I was digging around in our marketing folder and came across this post that I originally wrote for FreeAgent. The advice still holds true so I wanted to share it here.
In my experience businesses fail because of three things:
- Their records are a mess
- They don’t put money aside for tax
- They want to run before they can walk
So here are 10 top tips to make sure your business doesn’t join the failures!
1. Keep your records neat & tidy
Separate files for
- Money In (sales)
- Money Out (purchases)
- Tax stuff
- Bank statements
2. Understand your tax obligations
- Sole Trader – register with HMRC within 3 months of start up
- Ltd Company – register for PAYE
- Learn the basics about tax:
- Corporation Tax / Income Tax
3. Get paid by your customers
- Be clear about your prices and payment terms
- Ask bigger companies for a purchase order number
- Put your bank details on your invoices
- Send out monthly statements
- Remember… Cash is King!
4. Put money aside for the taxman
- Get a 2nd bank account and link it to your main account
- Remember you may not need to pay tax for 18 months – 2 years
- Know what your tax liabilities are (how?)
- Transfer money each month to the 2nd account
5. Invest in good accounting software
- Go for user-friendly over complexity
- Good records = lower accounting fees!
- How do you know you are making profit?
- Go online – www.xero.com or www.freeagent.com
Part two next week!
Do you have any tips to share with new business owners? Please leave a comment and let us know!