Not everyone has the guts to start a business, and although it’s incredibly rewarding it’s far from easy! Whether you’re running an established business, beavering away in startup mode, or your business so new that it barely feels like a business at all… We’re uncovering the essential questions you need to ask yourself about your business (and how these impact on your accounting).
Why did you start your business?
a) You wanted freedom
The desire for financial freedom and a better work/life balance is a motivation for many startups. Tired of the constraints of your 9-5 and you’re ready to be your own boss! However, it’s essential to identifying what you need support with (see our blog on whether you need an accountant). Understanding your limitations from the get-go will prevent unnecessary stress.
b) You were pursuing your dream
Sometimes your passion becomes your work… Some even come out of retirement to create a business. Now, the important thing to remember here is that you’ve probably invested your savings to make this happen. Even if you love what you do managing your finances is a necessity. The good news? You don’t have to go it alone, you can bring a professional in to help you.
c) It was a necessity
If you work in an industry where freelancers are the norm, or your current/ex employer requires you to invoice from a limited company you may have “accidentally become a business owner”. This doesn’t need to be a bad thing, but it’s also essential to be wary or organisations that make you operate through IR35 (give us a call if you need some advice on this).
d) For fun
Running a business doesn’t have to be full time, you might be making money from your hobby on the side of your day job. In fact, it’s so common that from April 2017 two new tax allowances of £1,000 a year will be introduced for those who earn extra income through “occasional jobs” such as selling online or baby sitting.
Where do you see yourself in the future?
Your business structure: Are you/ will you be operating as a Sole Trader, Limited Company, LLP or Partnership? You need to identify which business structure fits best with your business aspirations, look at the pros and cons of each and select which one is right for you. It’s also important to be aware of the tax implications for different types of businesses (if you need some help with this don’t hesitate to get in touch).
Future employees: If you’re in startup mode you may not have given this much thought. However, identifying whether you want to employ someone later on can help you decide on a structure. Or, if you’re employing someone soon you’ll want to get your payroll sorted.
Business survival: Cash Flow can be a killer, and although it’s not particularly exciting you need to have an accurate cashflow forecast for the next 3, 6 and even 12 months (otherwise there might not be much of a future for your business).
Do you have everything you need to succeed?
This very much comes down to two things - Money and expertise.
If you’re in startup mode or your business needs a financial investment what are your sources of capital? If you’re uncertain an accountant can help you weigh up which is best in terms of tax implications and ongoing financial management.
You’re probably great at what you do, but no-one is an expert at everything! Starting a business is an achievement in itself so don’t be afraid to get assistance with areas you’re not familiar with or just don’t have time to manage.
Here at the Chichester Accountants we’re here for business owners like you. Our accounting and bookkeeping solutions are completely tailored and scalable to give you exactly what you need when you need it! Get in touch on 01243 532490 or email email@example.com to find out more.
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This blog was written by Monica Jervis, small business owner, founder of the Chichester Accountants and qualified accountant. If you’ve got any questions please get in touch on Twitter, Facebook or Google+.
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