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Five Practical Business Tips Every Startup Should Know
by Startacus Admin
Tom Trainer BSc FCA, Chartered Accountant and owner of Chartered Accountant Online gives us the lowdown on the basic business tips that every startup should know...
1. Bank Account
This is the simplest tip and the easiest one to put into practice. Get a bank account and a debit or credit card used solely for the business. It doesn’t need to be a business bank account, if you tell the bank it is a business account, they will charge you more for it than if you just tell them it is a personal account. Alternatively, if you have a spare bank account that you do not use, then you can use that one for your business transactions.
If you do this, and put as much of your income and expenditure as possible through this account then, come year end, when it is time to do your tax return, you will automatically have a record of virtually all your business transactions in one place on the bank statements, and it will not be cluttered up with all your personal transactions.
You might think "Well I have all my receipts and invoices. My accountant can get all the information from there". Well:
What happens if you lose all or some of your records, maybe the dog eats them or they end up down the back of the sofa only to resurface years later. You don't want to be picking through hundreds of transactions on your personal bank statement trying to work out what each was for, and whether it is business or personal. If you put everything through your business bank account, you won't have to.
Another reason is if HMRC investigates you, and they can investigate anyone, you do not want HMRC going through your personal bank statements: their view is that, if there is some income in your account, and you cannot prove that it's not business income, then it is business income, and they will want to tax it. It could be winnings from a bet, it could be a gift, but if they question it, and you cannot explain it, they could cause you problems.
2. Business Plan
A new business often needs a degree of funding and unless you are lucky enough to have a benefactor, substantial savings or very low set-up costs then you will need to approach a lender of some description which could be a bank, private investor, charity, public body or even crowd funding, and to secure finance you will almost definitely need a good business plan. An accountant can help and not just with drafting the financial forecasting which is essential, but in reviewing the plan, asking challenging questions that a bank or investors are likely to ask, and attend the meeting or presentation with you. When going for finance it is critical that you are well prepared. You won't get a second chance with the same lender.
However, even if finance is not required from a lender a business plan is an excellent tool for a new or young business. It helps collect your thoughts and ideas. It sets out your objectives in writing. It details how you are going to finance the business, as well as expectations for sales, profitability and investment in assets. Drafting a business plan makes you think about issues and parameters you may previously not have considered, such as your marketing strategy and budget. It helps you put in contingency plans, it allows you to set goals and measure and track progress. It is constantly evolving, and should be reviewed and amended as circumstances change. Your accountant is someone who can help you track your business progress against your plan, make suggestions and recommendations. New businesses with a well thought out and monitored business plan are more likely to succeed. You can download business plan templates from the internet quite easily, but if you are unsure which one is best suited to your type of business then it might be preferable to seek advice.
Practical Business Tips Every Start Up Should Know...Continued on Page 2
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