Do you know what you have to do to make your new business start-up a success?
As an accountant, I am seeing more and more people taking the big step of leaving employment and setting up their own business. Often, they are experts in their field, whether this be installing windows or building websites, they can certainly do it well. However, to be successful in your own business you have to bring more to the table.
For your business to be successful it helps to be:
- Good at generating sales,
- Efficient at providing your product or service, and
- Confident in knowing your numbers and profit margins.
It is this third point where I see people get into difficulty the most. Previously, keeping records and accounts was ‘someone else’s job’, now it is yours…certainly until you can afford to bring someone else into the business! But if you do not keep good records how will you truly know when the moment has come where you can afford to take someone else on?
So, what does a good record keeping system look like?
People often ask me if they must use accounting software such as Xero or QuickBooks. My answer is always the same, ”No, use what is right for your business!”
You just need a way of tracking all income to the business and all expenditure from the business, including any loans you make to (or take from) the business. As long as you can do this you will have the basis of a good system. With this basic information your accountant will have most of what they need to prepare your accounts and tax returns, calculate profit margins, monitor cash flows and assess your future business plans. In addition, if you keep it all in order, your accountant’s fee should be lower too!
Here is a simple example of a very basic record keeping system:
|Date||Invoice No.||Customer||Description of work||Total Price|
|12.01.2018||000121||S L Davies||Coaching and mentoring||£383.00|
|15.01.2018||000122||Hot Steps||Equipment for sports team||£55.00|
|Date||Invoice No.||Supplier||Description of Expense||Total Price|
|08.01.2018||12379||Tesco||Fuel for van||£19.06|
|09.01.2018||EX742||B&Q||Nails and screws||£19.82|
N.B. Don’t forget to keep all your receipts!!!
The important point to remember is to keep receipts for everything. If you suspect it has something to do with the business, your accountant can review it at a later date and tell you if it is allowable or not. It is much easier to exclude items than to look for something to include which is not listed.
Clearly, the type of system you use will need to reflect the size of your business, how much time you have available, and your confidence and skills in record keeping. The answer to these questions will determine whether you use a paper-based system, an excel spreadsheet, or professional software. All of which are perfectly legitimate ways of capturing the information you need to help grow your business successfully.
If you are considering setting up a business, or have already done so, but would like a free, no obligation discussion with us to talk about your business, please get in touch We would be happy to give you a call.
Thank you for taking the time to read this blog.