COLUMN: Challenges for businesses


As a business progresses though its life cycle, it continually faces many opportunities and challenges. Here we take a look at some of the challenges your accountant can help you and your business with at each step of the journey.

Starting up

A new start up business has the choice of operating as an unincorporated entity (e.g. sole trader) or as an incorporated entity (e.g. limited company). There is no hard and fast rule as to which is more suitable as this will depend on individual circumstances.

It is also important that any business puts in place a system for recording and reporting its transactions and results as this will be essential as the business moves into the growth stage.


The business could require external financing or need to improve its IT systems to fulfil its potential, but should not underestimate the challenges of employing staff. Businesses will need to ensure a PAYE scheme is registered and they adhere to the many regulatory requirements including Real Time Information (RTI), national minimum/living wage and possibly pension auto enrolment.

The administrative burden of employing extends to human resources where, for example, there is a legal requirement to have written details of employment with each employee within eight weeks of them starting.


The desired stage – things are going well, but there may be uncertainty surrounding the length of this period. To help prolong this stage, the team will need to be kept motivated to continue producing the desired results. One way this could be achieved is through an employee share scheme, which would incentivise key employees by offering a reward of having a share in the business.


Any business in this stage could be challenged by falling sales, profits and, most importantly, negative cash flow.

Preparing management accounts and projections is essential at all stages of a business’ 
life cycle and probably most important in the decline stage.

By ensuring management accounts and projections are produced both in a timely fashion and in a way that easily determines the performance of each area of the business, this will give the entity the best chance to turn the business around.


Not every exit is undesired as the owner may seek a sale whilst the business is performing or perhaps is looking at a succession plan. The owners will need to consider the structure of the business as again different tax rules will apply.

It is important that early advice is sought to ensure the correct structure is in place and the business owners understand the exit process and the tax cost of this.

To talk to Sarah Clyde about how Duncan & Toplis can help your business overcome these challenges and prosper, call 01205 310250 or email