Month: May 2012

Running Your Own Business and Managing Accounts for the First Time

If the idea of being your own boss seems increasingly attractive in these trouble economic times, you’re not alone.  Surprisingly large numbers of individuals have taken, or are taking, the leap into self-employment.  It seems odd, when the economy is contracting, but it is often the case during recessions that the number of self-employed and new small businesses rises.  Small businesses are now leading the way in job creation; with more people facing job insecurity and redundancy, for many the only choice is to create their own job.  The idea is attractive at any time, being your own boss means freedom to take control of a big part of your life.  However, not all businesses will succeed and one crucial area that causes businesses to fail in the early days is poor planning, particularly of the financial kind. So what are the key tools to help you overcome the obstacles?

Basic Planning Matters

  • Planning can seem like a very boring part of preparing to go it alone.  However, it’s possibly the most essential part of the process.  Planning every aspect of your business from your marketing strategy to finding premises is absolutely necessary.  Planning your financial arrangements should also figure highly on your list.
  • Financial planning should include obvious, and frequently overlooked, matters like invoicing software and accounting software.  Customers will need to be billed and you need to be clear how this is going to work.  Simple paper invoices are fine; they are also time-consuming to produce and track. Invoicing software makes the process straightforward – and should be fool proof.
  • An accountant is an absolute must for any business or self-employee.  Tax and VAT regulations are complex and ever changing.  Regulations that apply to your company will vary depending on its size and could easily change as you grow.  Working with a professional from the start will ensure you stay on the right side of HMRC.  When choosing an accountant consider the following.

Finding an Accountant

  • Do find an accountant before, or when, you start trading.  It’s perfectly understandable that many small firms put this off.  Why pay for a service before you’re earning?  The simple answer is that you may not be aware of what records you need to keep.  Tax authorities recommend keeping records for at least six years.  An accountant can guide you through this from the start.
  • Contact a number of accountants and ask some questions.  Different firms operate on different charging structures.  Some will list charges for each service – which can allow you to pick and choose what you need.  Others will agree a service level for a fee – payable quarterly or monthly.  This may suit you if you will have a high volume of accounting work that needs to be dealt with frequently.
  • Find out what prospective accountants recommend in terms of accounting software.  Software comes in a range of options, including cloud versions which are extremely flexible and versatile.  Using online accounting software means that it will not matter what software your chosen accountant uses – they will be able to access your records online as and when required.

As your own boss you’ll be responsible for far more areas of your business than the actual work you do to bring in the cash.  While you don’t need to be an expert typist to type a letter, or a world class receptionist to answer the phone, areas such as accounting need specialists to be involved.  Don’t consider cutting corners on this particular aspect of your business but shop around carefully for a service that suits your specific needs and business.  With the right accountant and the right accounting software, making ends meet will seem effortless.

Simon Wilson blogs about small business issues and challenges, focusing on everything from accounting software to how small businesses can use social media.  When he’s not online Simon enjoys playing cricket and is a big movie fan.

Be Prepared For Your Taxes

There are many factors that can devalue your return during tax filing.  A bit of preparation each month can saves hours of work later on. This can also net you extra money on your return, which is always a good thing.
There are several ways to prepare for your taxes a little at a time.  Here we will discuss a few methods that will save you time when taxes roll around, or save you money if you are paying an accountant by the hour to prepare your taxes for you.

Save Your Receipts

Whether you are a business owner or simply buy supplies for your job out of your own income, you need to remember to save and file your receipts for any purchases made in relation to your work.  While most think of this when purchasing a new printer, laptop, or copier, they often forget the smaller purchases.  Other possible deductible purchases include:
•             Boxes of pens, pencils, highlighters, and other minor office supplies
•             Reams of paper and ink cartridges for printers and copy machines
•             Fuel used in travelling to purchase supplies

Stay Organized

There is nothing more frustrating and time consuming than a large box of random papers being dropped on your desk at tax time.  Save your accountant time and yourself money by properly filing these papers, receipts, and pay stubs for easier access during tax form preparation.  By doing this you will make a good impression as well as learn how to systematically reduce the stress that tax filing brings.

Communication is Key

During the year, if you have any doubts as to whether an activity will be important to your taxes, do your research and communicate with your tax professional.  This simple act can also protect you from possible auditing as your tax preparer will be able to notify you if an activity is going to bring up red flags later.
It is also important to communicate with your accountantabout any changes in your life or business. Common events that can affect your tax filing include:
•             Marriage, divorce, and separation
•             Custody changes
•             Insurance rate changes
•             Vehicle maintenance related to work

Plan Ahead

In the event that an audit takes place, you will need your records for several years prior to the year of audit.  In order to avoid excess stress and hassle, keep all tax records filed in an easily accessible place for at least ten years, more if you prefer.  The space taken by one four-drawer filing cabinet can save you from a very nasty auditing experience.

Some regularly saved records include:
•             Previous tax records
•             Purchase/Sale records for livestock in farm related industries
•             Banking records for all bank accounts
•             Receipts or proof-of-purchase for all vehicles
•             Maintenance records for all vehicles
•             Year-end paystubs for at least five years

Summation

By following these simple steps you will take a large bite out of the stress, time, and expense of tax preparation, as well as keeping secure and reliable resources handy in case of audit.  This system will also allow you more broad range of possibilities where your deductions are concerned, offering you a larger return at the end of each fiscal year.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

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