to set up an EOT. WMT will help you to determine the right type of funding to meet your goals and structure a tax efficient exit plans for the business owners. If external finance looks like the best option, we can negotiate funding with banks or specialist lenders on your behalf.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why does my company share scheme need a valuation?

    If a company makes any share based payments, under current accounting standards, it must recognise a charge in the profit and loss account equal to the fair value of the payment.

    The definition of share based payments is wide reaching and includes:

    •      Granting of options (including both HMRC approved and unapproved schemes)

    •      Direct awards of shares to employees

    •      Bonus awards to employees which include share options, share or a cash bonus which is linked to achieving performance targets in relation to the company’s share price.

    Valuing share options is a complicated technical area of accounting. We are experienced in interpreting the accounting standards that are relevant and apply valuation techniques such as Binomial, Monte Carlo and Black-Scholes.

    WMT’s support and advice includes:

    •      Guidance on the accounting standards

    •      Consideration and explanation of the most appropriate valuation methodology

    •      Valuation and disclosures issues

    •      Key assumptions

    •      Sensitivity of the model and the effect of a change in the assumptions

    •      The resulting charge to the profit and loss account

    Our tailored independent report can be discussed with the company and contains all the necessary figures and explains the rationale behind the calculations. The report can then be audited.

    In addition to this, we can assist in the design of share options schemes and advise from the outset of the future impact on your profit and loss account and balance sheet of the proposed share options scheme.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Who should be involved in improving profitability?

    Setting goals for profit improvement, agreeing broad strategies and deciding which of the areas you are targeting is largely a management level activity. You and your management team know your business and, either on your own or with external support, you will be in a good position to set the vision.

    Once you have a clear idea of the vision, all team members can have a good idea about how to increase sales or margins. Involving a cross section of staff at an early stage will make your plan more robust and easier for your staff to understand and follow.

    Cutting costs can be perceived as a threat by team members so communication is the key to engage your whole team in improving profits.

    If you are a busy business owner or manager, you should think about the value an external facilitator can bring. You could buy-in experience and expertise that you may not have in house and reduce the disruption to your day-to-day activities whilst you get the project up and running.

    WMT can help you to stay on track, measure your results and adapt your plans when priorities change.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • What is the best way to improve profitability?

    In essence, there are just two ways to improve your profitability. One is to reduce your costs – direct, indirect, fixed or hidden. The other is to increase your revenue.

    Of course, the best route to profit improvement for you and your business depends on several factors including your businesses goals, your current situation and the timeline you have for achieving the desired change.

    In terms of reducing costs there are a few basic steps you can take to get started, but in our experience, most SMEs have learnt how to manage the obvious costs effectively themselves.  Ultimately, a cost reduction strategy can only go so far without having a detrimental effect within the business or on quality and service. A more effective and sustainable approach can be focusing on managing out waste – wasted resources, wasted time and ineffective processes.

    In terms of driving up turnover, one of the ways we work with clients to increase profitability is to understand what we call the “Revenue Model”.  The Revenue Model looks at the constituent parts of the income stream(s):

    • The average transaction value – and how that can be improved
    • The customer base – and understanding how that grows and churns over time
    • The transaction frequency – and how that can be increased

    Once these areas are analysed and understood, clear KPIs emerge that can increase margins and revenues.  Other effective strategies for improving profitability then also flow from this analysis; how profitable is each product and/or service? How profitable are each of your customers?

    Often the biggest profit improvement challenge for business owners is finding the time to think about it in the first place. If you find yourself in this position, external support could provide the answer.

    We will help you gather and understand the numbers, put together a financial model for your business and create a practical goal-driven plan that delivers.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • What is a vendor initiated management buy out (VIMBO)?

    A vendor initiated management buy out (VIMBO) is a management buy out where the owner offers the business to the management team. Typically in a management buy out, it is the management team that ask the owner if they can buy the business.

    In our experience, management teams often need help pulling together a buy out proposal and approaching the owner.  With a VIMBO, the vendor puts together a sensible and well-structured deal before approaching the management team. This can take the pressure off the management team to come up with an acceptable offer. It also lets the business owner take control of the process.

    Often the owner keeps a minority stake (perhaps as much as 25%) and regularly would act as a consultant to the business after the buy out. This usually makes the change of ownership easier for everyone concerned.

    Owners and management teams usually find a VIMBO more attractive than selling the business to a third party. As an owner, a VIMBO can provide you with significant tax advantages over, for example, extracting income through salaries and dividends. The deal has to be structured carefully to make sure you receive all available tax reliefs.

    It is increasingly common for a large part of the payment to the owner to be deferred. This means that the management team may not need to borrow from an external funder.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • When should I begin preparing to exit my business?

    When you should start planning depends largely on what value you want to take out of the business when you exit and the market conditions.

    If a valuation of your business shows that it meets or exceeds the value you are looking for, you should be able to exit sooner rather than later, assuming the market conditions are working in your favour. You should make sure that all the tax angles have been considered, especially those relating to entrepreneurs’ relief and inheritance tax planning. This means you should start getting ready 18 months to 2 years in advance of your planned exit date.

