How Can Accountancy Firms Diversify To Create Additional Revenue Streams?
The outbreak of coronavirus COVID-19 has changed the way we work - possibly forever. Small and medium sized businesses (including accountancy firms) across the country have had to come up with new ways to survive wherever possible. But if the current economic climate offers one thing it’s the chance to mix business up a bit, and find new ways to make more money. If your firm is new to the concept of diversifying its income, why not seize the day!
Why new revenue streams are a good idea
The more revenue streams a business has, the more it can protect itself against financial hardship if one particular revenue stream dries up. By diversifying your offerings successfully, you can also gain a fantastic competitive edge whilst increasing cash flow.
But how can accountancy firms specifically diversify their revenue streams?
Having worked with hundreds of different accountancy firms over the years, we’ve been able to put together a few ideas:
1. Financial planning
Small business and start-up owners may not have much experience with the ins and outs of financial planning. But this is where your accountancy firm can help, by offering a discounted financial planning consultation. This can then shift any occasional customers to full-time clients. By working with business owners to plan ahead and achieve small, manageable financial goals, they’ll hopefully become loyal, financially literate clients who tell everyone they meet how great your firm is! As time goes on, you can also help with other necessities like loans, mortgages and investments as that trust will already have been built.
2. Virtual CFO services
Small and medium sized businesses may not have the physical or financial space for a chief financial officer (CFO). But technology means that accountants can now provide this service virtually, which can be a very lucrative revenue stream. It’s also a good way of growing your business, opening up the chance to focus on broad financial planning, regulatory compliance and recordkeeping. The beauty of it too is it can keep accountants going throughout the year, after the madness of tax season has passed.
3. Online courses
This is ideal now that everyone’s more familiar with Zoom than ever! So why not come up with some handy online courses which clients and prospective clients can do from home. They would need to sign up and pay to access the course (this is how revenue would be generated), but you could offer all sorts of different types, for example best practices for invoicing or how to record payments and disbursements.
4. Additional services such as advice on R&D tax relief
Unfortunately this one isn’t so straight-forward, as research and development tax relief is highly niche area of tax. But by not having at least some working knowledge of R&D tax relief, as well as what projects and costs are eligible, then you won’t be able to flag up the scheme to a client if they do in fact qualify. Potentially they could then lose out on many thousands of pounds - whilst you’re left with a much smaller portfolio.
At Myriad Associates (developers of the Tax Cloud portal) we eat, sleep and breathe R&D tax relief. It’s all we do. So why not get in contact and see how we can work alongside you in offering a more complete R&D tax relief service.
There may be costs involved though
Diversification is great, but it’s likely to incur some development costs along the way - especially if it means innovating new processes and systems. It may also require additional management, skills and operational resources that need to be outsourced. Luckily, R&D Tax Credits can help with these costs too.
R&D Tax Credits in a nutshell
The research and development (R&D) tax relief scheme is a very generous financial incentive offered by the government. It’s designed to encourage UK businesses to innovate and grow, either by providing a cash lump sum or a reduction in their Corporation Tax. It’s particularly valuable in that it can give companies back up to 33 pence in every £1 of R&D expenditure.
You can only claim R&D tax relief if your project meets the eligible criteria and is subject to UK Corporation Tax.
What qualifies as R&D for tax purposes?
A project will only be eligible for R&D Tax Credits if it seeks to make a specific advancement in science or technology - not just within the business but across the field in general. This may be through the development of a brand new product, process or service for example, or the appreciable upgrade of an existing one.
Who can claim R&D Tax Credits?
Companies large and small, in any industry, can claim R&D Tax Credits regardless of whether they’ve made a profit or a loss. However, there are some very strict rules regarding what counts as qualifying expenditure here - and this is where we come in.
At Tax Cloud we are proud of our 100% success rate in preparing, submitting and supporting R&D Tax Credit claims for our clients. Our team has worked with companies from right across the spectrum, from new start-ups to established multinationals. We offer a bespoke service to all our clients, taking the time to assess each claim and its potential for success. Then we will offer advice on how best to put the claim together and how to maximise it too for the very best return.
The Tax Cloud portal itself is a handy interactive tool that allows you to see how much you can claim before being guided through the application process. It’s even divided into two sections - one for businesses and one for accountants - so whether it’s for your own firm or for a client, all claims can be compiled easily and accurately.