Guest Blog by Flow Online Accounting Limited
If you are about to embark on a new business venture then there is something that you need to know; you are going to be extremely busy. As a small business owner you will have a million and one things to manage at any given time. These aspects of running a small business will range far and wide from controlling stock, marketing your brand, hiring the right people to creating and maintaining relationships with your customers. The bottom line is that you will a lot on your plate with all the factors that building a new business encompasses, but what a lot of small businesses really struggle with is staying on top of the financial side of their operations.
With this in mind, here is a list of some of the main accounting issues small businesses come face to face with when they are starting up.
We find that managing cash flow is the number one problem for small businesses and start-ups. Having enough money in the bank to cover your costs and keep your business alive is vital for all businesses, but a lot of companies can find this difficult. It may be the transition from having a steady job where you have a regular wage coming in, to now having to carefully monitor each outgoing (including how much you pay yourself) and chasing payments from customers – it can be a tough change to adjust to.
Having customers who pay up front or by the agreed time is an absolute godsend and will help you keep a steady cash flow.
Although many new businesses struggle with this, there is plenty of help available. Using cloud accounting services to have access to real time information of your accounts can really improve your money management and decrease the amount of time you spend worrying about your cash flow.
Tax & VAT
Quite a popular phrase we come across is “there are 2 certainties in life; death & taxes”, and whilst this is a pretty grim outlook, it is the truth. However, many businesses find the prospect of tax and VAT very confusing. They are unaware of certain methods that they can implement where they could pay less tax or sometimes they are paying too little tax and will face a big bill from HMRC which can knock them for 6. Similarly, some businesses qualify for the flat rate VAT scheme and this is not something everyone knows about, which can save your company significant amounts year on year.
At Flow, we have actually developed a free to use App which includes tax calculators to help freelancers and small businesses calculate what tax they should be paying; of course seeking professional help too will save you more money in the long term, but the App gives you quick and easy access to very helpful information.
(Related: get your free guide to VAT reporting today)
When you start a new company you are not going to be a HR or Payroll whiz, and figuring these things out as you go along can be very difficult. Do you know about HMRC’s RTI (Real Time Information) process? Do you know what tax code to put new employees on? How will you go about paying all of your employees?
All of these problems and many more become very time consuming for small businesses – especially as they grow – but with the right guidance and procedures put in place, they don’t have to be an issue for you. Many accountants offer payroll assistance, and cloud bookkeeping software typically has this service integrated to make it easier for you.
Keeping On Top Of Expenses
Business expenses can be a real hassle at times. “What was that £57 bill I used the company card for?” or in a lot of cases keeping track of your receipts can be extremely hard. Yet expenses are very important for small business to process and keep on top of.
Luckily, we are in an age where you no longer have to store all of your receipts in a box and file them away so they can be processed at a later date. Companies such as Receipt Bank make keeping on top of your expenses so much easier. All you have to do is take a photo of your receipt, upload it and add the details and then it is logged and backed up over the cloud; simplifying your filing and expenses procedures in the process.
Finding The Right Accountant For You
Perhaps the most important issue however for small businesses is finding the right accountant for them, and early enough in their business life so that they can avoid all the mistakes above. A good accountant will be able to advise your business on all the issues above, and many more, to help you to grow. Some small businesses may think that they are too small to justify the cost of an accountant – but if they fail to get a qualified professional on board at an early stage then you will pay for it in the long run.
Also, your accountants don’t have to cost an arm and a leg. Using cloud accounting packages has revolutionised the accounting industry and working with your accountant no longer has to a scary expense that is paid by the hour. Many accountants, including Flow, now work on a monthly payment plan which lowers the overall costs and means all services are inclusive, depending on your package; effectively making accountants an extension of your business for a small monthly retainer.
For any more information on how hiring an accountant can help your business grow, please visit http://www.flowonlineaccounting.co.uk/online-accountants.
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