Auditox Accountancy recognises the fact that small business owners face many challenges when establishing themselves in their chosen market. Getting those foundations just right in order to launch and develop a successful small business is just one part of the process. And if you get it wrong, the results can spell disaster for small businesses.
The figures speak for themselves: around 20% of small business start-ups fail in the first year, and half will fail before they reach their fifth year. Many factors contribute to this sobering statistic, but most businesses fail in the early stages because of a lack of funding and capital, a poor business model or infrastructure, and inadequate marketing strategies.
Auditox Accountancy is familiar with this scenario, which is why we offer dedicated accountants for small businesses. With the right guidance and a firm foundation based on a solid, accurate accounting system, you can avoid the mistakes and pitfalls that might otherwise put your business alongside all those other failures in the figures given above.
Before we answer this, it's important to stress that there is no legal requirement for small businesses in the UK to use an accountant. As long as you provide accurate figures for your annual self-assessment tax return, then you don't have to employ an accountant to keep your books in order.
However, financial experts agree that it makes sense to have a qualified accountant to oversee your accounts and maintain accurate record keeping. Auditox Accountancy endorses this wholeheartedly, but we would also like to add that we have a lot more to offer than this.
Accounting and business administration is also time-consuming, distracting you from your daily tasks, especially as your business grows and there are increasing demands on your time.
So, what exactly can you expect from an Auditox small business accounting specialist?
Aside from basic accounting tasks, we can help a small business owner with the following:
When costs and expenditure exceed your income because of bad timing, your business is likely to suffer as a result. Staff or suppliers are waiting for payment, but your clients aren't forthcoming. Eventually, the whole thing becomes a nightmare as you juggle with the available funds and decide who to pay first. It often becomes a case of paying the person who is shouting the loudest, and this is not a good way to run your business.
A qualified accountant will help you to predict the ebb and flow of income and expenses. They will liaise with you to arrange sensible strategies to manage your cash flow better and to create a spending plan that ensures that you always have money in the bank.
Launching a business can be an exciting time, but it can also be a roller-coaster of nerves and anxiety. This is your dream, and it's only natural that you are enthusiastic about it as well as worrying about the prospect of failure. You have a great idea, but you need to know that it will earn you money. Investors and lenders need convincing that their capital is safe in your hands.
Auditox Accountancy small business specialists will go through the fine details with you and help you test your idea. They will work with you to draw up a convincing and workable business plan, identify any costs involved, and create revenue forecasts.
A qualified accountant with experience in business finances will know the best lenders to approach, and they'll help you to sharpen your pitch to increase your chances of success.
When starting your own business, it is always better to open a separate bank account for your business, even if you are a sole trader. This should ideally be a business bank account as this looks more professional.
All business transactions should take place here rather than in your personal account as this will keep your financial information neat and tidy, making the accounting process easier.
Before going ahead, small business owners must decide on a legal business structure. Your dedicated Auditox accountant will help you with this, as it is important to get this right from the start. You will need to choose one of the following models:
You run your business as a self-employed individual, keeping the profits after you pay tax on them. You are also personally responsible for any losses your business makes. This group includes freelancers, gig-economy workers, and self-employed tradespeople.
This is an arrangement between two or more people who agree to share responsibility for a business, including profit, loss, costs, and expenses.
This is similar to the category above, but one or more partners are protected from liability for any loss which is limited to the amount they contributed.
The business is a separate legal entity to the owners (shareholders or directors). These are registered with Companies House and information about your business is available for anyone to view.
These are the most commonly used structures in the UK and the first two on the list are the simplest and most straightforward to establish. Sole traders (or freelancers) and each business partner will need to inform HMRC when they begin trading and are expected to complete a self-assessment tax return for each tax season.
Limited partnerships and companies are more complex to set up, and it is wise to seek guidance from a certified public accountant to ensure that your paperwork is completed accurately. You will need to inform HMRC and register your small business with Companies House. Your accountant will help you to do this correctly and get you up and running.
Aside from this, we will help you to decide on an accounting system and set up business bank accounts.
Not all debt is equal- there's good and bad debt. Your accountant will help you to know which is which. They will also seek out the best borrowing strategies, finding the most flexible in terms of repayments and selecting those with the lowest interest.
Your accountant will provide advice on whether any cash should be invested or used to pay off outstanding loans. This will be done by analysing your debt structure to tailor a strategy that suits your business.
Auditox Accountancy will guide you on the best way to become a successful business.
Small business owners can sometimes become overwhelmed with the sheer volume of tasks and it's not always easy to know which ones need tackling first. We help you to learn which ones are more important, then assist you in setting goals and prioritising your workload. This will involve a business plan and strategy that we'll help you to create.
A sound business plan will impress investors as well as keep your day to day business ticking over.
If you use accounting software, your dedicated accountant will set up the dashboard for you. This will help you to establish a set of key performance indicators. These are especially useful as they allow you to measure the success (or otherwise) of your business at any time.
If things are going well, then keep going. If the KPIs show that you're moving in the wrong direction, then your accountant will work with you to find a solution and reset your KPIs accordingly.
