Once you’ve selected a name for your business and worked out what it is you’ll sell the hard work really begins. Understandably the urge will be to throw yourself into making money as quickly as possible but your future success relies on the foundations you lay before you start your business.
We’ve listed our top ten tips you can’t afford to ignore!
- Decide your trading status. Limited company or sole trader? There’s information everywhere detailing the pros & cons for each but if in doubt speak to a professional. The important thing to remember is that as a limited company director you have more legal responsibilities but greater protection and, some say, a more professional presence. However there are many successful businesses run by sole traders and this is an ideal starting point while you make up your mind. The most important thing is that you register with HMRC so as not to incur penalties!
- Should you register for VAT? If you are likely to be purchasing stock or materials you may want to register so that you can reclaim the VAT you have been charged by suppliers, however remember that you must then charge your customers VAT, will that make you less competitive that other traders in your sector? Again VAT registration is not a decision you need to make on day one but there are benefits in registering voluntarily before you hit the VAT threshold.
- Consider your brand We don’t simply mean choose your logo’s colour but decide how you will answer business calls, what information will you put on your email footer, will you have a twitter, facebook, instagram account and how will these link to your website? We don’t suggest that you pretend to be a multinational conglomerate but to inspire customer confidence you do need to appear professional and a consistent brand image is an important step in this process.
- Decide your terms How much do you plan to sell your product or service for? In what circumstances would you offer a discount? Will you have a returns policy? These are all vital questions and along with your projected outgoings will allow you to calculate estimated profit margins. This is essential to work out how much money you will actually make from the business. After all not many people do it solely for the love!
- Plan your processes When someone wants to buy your product or service how will you record this? What types of receipt or invoice will you need to generate and how will you deliver this to your customer? Do you need to post a product or schedule in time to deliver your service? Make sure that you’ve tested all scenarios so that when the first customer approaches you can at least appear to have sold your services before (even if you’re knees are knocking and you’re punching the air in delight!)
- Create standard correspondence Most businesses need to communicate with their customers in writing, whether sending a quote, invoice, asking for feedback etc. Spend some time writing standard templates you can pull from in the future, it not only saves time but also ensures a consistent approach to all customers.
- Diarise your deadlines All businesses have a reporting responsibility, although the volume is greater for those VAT registered or trading via a limited company. Make a note in your diary at the start of the year to remind yourself when deadlines are approaching to avoid costly HMRC penalties!
- Organise your paperwork A very simple filing system can make all the difference when managing your business. You will need 1 box file to hold company certificates, contracts, insurance schedules etc. 1 lever arched file for all HMRC letters. 12 folders or envelopes to hold each month’s expense receipts. A spreadsheet or accounting software to record money spent and money received.
- Work with an expert Find an accountant you can talk to in non-technical terms, someone who knows their stuff and who will allow you to ask unlimited questions without charging you for their time. You need to build a relationship with someone you can trust with the numbers while you get on with doing what you love… earning money!
- Stop the clock It is important to give 100% effort to your business during the start up phase, but it is equally important to have time away from the business. Your family and friends will want to spend time with you and will no doubt be able to offer constructive advice and feedback. You will be better focused and more productive with regular breaks, rather than burning out before your first anniversary!
Esther Guy and Natasha Baker run accounting4contractors, providing friendly jargon-free accounting support to individuals running their own businesses. With fixed monthly fees and free accounting software they love nothing more than getting to know their clients’ businesses so that the advice they give is tailored, compliant and tax efficient.
For a friendly no obligation chat call today on 01737 652 852 or find out more at www.accounting4contractors.co.uk or www.facebook.co.uk/accounting4contractors.
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