    On the other hand, if your business valuation falls short of your expectations, you may have a lot of work to do before you can market the business and receive the value that you’d hoped for. In this situation, you will find external advice on how to achieve your goals invaluable. It will give you a fresh perspective on your business and its challenges, along with practical solutions to address them tax-efficiently.

    For more information on how we can help you prepare for exit, visit our pages on profit improvement, management accounts and entrepreneurs’ relief.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Is income tax payable on all discretionary payments from customers?

    Income tax is payable on all income received by staff, including income from discretionary payments made by customers. The type of discretionary payments, and how they are passed to staff, affects when tax is due, who should make sure the tax is paid, and who will be held as responsible if it’s not.

    In most situations, it will be down to the proprietors of the business to deduct income tax at source under PAYE from amounts paid to employees. This includes situations where tips are paid on cards by customers and converted to cash through the till.

    If money is passed to a Troncmaster to distribute directly to staff, then there is a legal obligation on a business to notify HMRC of this arrangement, as well as the name of the Troncmaster.

    Businesses who fail to deal with their obligations to HMRC face demands for unpaid tax together with interest and penalties going back up to 6 years. This mean that £100 per week of untaxed tips can lead to a business facing a demand for over £5,000.

    Tronc systems designed by WMT ensure that only the correct amount of tax is paid by your employees.

    Lower-paid and part-time staff (including students) will not pay tax under our arrangements if their income is less than their personal tax allowance. Higher paid staff, who may have some of their income taxed at 40%, will pay this during the year so they don’t receive an unpleasant surprise from HMRC when the tax year finishes.

    Do you still have questions? Get in touch with our hospitality services team to find out more about how they can help you.

  • Should cash tips be treated the same way as tips paid on a card?

    Unlike tips paid by card or service charges, cash tips belong directly to the employee. It is up to staff – not the employer – to choose whether to pool and share those tips with colleagues or keep them to themselves. Forcing staff to share their cash tips can result in complaints and even lead to an employment tribunal.

    All tips are taxable income. The question for your business is, do you have a responsibility to tax this money at source or is it down to employees to tell HMRC about their cash tips income? The answer depends on exactly what happens to the cash and what systems may or may not be in place, even informally.

    HMRC will always try to collect the tax on cash tips directly from businesses, so it’s important that you understand what can and cannot happen to cash tips without any legal responsibilities falling on you.

    Hospitality specialists at WMT will help you understand the complicated rules surrounding cash tips, so you can deal with them in a way that limits the likelihood of staff complaints and HMRC enquiries.

    Do you still have questions? Get in touch with our hospitality services team to find out more about how they can help you.

  • What could happen if my company fails to meet its company secretarial obligations?

    Non-compliance with the company secretarial filing requirements could lead to the company being struck from the register of companies. Restoration to the register can be a costly procedure.

    Our company secretarial service takes care of your filing requirements and deadlines so you don’t have to, giving you peace of mind.

    Do you still have questions? Get in touch with our accounts services team to find out more about how they can help you.

  • Do I need a company secretary?

    All companies have company secretarial responsibilities. It is no longer necessary for private limited companies to appoint a company secretary.

    The directors of a company can undertake the recording, reporting and filing duties or the company secretary. Alternatively, they can assign them to another staff member or commission an external party to compete the duties for them.

    Do you still have questions? Get in touch with our accounts services team to find out more about how they can help you.

  • What should I include in my management accounts and reports?

    The contents of your management accounts and reports depends on:

    • What you are trying to achieve – this determines what you want to monitor to check your progress
    • What data is available to you

    Reports can be used to identify and measure success, check if you are meeting your forecasts, support your decision making, and help you to plan next steps.

    Professional advice on your management reports from WMT will ensure you are tracking the measures that will help you take your business forward as well as providing additional insight into underlying trends and fresh ideas on managing your business.

    Do you still have questions? Get in touch with our accounts services team to find out more about how they can help you.

Tax advisory

Effective tax planning from our specialist tax accountants helps individuals, businesses and other organisations to ensure that tax does not become a barrier to their ambitions. As our clients often benefit from both personal and…

Business consulting

Our business advice service provides you with guidance throughout the whole of your business’s lifecycle. We develop a deep understanding of your key business drivers, which enables us to provide advice and support at every…

Audit services

WMT’s external audit services go beyond ensuring that your business is compliant with the Companies Act and other regulatory requirements. It offers you a greater insight into the way your business functions and where improvements…

Accounts services

We provide a comprehensive range of cost effective accounts services including accounting, bookkeeping and management information services. These are designed to supplement any internal resources or to be a fully outsourced solution. You will benefit…

Payroll & employment

Dealing with the ever-increasing range and complexity of employment taxation, alongside constant changes to legislation makes it challenging for employers to stay on the right side of the rules. WMT will answer your day-to-day queries…

Corporate finance

With our extensive commercial experience and technical know-how, our corporate finance team are well-equipped to help you with your corporate transactions. Having established a deep understanding of your business needs and goals, we are able…

Tronc & hospitality

Whether you are a start-up or an established company, our hospitality experts can work with you to manage and develop your business. They can take the hassle out of compliance, set up and manage your…