Starting a new business is a huge learning curve, and you will often be so focused on selling your product or service that you may overlook important factors such as accounting and bookkeeping.
You may also feel as though you don’t have enough cashflow in the beginning to take on an accountant, but setting everything up correctly from the start will help you to avoid any issues later on.
If you are in the early stages of starting a new business venture, make sure you have given some thought to these 6 things…
1. Save enough money
You might be relying on a bank loan to finance your startup, but it’s always a good idea to have some savings in the bank to fall back on in case of an emergency.
Financial analysts suggest having at least 3 months’ operating expenses saved before you start a business but the more you can squirrel away the better – just in case your first few months don’t quite go to plan.
2. Use accounting software
It can be tempting to set yourself up with a quick Excel spreadsheet to keep track of the money going in and out of your business, but it’s easy to enter a wrong formula and realise further down the line that you haven’t been keeping track of your finances properly.
Using a cloud-based accounting software will allow you to be confident that you’re on top of your finances and know where you stand each month.
3. Keep accurate records
It’s important to keep your invoices, statements and receipts organised – keeping well-organised accounting records will save you time and also help you to ensure you are HMRC compliant.
Set up an easy to use system and make sure you (and your business partners if applicable) know where everything is.
4. Create a budget – and stick to it!
Creating and maintaining a reliable and realistic budget will help you keep your finances in check and make sure you stay on track.
Try and stick to your budget as closely as possible in the early days so you don’t get any nasty surprises.
5. Open a business bank account
It’s important to keep your personal finances separate from your business finances, even if you are a freelancer in the beginning.
Having a business bank account avoids you dipping into your business funds and any complications with having personal direct debits going out of the same account as business expenses.
6. Hire an accountant
Hiring an accountant from day one will allow you to focus on what you’re good at. An expert will know what to look for, how to make sure you meet any requirements set by HMRC, and will even know how to save you money.
You don’t have to employ someone in-house, an outsourced accountant will be able to look after your finances for you.
If you would like any more accountancy tips or advice, feel free to contact us here at Magpie Accountancy.
