When it comes to Brexit, business owners are split into two camps.
One group believes that the impact of Brexit is minimal to their businesses, which range from providing consultancy to logistic services, to multi-disciplinary companies spread across the UK. Their size ranges from two people to teams of several hundred.
The other group believes the opposite. To them, the impact of Brexit is enormous, potentially disastrous even though they may not necessarily rely on any EU supply chain. They can also range from individuals providing consultancy services to business owners who offer local transport services and other services across the UK.
The common attribute both groups face is uncertainty and under this circumstance, the best thing to do is to prepare as best as you can while continuing to deliver an excellent service to your clients. As preparation is key, we aim to discuss a few points in this post which you can do now to prepare your business, either way.
EU workers
Many EU workers are keen to remain in the UK and we have seen plenty of business owners actively encourage them to do so. The first thing EU workers need to do is to apply for “settled status” (aka Indefinite Leave to Remain) with the Home Office if they have been here for five years or more. Alternatively, they can apply for “pre-settled” status (aka temporary residence) if they have been here less than five years but longer than six months.
A weaker pound
The pound has dropped in value following the Brexit referendum, currently sitting at around 1.15 Euros at the time of writing. A weaker pound has challenges and advantages depending on how you look at it. One clear advantage of a weak currency is that it can help to boost the UK’s export, as the goods will be less expensive to foreign buyers.
A weaker pound will also attract foreign investments, as their money will buy more. The UK’s economy is still the fifth largest in the world (if we don’t count California as a ‘country’) and there are overseas companies looking to get a foothold in this market, giving businesses in the UK a chance to forge some profitable partnerships with foreign investors.
Having said that, a weaker pound will have its disadvantages – imported goods will be more expensive for consumers and it will be harder for the Government to pay back debt issued to foreign investors.
If you haven’t done so, it’s wise to start creating a business plan to see how a weak pound could affect your business.
Operations and supply chain
At the time of writing, we don’t know what the tax implications will be when it comes to importing goods from EU countries to the UK, but if you haven’t taken a precautionary initiative to source for non-EU suppliers, do it now. Also, don’t forget to factor the impact of costs and the potential delay in the movement of goods on your operations.
Consider a new sales and marketing plan
Regardless of Brexit, it pays to revise your sales and marketing plan and make sure what you’re selling still meets the needs of your clients, local and overseas. If you deal with goods, make eCommerce one of your key sales strategies because it is an area that will continue to grow and allow you to reach customers all over the world.
Brexit and financial planning
Cash-flow planning is vital in any situation and can help your decision- making process. The reason is simple; it makes you go through the best and the worst scenarios and allows you to see your options without bias or prejudice.
VAT will continue after Brexit, but the rates may move should the Government wish to help the economy a little. At present, UK businesses selling to EU clients can claim VAT refund online, this may change.
How Tax Agility can help contractors and small businesses in London
At Tax Agility, we have a team of chartered accountants working with businesses across London. We excel at handling accounts & bookkeeping, payroll, VAT, management consultancy and giving solid, no-nonsense tax advice.
We also help contractors and small businesses to grow, providing realistic business guidance and advice. If you’re interested to know how a solid business plan with realistic financial KPIs can benefit your business, give us a call on 020 8108 0090 and book a free, no-obligation meeting.
This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.