Establishing a credible and workable budget can take up much of your valuable time. But without one, your business is at serious risk of failing. Estimates and inaccurate figures are worthless and will result in errors, misunderstandings, and a potential loss of revenue.
Auditox Accountancy small business accountants will help you to create a sensible, accurate budget that will provide you with a clear picture of just how much you can invest, or set your own income.
Late payments are an annoying fact of life. Clients often need chasing, but this takes time that you don't always have. But if you leave it, then your finances are put under extra strain.
Your accountant can take up this burden, sending invoices using an automatic system that reminds clients when the bill is due or overdue. And if emails remain unanswered, they will chase payment by telephone.
Your Auditox Accountancy small business expert will advise you on all tax matters, including how to claim tax back from business expenses. They will also use financial reporting to predict tax liabilities.
Getting your tax right is a balancing act: you don't want to pay too much, but if you pay too little then HMRC will be on your back. Auditox Accountancy will help you calculate exactly how much tax you owe and find ways to reduce your tax burden.
If you employ even one person, you will need to set up a payroll and register as an employer with HMRC to get your PAYE reference number. We can offer help and advice with this as it can be a complicated process, especially if it's not set up correctly in the first place and you don't keep an accurate record of payments.
Accurate business accounts are essential to any business venture. All business transactions must be recorded, ideally separate from personal ones.
An Auditox Accountancy small business accounting specialist will guide you as to which accounting method to use and help you to use this to manage your income and expenses, accounts payable, bank statements, sales, cash transactions, etc.
Recording transactions is vital to providing accurate business financial statements. These are not only used to provide HMRC with the correct figures for each accounting period, this financial information can also be used for planning future growth, expansion, and investment.
Few people realise that most accountants will offer sound business advice on a wide range of subjects.
Auditox Accountancy ensures that its staff have a wide experience of all kinds of businesses and will have encountered many of the challenges and problems that small businesses might face. They will listen to your ideas and offer unbiased, specialist advice in your industry, giving you the edge over your competitors.
This might cover such subjects as setting up an online store, to finding the best office rental space.
Basically, they will offer advice to help you keep control of your finances, plan for the future, reduce any risks, comply with regulations, and save you money.
Good quality small business accounting software provides you with an excellent tool for a successful and efficiently run business.
Most accounting software isn't designed to keep business transactions and personal transactions separate, but your accountant will guide you on how to deal with this. They will also work with you to maximise the accounting features within the software to get the most for your small business.
A small business owner can use accounting software to keep track of sales, chase payments from customers, check a purchase invoice, look at expense management, examine the balance sheet, and for receipt scanning.
Accounting software can sometimes be cloud-based, allowing real-time viewing of your financial position. Sales, income and expenses, payments, and purchase data can flow between your books and the bank without the need for transcription. With cloud-based software, business owners can check their cash flow and financial statements in seconds, allowing multi-access to this data, so investors, accountants, or business partners can view the same data simultaneously.
If your annual turnover is £85,000 or more, then you must register for VAT. Under new rules, VAT-registered UK businesses are required to keep digital records and file their VAT returns using the Making Tax Digital system (MTD comes into effect for all VAT registered companies on April 21 2022).
Auditox Accountancy will steer you through this process to get your VAT figures sent in good time.
They will also advise you as to whether it is beneficial for you to apply for VAT even if your turnover is below the threshold. At the very least, having a VAT registration on your business stationery adds to your credibility and professional image.
Also, VAT-registered businesses can claim VAT on all goods and services they buy, as long as it is balanced against the VAT you charge and the VAT payments you receive. You can claim a fair amount of VAT if you invest in IT, machinery, or equipment.
If you have been in business for more than four years, then you may be able to claim back VAT for that time, as long as you have kept accurate records and VAT receipts for that period.
Auditox Accountancy will always seek to offer the best advice to boost your chances of success, and if we believe that you will benefit from registering for VAT we will be on hand to deal with the extra paperwork.
Small businesses are particularly vulnerable, especially so in these uncertain times. And when you are self-employed you can feel isolated and exposed in the business world.
Auditox Accountancy completely understands the courage, dedication and determination it takes to create a successful business. This is why we don't just help with accounting basics, we are with you each step of the way, guiding you through the pitfalls and difficulties of running a business.
We help all small businesses, whether sole traders, partnerships, or limited companies, to get their ideas up and running. We guide you in choosing the best accounting system and structure for your business. We recommend the best accounting software and help you set up a dashboard that's tailored for your needs to get the most out of the accounting features. We produce accurate financial statements for planning, strategy and investment. We help you manage your money, advise you on tax, and deal with the intricacies of the payroll system.
In short, we offer the complete accounts package that's perfect for you, whatever stage you are at in your venture.
After all, your hopes, dreams, and livelihood are all bound up in this. You need the very best financial advice and support to ensure that your business will stand the test of time. Auditox Accountancy will provide this, as well as dealing with all aspects of accounting, leaving you to run things your way.