Hi there
So we had the Government’s anticipated help for the Self-employed announced this week but it has left many small businesses not afforded the same level of support as the employed.
Small limited companies with one director are particularly let down as are new self-employed businesses and those who don’t quite fit the criteria.
The Chancellor has seemingly not taken into account that a small one-director limited company, which has seen their trade reduced to nil or very little, has been paying corporation tax at 19% and dividend tax at 7.5% (assuming not in the higher tax brackets).
Also, what about a small limited company where they employ say 10 people? The employees are looked after by the Job Retention Scheme but a director who legally has taken a very small salary and the balance in dividends is being hard done by on 2 fronts. Firstly, he is expected to keep his staff and not make them redundant and at the same time battle to keep his business alive so that the employees can come back to work. Secondly, he/she has to maintain their own household as well! He may not even be able to furlough himself as he still has to do something for the business!
It, therefore, comes down to a series of measures where debt is the ultimate end game and rebuilding your business when things reopen. The small limited company will still have to go out there and borrow to survive or defer some taxes to a later date (see Government measures for VAT payments to 30 June 2020).
I understand that the Government is in a precarious position, and it may be impossible to help everyone, so small limited companies need to show their business spirit to survive and use what is at hand.
Talk to your accountant and use all available measures.
Each business I have spoken to is very different in its needs but I am finding that there is a solution for most if they stop and think about all the measures. It can be quite overwhelming and I find that talking to my clients to reassure them helps.
I met one of my clients out this morning (I had to go shopping and saw him cross the road). He looked distressed but when I broke down all the help to him (at a distance!) he suddenly noticed that he could keep his head above water by coming out of his comfort zone. There were several options open to him and as a household, they could survive for several months.
I am not saying this is an ideal situation and there are many clients in genuinely bad situations. I am just saying that all cases are different and talking helps.
