As we wave goodbye to the old year and set our sights on the next, now is the perfect time to make sure your business is in tip-top shape. Whether you’re a sole trader, limited company, or freelancer, starting the year with a clear plan can make all the difference. From tax planning to agreements and policies, these steps will help you stay organised, compliant, and financially savvy.
1. Save for Your Tax Bill: Avoid the January Sting Next Year
January 31st is no one’s favourite date when it comes to finances, but with a solid plan, you can avoid scrambling to pay your tax bill when the self assessment deadline hits.
At Richard Riley and Associates, we urge our clients to set aside at least 20% of their earnings if they are basic rate taxpayers or 25% to 40% for higher and additional rate taxpayers. Whether you’re self-employed, in a partnership, or running a limited company, saving monthly makes a world of difference.
Why is this so important? Waiting until the last minute can leave you having to dip into your business account or even your personal savings, which can cause unnecessary stress. Spreading the cost across the year makes budgeting far easier and protects your cash flow.
Top tip: Keep tax savings in a separate account. Many business owners opt for savings accounts or Premium Bonds with National Savings & Investments (NS&I). With Premium Bonds, you can earn tax-free cash prizes while still keeping your funds accessible when it’s time to pay the taxman.
2. Maximise Tax-Efficient Savings
A new year is the perfect time to review your investment strategy and take advantage of tax incentives. Are you making the most of what’s available?
- ISAs: You can save up to £20,000 per year in an ISA, with any income or gains completely tax-free.
- Pensions: Pension contributions are tax-deductible for companies and tax-efficient for individuals. You can contribute up to £60,000 per year, relieved at your highest rate of tax.
- Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS): These offer attractive tax reliefs for higher-rate taxpayers.
As St James’s Place explains:
“You can take 25% of your pension fund tax-free. After that, the retirement income you take from a pension is taxable, whereas you can access funds from an ISA anytime. Using both, combined with your personal allowance, means you can plan your retirement income tax-efficiently.”
This is a fantastic opportunity to save for your future while reducing your current tax liability. Not sure where to start? Speak to one of our expert advisers who can help you create a tailored plan.
3. Review Your Shareholder, Supplier, and Client Agreements
The start of the year is the ideal time to make sure your legal agreements are up to date and working in your favour. This includes:
- Shareholder Agreements: Whether you’re a minority, majority, or 50/50 shareholder, a well-drafted agreement protects your interests and clarifies responsibilities.
- Supplier and Client Contracts: Clear, well-structured contracts ensure smooth relationships and minimise risks.
A legal review can save you headaches further down the line, ensuring compliance and clarity. If you need support, our trusted legal associates are here to help.
4. Get Your HR Policies in Order
Outdated policies may not comply with new regulations which could put your business at risk – whether it’s compliance issues or inefficient systems that don’t reflect the way your business now operates.
According to Centric HR:
“It is very important to consistently review HR policies and procedures to ensure that there are clear and fair strategies in place to help with the management of people and the issues they face with regards to their employment.”
Ensure your policies are up to date with the latest employment laws and tailored to your business needs. This is especially important for companies navigating hybrid work, new technologies, or growing teams. Our HR partners can help ensure your processes are efficient and compliant.
5. Plan Ahead and Build Better Financial Habits
If last year taught us anything, it’s that staying ahead financially gives you room to breathe. Start as you mean to go on:
- Set a percentage aside for tax each month
- Make use of separate accounts or tax-efficient savings options
- Review your contracts, policies, and agreements regularly
- Maximise your tax-saving opportunities, including pensions and ISAs
By building these habits early, you’ll save yourself stress, improve cash flow, and set your business up for success.
At Richard Riley and Associates, we’re here to guide you every step of the way – from tax planning to legal and HR support. Get in touch with our team today and start the year on the right foot.
Check out our other blogs for more tips and expert advice on keeping your business ahead in 2025.