Essential Accounting Tips for Start Ups – Part 1

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:

  1. Their records are a mess
  2. They don’t put money aside for tax
  3. 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:
    • PAYE
    • VAT
    • Corporation Tax / Income Tax
    • CIS

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!

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