Starting a business is never easy. Recent statistics suggest approximately one in ten startups fail in the first year, and by year 5 less than half have survived. It’s never too soon (or too late!) to ask an accountant for advice when starting a business, and before starting up is best. For example, it’s not always best to start off as a company, and you could be missing out on a potential tax refund by assuming it is.
Good advice early on can save tax, accountants fees, and quite a few headaches. Not to mention helping you survive the first year, then year two and so on. A couple of the main reasons cited for startup failures are overspending on advertising, and getting the pricing wrong. So it’s crucial that you have a good pricing strategy and that you have, and stick to, a realistic budget. Of course you will need accurate bookkeeping records from the start to help monitor the spending against the budget, and online accounting is ideal for that. As we help many different types of business, our experience can also help you check there are no flaws or missed opportunities in your plan.
Many of our clients received our free advice and free help to setup a self employed business or company, and register it with HMRC. We even setup and train our clients on online accounting for free. Our range of business startup helpsheets below are written in plain english to help you start a business successfully. If you have any questions please contact us. We are happy to advise anyone looking to start a business, or have already done so.
Business Startup Guides
Go to our Resources page, Business Centre, Business Helpsheets, Business Startup Helpsheets, to find the following business startup pages:
The advantages of choosing a franchise, what to look out for when choosing one and the legal aspects to consider.
- How to Get a Grant
From the realities of getting a grant, how to get one and the pitfalls to avoid.
- How to Raise Finance
A review of all the main ways you can do it and get your bank to say YES
- The 5 Key Qualities Needed to Succeed in Business
Find out what helps make a successful entrepreneur.
- Top Tips to Consider When Starting a Business
The main things to consider when starting up.
- Which Business Structure Should You Use?
A comparison of sole traders, partnerships, Limited Companies and Limited Liability Partnerships.
- Writing a Business Plan
How to do it and a checklist of what to include.
Online accounting software has revolutionised the way accountants provide accountancy services. Businesses should get a better and cheaper service from their accountant by using online accounting software. It makes it easier to do your accounts, both the bookkeeping and then converting the online bookkeeping records into accounts. Read about 10 of the many benefits of getting your accounts online below.
In fact, HMRC will soon make it mandatory to use online accounting software, by requiring quarterly submissions of data. Making Tax Digital is already here for VAT registered businesses. It will soon be required for Income Tax, then Corporation Tax. Don’t worry if you’re not yet using online accounting software. We can help you move onto any one of them that you choose. Such as the free Pandle or the easy to use Xero.
Still need convincing?…
10 benefits of using online accounting software. 1-3:
- Do your accounts on the beach…
Because online accounting software is in the cloud, it means you can log-in to do or view your accounts from anywhere, at anytime. At your customer’s site, in a pub, or even on the beach!
- Let the software do all the hard work…
Import your bank statement, or easily set up an authorised feed from your bank account or Paypal to the secure online accounting software. All you need to do is tell it what each transaction is for. So you don’t need to manually enter anything, but if you choose to do it this way, the software can automatically check and compare your records with the bank statements. There are also free apps that will read images of receipts and invoices and enter the data onto the software for you!
- Advice when you need it, not a year later…
You can give us secure access to your online accounting software. So we can both look at your accounts and deal with any issues. In fact we’ll ask to look at your accounts regularly to see how you’re doing, and offer relevant timely advice.
More benefits of using online accounting software. 4-6:
- We don’t want your records!….
At your period end, we don’t need you to bring in your records. We’ll just log into your online accounting software and view what we need to produce your accounts etc. We’ll let you know if we do need anything e.g. a scanned bank statement. Of course if we do your bookkeeping, we will need some form of records.
- FREE or low monthly charges…
Wave Accounting Software is free, and we all love a bargain, but what’s the catch? Well you might notice some small discreet adverts, but they are tailored to your business, so they may even be useful. Others we also recommend charge a low monthly fee from between £5 and £19, so spreading the affordable cost over the year. Also, there are free trials and no tie in periods, so if you change your mind, no penalties.
- Easy to use software…
You don’t need to be wizz on computers, or an accountant, or even a bookkeeper to use online accounting software. The providers we recommend have designed their software to be so easy you shouldn’t need help with it. But just in case you do, they all offer free support, and being local we are never far away. We’ll also help you get going with it, for free.
Even more benefits of using online accounting software. 7-10:
- Safer & securer than other records…
Your accounts data is stored by the software providers on secured, monitored, and constantly backed up servers. Data security is a top priority, and some providers claim to be as secure as your online banking. Still not convinced? Ask yourself this: How secure are your paper records? – are they kept in a fireproof safe? Do you password protect and backup your spreadsheets? – are they encrypted when you email them? Do you backup your current software data daily? – is the backup stored securely offsite?
- Instant reports for your business…
Each of the online accounting software comes with a bundle of reports so you’re likely to find what you need. So at the click of a button you can view all sorts of things about your business such as what you owe, who owes you, how much profit you made.
- Get off to the best start, not a false start…
By logging into your accounts from anywhere, we can fix any errors there and then. Which means your reports are always accurate, and start off from the correct position. So there’s no need to wait for the year end adjustments from your accountant several months later, we will have already adjusted your online accounting software.
