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How businesses can plan ahead for Christmas
30 November 2023

With Christmas fast upon us, many of us have already got the decorations up, wrapped all the presents and have plans in the diary for every weekend during December.

Whether you have been organised since November or you’ve not bought one gift yet, it is important as a business to be prepared for the Christmas break.

It’s a time for unavoidable spending with Christmas parties, client and staff gifts and you may close for the holiday which we understand can be difficult.

Here are some of our tips on how to plan ahead over Christmas.

 

Advise clients

 

We always advise our clients that we will be closing for the Christmas period so that we can not only set expectations, but it also gives them time to let us know if anything is going to need doing. If you are 100% closed over the Christmas break, ensure that you have informed all of your clients well in advance to allow them to prepare too.

 

Keep hold of any receipts

 

So many of us make the mistake of not keeping our receipts, especially during Christmas and New Year but all those small amounts can soon add up. Keeping all your receipts is important for a number of reasons: evidence of transactions, proof of your finances to HMRC, assistance with budgeting and they allow you to be able to claim all of your deductions in your tax return and give an overview of your business year.

 

We recommend using the Xero add-on Hubdoc which allows you to take photos of your receipts and send instantly on the app. Hubdoc automatically processes, categorises and sends your receipts into Xero without you having to do a thing … so when you return from your Christmas break, they are all sat there for easy reconciliation.

 

Keep business and personal finances seperate

 

Not having separate bank accounts for business and personal, or using the wrong account to pay for things, can mean your finances can get a bit messy. Keeping them separate lets you know exactly where your business is at financially and saves you having to sift through hundreds of receipts and separating them into personal and business transactions.

 

Understand your cashflow

 

You can’t relax over the Christmas period if you don’t have an idea of what’s coming in and out. A clear view of cash flow helps to inform better business decisions. Without a strong cashflow even the most profitable businesses will fail.

 

To make sure you’ve got enough cashflow to keep your business running, follow these steps:

 

  • Stay on top of bookkeeping. It’s the single best way to understand all the financial transactions in your business, and you can’t do the rest of the steps without it.
  • Analyse your cashflow. Take the information from your cashflow statements and use it to understand how money is moving through your business.
  • Cut overspending to increase cashflow.
  • Speed up your accounts receivable (i.e. money owed to you). The faster you get money in your pocket, the more cash you’ll have. 

 

Issue any invoices

 

If you’re on a cloud accounting system such as Xero, scheduling your sales invoices is an easy way to keep the cash flowing while you enjoy that hot chocolate.

 

The repeating invoice function allows you to invoice your clients on a regular basis without having to lift a finger. This can be combined with tailored e-mail reminders which automatically prompt clients who haven’t paid but still have that personal touch.

 

Now is the perfect time to give your debtors a cheery Christmas nudge. Consider making contact a few days before the due date to ensure that they have received your invoice and are ready to process the payment.

 

Christmas expenses

 

It is the time of year when you want to show appreciation to clients and team members, but you should bear in mind which Christmas expenses are claimable.

 

If you decide to treat your employees to a meal or a Christmas party, it is tax deductible as long as you do not spend more than £150 per person. This is to include the venue, transportation, accommodation as well as VAT. The budget is an exemption, not an allowance so if the party or meal costs more than this, the event would therefore be taxable.

 

If you provide a Christmas gift to your clients or team members, its value must be less than £50 or it could be deemed a taxable benefit. You can claim VAT back on these if you are VAT registered.

 

Christmas decorations count as an allowable expense if they are for an office, shop or anywhere that isn’t your home.

 

HMRC has a more details explanation which you can read here. https://www.gov.uk/expenses-benefits-social-functions-parties/whats-exempt

 

Plan ahead

 

We highly recommended that you put together a business plan for the New Year. Having the right information and having the right financial systems and processes in place is key to underpinning your financial future.

 

Our “Path to Success” programme has been designed to help you to get to grips with your business finances. Knowing where to start can be daunting, even impossible but with support from our expert team we will provide a step-by-step programme that gives you everything you need to get your finances in order.

 

We will work with you to define your financial business goals, develop a 3 year financial plan and put in place a measurable one year detailed budget to achieve the return you want from your business

 

Take a break

 

Most importantly everyone needs to take a break and recharge every now and then. Too many business owners don’t switch off over the festive season. Take this time to rest and relax with family and friends. It will mean you can hit the ground running in the New Year with a fresh head of ideas and feeling fully recharged.

 

Have a great Christmas and Happy New Year from everyone at Your Support Team.