This is the third instalment in a series of short articles about how to set up your own business, with real-life tips and experiences to help others achieve the “boss-free” life.
This month, we’re thinking about finance.
Now if you’re anything like me (a little risk-averse), it’s tempting to be as self-sufficient as possible in the early days of running a business to minimise expenditure and therefore risk. However, there’s one area where it’s (in my opinion) essential to hire a professional: finance.
There are some things you can learn yourself without too much trouble, such as marketing, sales and website design (yes, really!). But finance isn’t like that. It’s a hugely complex area with constantly changing regulations, and, most importantly, fines for mistakes and missed deadlines. A good accountant can also provide invaluable advice about company structure and getting your business off the ground.
Unfortunately, this is something I failed to do when I started my business. I telephoned a number of accountants in my area to get an idea of what they could offer and what they’d charge. I found the fees to be pretty similar, but one chap really took the time to talk through possibilities with me and shared some stories of his “satisfied” clients. He won me over and set up my business for me. All went well until it became time to submit the first year’s accounts, which he did on deadline day, which I thought was cutting it a bit fine. The following year he missed three deadlines, meaning I got fined. He paid the fines, so I decided to give him one more year. I became very proactive, and sent him all the info very early plus a number of reminders to please do it. Did he? No – another deadline missed, another fine incurred.
At this point, I decided to change to another accountant. Chartered Accountants have a code of practice about the time allowed to pass on client details to new accountants, and at this point I found that mine wasn’t a CA at all. Cue huge amounts of my wasted time trying to sort out the mess.
Here are my tips for working with an accountant:
Most companies need to accept credit cards these days, but many people don’t like putting their details into websites. Although they’re expensive, PayPalare a huge benefit as people don’t have to give their credit card details to you. You only pay when you sell, but the percentage is quite high compared to others in the market. Personally, I think the trusted brand name is worth the cost.
Keep a simple list of all your sales and expenses – your accountant can advise on the best format, so that you always have a snapshot of your business situation at the time, and can pass the information easily to your accountant when required.
You don’t need to keep paper receipts – HMRC accept scans, so get a scanning app on your phone, scan as you buy something (scan both sides if there’s info on the back) and have a robust filing system. Mine is as simple as a spreadsheet and I name each receipt scan after the row number on the spreadsheet the receipt refers to.
To close, finance is best outsourced, to a reliable and reputable accountant, and it’s easier to let them take complete control. Be sure to keep your own records to verify things, because if there are any mistakes, it’s you who’s liable, not the accountant.
*Neil Shorney is Principal Training Consultant at Navanter Ltd.