Launching a new start up business is an exciting and challenging time for anyone but as well as your idea and all the ways to promote it, one of the most important aspects of running your new business is the finance.
This is often the least popular aspect for anyone setting up in a business and the first thing to get outsourced once the business is bringing in money. However, if you are just starting out and doing the finances yourself, check out our quick guide to accounting.
1. Get a Business Bank Account
Once you have established your business and registered it, you will need to have a separate bank account for your business. One of the easiest ways to make accounting for your business more simple, is to separate your business income and outgoings from your personal banking.
Depending on how you have set up your company, a separate bank account could even be mandatory so make sure you look into all the requirements. Set up a business bank account but make sure you get the best deal so check interest rates and fees before signing up.
2. Keep Records of Your Expenses
Once you start up your business you need to keep records of all your financial transactions – this includes keeping copies of receipts, invoices, sales and purchases which are business related. You can keep them electronically by scanning them into an accounting software system so you don’t need to have boxes of paperwork, but you need to have records.
Getting it right from the beginning will make it far easier when you come to complete a tax return for your business at the end of the financial year. If you are not great at keeping records then you should invest in a bookkeeper to do the work for you.
3. Sort Out Your Bookkeeping
Bookkeeping is just keeping the records of all your transactions so you can potentially do this yourself using an online software, or you can pay a bookkeeper to do it for you. Some new businesses look to do this themselves but many look for a suitable accountancy service and software
4. Sort Out Payroll if Required
If your new start up business involves employing staff in any capacity then you will have to set up a way to pay them and how that will work. You need to be able to track how much you are paying each person so make sure this is all factored in to any finance system which you set up.
5. Do You Need a Payment Method?
You need to decide how you will receive money into the business – via invoicing, BACs payments or whether you need some kind of online card payment system for sales. Once you have decided you will then need to get the payment system set up properly for your business, so that customers can pay you easily.
6. Register for Tax
As a business owner you need to look at your tax requirements and register for the correct obligation. The kind of tax you will need to pay depends on how you have set up your company so you need to seek advice from the tax department as soon as possible to make sure you meet all of the legal requirements.
You may like to Read: Advantages of Tax Return Online
7. Have a Business Growth Plan
As part of your accounting you need to make sure you know what your numbers are in terms of income and outgoings. Without these you have no way of knowing how well or badly your business is actually doing.
If you were to seek financial help in the form of a business loan in the future, perhaps to support expansion plans for your company, you will need to prove your profit and loss and future income predictions so having these plans and figures to hand will support your case.
8. Keep Your Records Updated Regularly
It’s all too easy when you are starting a new business to just put your receipts into a box or a drawer and plan to come back to them later. While you focus on dealing with customers and getting out there to promote your business, your financial records are left untouched for months and months.
The last thing you want as new business owner is to get to the end of the tax year and have to sit and plough through a whole year’s worth of receipts to get your books up-to-date and enable you to complete a tax return.
Get into the habit of recording all of your receipts monthly – put a date in your diary where you block out a day each month to focus on your finances and you will be thankful when you get to the end of the year and find it very simple to complete your tax forms.
Once you have your figures to hand you can use them to predict future income and plan business growth. Good accounting will help you to see where you are spending money and where the most money is coming in from – which gives you a great foundation from which to build your business.
Setting up a new start up business is a really exciting time but it’s important to treat it as a business, understand all of the figures and the legal obligations around tax so that you don’t get caught out and end up with a hefty tax bill you weren’t expecting.
Looking after your finances might be simple as your business gets off the ground but it is likely to get more complicated as you take on more customers, staff and sales, and the business starts to grow bigger so make sure you have an accounting system which can grow with your business.
Getting the numbers and systems right from the beginning will set you up for business success and help you to see quickly and easily where your business is working, and where you might need to make some changes to keep the profits coming in.