When you start a new business, there are a thousand and one things that need doing and everything takes priority. The main focus for start ups is on promoting the business, as without sales there is no business. However, finances are also important, especially if you produce invoices for the goods or services you sell. With this in mind, the following is a brief list of some of the basics which start ups should make sure are covered:
- Open a business bank account; for a limited company, it is pretty much compulsory, but for a sole trader or partnership, it is a good idea to keep business transactions together.
- Keep supplier and customer invoices together and split between paid and unpaid, so you can (a) forget about the paid ones, (b) make sure you don’t neglect suppliers who may withdraw or stop credit, and (c) keep on top of customers and make sure they pay you.
- Write on supplier invoices how and when they were paid. It is a quick and simple process when you make payment which is good practice and may save hours in the event of queries.
- Keep on top of the paperwork. Do NOT let it slip from days to weeks to months; the longer you leave it, the bigger a job it will be and the more you will hate it!
- Keep a track of your business mileage; again it is not a big job, and is often one of the most important things which gets forgotten when it is time to claim for expenses. The odd trip here and there may not seem like much at the time, but will add up and potentially save you tax.
- If you must pay suppliers from your own funds, either by cash or personal credit card, make a note, so you know what’s happened when you look back.
- Finally, see an accountant. Of course you would expect me to say this, but the opportunity to plan and minimise tax bills may disappear if you wait until AFTER your year end.
One final tip: If you are starting a business from scratch, typically a service business, and find you have time whilst you are building your client base up, get your systems sorted. In 6 month’s time when you are rushed off your feet and working long hours, you will be glad you made the initial investment.
If you need any help, please do not hesitate to contact us.