Accounting and Bookkeeping tips for Start Ups
Having been involved in a number of start-ups myself with varying degrees of success and failure, yes you can fail in business too, I know from first-hand experience that resources can be very tight in every aspect of your business. The image of the entrepreneur with head in hand and papers flying all over the place isn’t totally out of place, even if you have deep pockets full of cash. Starting a new business is also akin to having a baby, your business will need lots of nurturing and there WILL be unexpected and unwanted things that happen particularly as there is huge pressure to get new clients for your business.
So what can you do in the area of accounting/bookkeeping to reduce your stress and get organised, all the tips below are HMRC compliant.
- Make sure to keep all your purchase invoices. If you lose this type of stuff, vast majority of people do lose paperwork like this, then make sure to take a picture of your invoices with your smart phone as soon as you get them. Just ensure that you have all the details on the purchase invoice clearly recorded, particularly VAT number and details of what you bought and when. Once you have done that you can download these picture to your computer/laptop when you back up your phones data. Create a file which you can give to your accountant at the end of the year/month/qtr.
- Do your banking online as this will save you a lot of hassle. With online banking you can download your bank statements in CSV format, up to date accountants love it if you give them your bank statements in CSV format as this is essentially an excel document that can be manipulated. Make sure to download your bank statements in this way at the end of every month, store it on file and give to your accountant at the end of the year/month/qtr.
- Produce your invoices and email them to your clients, it’s easier and faster. Keep your sales invoices on file and send them to your accountant at the end of the year/moth/qtr.
These three things above will mean that you can have your year-end accounts produced and submitted to HMRC and or companies house if you operate using a limited company. This will give you the breathing space to focus on sales and marketing as well setting up processes within the first year. You could operate in this way for years if you want, however if you are looking to grow then it’s better to have an accounting software package that keeps all your records for you. The important thing here is to have the initial set up of the accounting software to reflect the way you do business yet be flexible enough to allow you to grow. I will be writing a separate blog on this subject later in the year. If you are a small business with few transaction then the above should not take you more than 15-20min per month.
In addition to the above you should look to create the circumstances that will help you to approach your bank for an overdraft or a bank loan, very useful in your business growth phase. If you do not have the following at the very least you will likely get a straight refusal from your bank.
- The money coming into your account should be at least £1,000 a month
- At least two active direct debit
- At least two standing orders
You need to have all three in place for three to six months at least before your bank will consider giving you credit for your business.
Your comments below are welcome. Please feel free to share personal experience. If there is a specific topic on which you would like me to write a blog please do let me know, you can email me on firstname.lastname@example.org
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