UKC

Hello, after reading about them for a long time, I'm finally writing my first one, somewhere along the lines of an overview draft copy to give to bank and accountant in initial set up of limited company.

For the financial section as it's all estimated i don't need to get bogged down with trying to derive exact amounts so was just wondering what the forum collective thought the ball park figure for tax is, including a breakdown for VAT as the plan will forecast for that.

Cheers, i'll be here all day, and night no doubt

In reply to John Simpson:

That's too broad a question tbh. Are you doing a cash flow (i.e. actual monies in and monies out) in which case VAT maybe important, or a profit forecast in which it may not be - you should probably prepare your profit forecast excluding VAT, though in my own line of business it can be a bit more complicated than that.

As well as VAT if you are employing staff you have to deal with tax and NI - employers NI is 12% of someone's gross salary, i.e. if you pay someone £2K per month you have to stump up an addition £120 by the 17th of the following month.

Then there's corporation tax, 20% of profits.

In reply to Rob Exile Ward:

Hi Rob, thanks, I was thinking of just writing, a cash flow statement, an income statement, and a balance sheet, and to group all taxes together in cash flow as in 30%

Probably still need to do some more reading with regards to corporation tax.

Ok thanks for the NI info, it will be a small workforce of 3 or 4 at most.

In reply to John Simpson:

You need to do profit & loss estimate and cash flow - balance sheet not really relevant to business plan unless you are looking at spending loads on assets up front and not leasing imo.

You count your sales invoices into the P&L at time of expected billing and your purchases at time of purchase. These will not normally be the same as the cash flow / income statement dates since (depending on business and terms) customers will take from 30 - 90 days to pay after they get the invoice. You however, as a newbie, will have to pay your suppliers early or even in advance

Ignore VAT for the P&L and you only need to worry about corp tax for cash flow and that will be a long way down the line from startup.

There are different VAT payment schemes. In my opinion the cash accounting scheme should be looked at for startups - you only pay the VAT over once you have been paid but can only claim for bills you have settled. Otherwise you have to pay the VAT across even if you have not been paid ! There is also an annual accounting scheme - see https://www.gov.uk/vat-registration-thresholds

If you already have an accountant put your first set of numbers to them and see what they say - better he has a laugh than the bank marks you down as a nutcase.

They and the banks may well have sample business plans you can base your layout on to suit specific industries.

In reply to John Simpson:

When I put together my first plan I spent a lot of time asking similar questions to you - I'm now on Version 9 so don't worry too much, a year after writing your first business plan will make you laugh anyway!

Good points on the statements above, using 13% on top of employment costs for tax and NI is good, VAT is only relevant for cashflow - this is really important if you're doing some form of capital works/initial investment, if your services are all VATable then roughly accounting for 20% of your profits should cover what you have to pay out - budget for that quarterly in the plan and double check that doesn't send you into the red. The balance sheet is the most critical part of my plan, as we're reinvesting in a rolling programme of capital works - we need to know there is X amount in the bank at the end of year 1 to pay for the growth in year 2. A P&L account won't tell you that. Once you've done it ask your accountant how far off the mark you are. If you're including corporation tax in your business plan you probably want to rethink, as you're probably better showing how you're going to reinvest your first few years profits into growth.

Having said all that, despite what the banks and Alan sugar will say it's not all about the headline numbers, you're probably just as well forming the fuzzy front end of the business plan (marketing mix, 3 year strategy plan and meet the team) and asking the accountants for advice from that, they're there to help you.

And if you're like me and you're a wantrepreneur type - try finding a business partner who is the CFO type to deal with that side of things, you'll end up with headaches if you try to do everything...

In reply to foxwood:

Hello thanks for taking the time to post, some helpful advice there, I've done better than I thought would today and have quite enjoyed it so no night shift required, I'll definitely see if i can run it past an accountant, before I have to see the man, cheers

In reply to 65m moderate millington:

Likewise thanks for taking the time to post and share your knowledge and experience , which is helpful and encouraging cheers

In reply to John Simpson:

No worries - if it's not too long and you want an impartial constructive criticism I'd be happy to skim over it - just send me a PM if you do.
Oliver

In reply to 65m moderate millington:

Cheers for the offer Oliver is very kind, but i'll leave it for this time as I'm running a bit late on it so I'm going to have to 'run what you brung' so to speak, thanks again and hope your business and plans are going well.