- Not low, NO maintenance bookkeeping…
There’s no need to start a new page, or a new cashbook. No rolling forward of spreadsheets from one year to the next. There are no software updates to buy and load, this is done automatically. And no messing about sending records to and from your accountant, or trying to get software backups to restore onto the accountants’ version. So you just login and go – easy!
How we can help you
We are online accounting software specialists. We’re committed to giving you a better service for less, by utilising all of the benefits of online accounting. Plus we’re not tied to any particular software provider such as Xero, SageOne, or Kashflow, so you’ll get honest independent advice on which is best for your business. If the free one, Wave Accounting, is all you need then why pay for something else?
All of our accounts clients get free help moving to online accounting software, and free help throughout the year. See our fees, or contact us by clicking the buttons below.
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This helpsheet gives you an outline of what you need to do when going self employed, and what it really means. There are a number of advantages of going self employed, but you must also comply with various regulations including the tax law and you must register as self employed with HMRC.
Form of Your Business
When you decide to work for yourself you need to choose which form your business will take. The most common forms of business are:
- Sole-trader – you run the business on your own, usually under your own name;
- Partnership – you and one or more other people jointly run the business;
- Limited liability partnership – a special type of partnership that gives you and the other business owners more protection from creditors;
- Limited company – an organisation that you own and control, which carries out the business on your behalf.
If you start your business as a sole-trader or as a partnership you are legally going self employed.
When you choose to start your business as a limited company you will normally be a director and an employee of that company. You will be employed rather than self-employed, but in practice you will work for your own business.
It is important to understand the difference between being employed by your own company, and being self-employed, as it will affect the tax you pay, and the regulations you have to comply with. This helpsheet deals only with the advantages and regulations of being self-employed.
Tax Advantages Of Going Self Employed
Once you register as self employed you only have to pay income tax twice a year on 31 January and 31 July. This means you can hang on to your money for longer than an employee who has tax deducted under PAYE from every pay packet.
You must make sure you have the money ready to pay the tax when it is due as you will be charged interest on any tax paid late.
If you work in the construction industry you may have tax deducted from each of your sales invoices by the contractor you work for, under the Construction Industry Scheme (CIS). You may be able to reclaim some of the CIS deductions each year when you submit your tax return.
Expenses to Claim
- The cost of any goods or services you use fully for your business (sometimes even if you paid for them before going self employed) can be deducted from your sales revenue for tax purposes. Where an item is used partially for your business and partly for private purposes, such as your private car or home, you can claim the business proportion of the costs against your business profits. However, you must be able to justify the business proportion with evidence such as the miles driven, or space used by the business.
- Capital allowances – if you purchase an item that is expected to last several years, such as a van, you can claim a special deduction known as a capital allowance. The first £250,000 you spend on equipment each year qualifies for 100% capital allowances in the year of purchase. This does not include cars.
- Loan interest – if you take out a business loan the interest paid on that loan can be deducted from your sales revenue. The loan must be taken out to fund your business, rather than a personal loan or credit card borrowings.
- Government funding – if you live in an area in the UK that has been designated as a regeneration area you may qualify for a government funded programme to help people going self employed or starting their own company.
- Charitable support is also available from the Prince’s Trust throughout Britain for those aged 18 to 30 who wish to start their own business.
- Self-employed credit – if you have been registered as unemployed for at least six months you may qualify for a self-employed credit of £50 per week if you start your own business. Ask at your local Jobcentre Plus office for more details.
- Working and child tax credits – You may qualify for these after going self employed. Your tax credit award is based on your family’s joint income including your self-employed profits, but it will also be determined by the number of hours worked by the adults in the family, and the number of children aged under 16.
Your Tax Obligations
Tell the Taxman
When you start your own business you must register as self employed with the Taxman (HMRC). It is best to do this as soon as possible after you start to charge your customers for the goods you sell or for the services you provide. There are a few ways to register as self employed…
- On the HMRC website – http://www.hmrc.gov.uk/self employed/register-selfemp.htm
- By telephoning the tax office on: 0300 200 3504
- By completing the leaflet CWF1: Going self employed and registering for national insurance contributions and tax.
You must register as self employed even if you make a loss from your business. Every partner in a partnership business must register as self employed separately. If you do not register with the Taxman by 5th October following the end of the tax year in which you started your business you may be charged a penalty of up to 100% of the tax and national insurance you do not pay as a result of the failure to notify.
If you’re going self-employed you will need to pay two types of national insurance contributions (NICs) known as class 2 and class 4.
You must complete a self-assessment tax return every year to report the income and expenses from your self employed business and any other income you have to the Tax Office.
Register for VAT
When your sales for 12 months reach the compulsory VAT threshold, you must register for VAT within 30 days.
How We Can Help You
If you’re thinking of going self employed or already have done, it’s never too soon or late to talk to us. We can help you register as self employed with the Tax Office for tax, national insurance and VAT. We can show you how to keep accurate records for your business and complete tax and VAT returns. As your business grows we can discuss tax planning ideas with you to ensure your tax bills are kept as low as possible.