At the beginning, you will be offered plenty of advice and support to set up your business enterprise schemes often run seminars and give out free software to help you manage your accounting, for example. Local mentoring schemes can provide a useful way to make contacts with other people who have set up in business and excellent chances to network.
When it comes to tax and accounting, however, you may want to enlist the help of specialists. Particularly if your business has a large turnover or complicated finances, using an accountant can make a world of difference. While some people are put off by the thought of paying fees to accountants, the costs involved can actually be relatively low, and often your tax bill can be significantly reduced. Taking on an accountant may save you money as well as a lot of hard work! Some offer additional services, such as advice and auditing that could help to make your business more profitable.
If you run a business you are legally required to keep records of certain things. For example, if you employ staff you will need to keep PAYE records, and VAT records if you are VAT registered. All businesses must submit a tax return every year you can now do this online. If you have an annual turnover of over 5.6 million you are legally required to have an annual audit, which must be carried out by a qualified and registered auditor.
Choosing an accountant is a matter of knowing what you want from your relationship, and finding someone whom you trust to do the best job. While personal recommendations from family and friends are a frequent reason for choosing an accountant, you may also want to consider whether they have particular experience in your sector, how much the practice charges, and what additional services they may be able to offer you.
Qualified accountants must be registered with one of the professional bodies that regulate them:
The Institute of Chartered Accountants (in England and Wales, Scotland or Ireland respectively) www.icaew.co.uk The Association of Chartered Accountants www.accaglobal.com Chartered Institute of Management Accountants www.cimaglobal.com
Tax is an immensely complicated subject, but the Inland Revenue do attempt to make it as easy as possible to understand the basics. They offer a starter pack for new businesses, and a helpline for the newly self-employed. Check www.hmrc.gov.uk for full details.
New accounts and special offers crop up all the time, and it may be worth your while to change banks. You can also point out the competition's rates when negotiating terms with your own bank, often these are flexible and a bank may offer you improved rates if you hint that you are considering taking your business elsewhere. Stay on top of bank charges, and if any show on your account that you do not understand, contact the British Bankers' Association for more detailed explanations on charges and interest: www.bba.org.uk
There are ways to minimise charges and run your account as smoothly as possible:
1. Automate Your Account
If you have frequent customers, you could encourage them to make payments by direct debit or standing order. The more electronic payments you have, the fewer charges you will incur. The same goes for your expenses - try to use automated services for all your regular payments.
2. Bank Online
If your bank account has online facilities, make use of them. It is both more efficient and cost effective. Larger businesses may be offered PC banking, which involves special software being installed on your accounting computer, so that your accounting system is linked directly to your bank.
If you find yourself struggling, for example if cash is short and it's becoming difficult to meet the repayments on your loan, the best course of action is to visit your bank and renegotiate your account. You should do your best not to exceed any overdraft limit that has been agreed, and stick to the terms of your account. If you break the terms of your agreement there can be stiff penalties, such as referral fees and administration costs.
If you accept a cheque which then bounces, you will lose the money owed to you and also incur a charge. Be sure to write the number of the cheque guarantee card on the back of all cheques
You should also keep your records scrupulously accurate - noting all transactions and crosschecking your records with your bank statements. Not only will this mean you can query any discrepancies, but it will make filling in your tax return much quicker and easier!
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