5 Accounting Tips to Kickstart Your New Business

Starting a business can be an exciting and rewarding experience. There’s a lot to get in place even before your new business starts trading, and you may be wondering, “Just what do I need to do to start a new business?”

Well, that’s what we’re here to help you with. At Excel Accountants, we specialise in helping businesses grow. Where better to start than at the beginning, with our top tips to get your business underway?

Choosing a logo. Designing brochures. Fitting out your new premises. It’s a hectic time when you’re starting a new business with so many things for you, the founder, to think about.

Accountancy might not be at the forefront of your mind. We get it. Not everyone finds it as interesting as we do. However, get the accountancy basics right, and your new business will be stronger; you’ll have more management information, and you may even pay less tax – perfectly legally. So grab a cuppa and check out our top tips for getting it right and saving yourself business hassle.

Step #1 – Open a Business Bank Account

One of the first things you should do when starting a new business as a sole trader is to open up a separate bank account for your company. This will help you keep better track of your finances and avoid confusing personal and business expenses.

Of course, suppose you’ve set up your business as a Limited Company. In that case, the Limited Company needs its own business bank account as it’s a separate legal entity from you.

Mixing your personal and business finances is a significant mistake because tracking expenses and income, managing cash flow, and preparing financial statements becomes much more challenging. So, open a business bank account immediately after starting your company and ensure that your records are clear from the outset.

Step #2 – Track Your Expenses Even Before You Open

Another important accounting tip for new business owners is tracking expenses before launching the company.  This gives you a good idea of your overhead costs once you’re up and running, making cash flow planning much easier, even if it’s bad news. You may also be able to deduct some of these expenses from your tax bill, and your accountant can advise on that one.

Accounting software, such as Xero, QuickBooks, or FreshBooks, is the best way to track your expenses. Including things like office supplies, marketing materials, website costs, and any professional services you may need to help get your business off the ground.

Just because an expense occurred before your first customer doesn’t mean it’s not part of your business costs to offset against tax if it’s an essential part of getting ready to trade. So, record it all and make sure you keep the paperwork.

Step #3 – Hire an Accountant or Bookkeeper

Hiring an accountant or bookkeeper is one of the best things you can do for your new business. It pays to have a great accountant or bookkeeper on your side before you launch, so take your time with this decision. They’ll be able to help you set up your systems, track your expenses, prepare your financial statements, and ensure that you choose the proper structure for your business.

Once up & running, it’s tempting to try and do absolutely everything yourself to save money, but that can be false economy. You’re better off doing what you do best and letting other people take on the headaches of bookkeeping & accounting, you may save more than you spend.

If you don’t have the budget to hire someone full-time, you can outsource your accounting and bookkeeping needs to a part-time or virtual accountant. This is a great way to get the expertise and support you need without breaking the bank.

However, be wary that ‘accountant’ is an unregulated term, meaning that anyone can claim the title! Be sure to look for a professional with respected accounting qualifications and plenty of testimonials. Dirt-cheap prices are usually a warning sign, so do your research. Speak with the accountant and don’t hesitate to ask some probing questions.

Step #4 – Set Up a Payroll System

If you’re hiring employees, you’ll need to set up a payroll system to administer your PAYE tax records. This helps you pay your staff on time and accurately, as well as deduct the right amount of taxes to send to HMRC.

There are many different payroll software options available, so do some research and choose the one that best suits your needs.

Choose how you want to spend your time, and remember, you can always outsource payroll to a trusted accountant!

Finally, Step #5 – Understand Your Tax Obligations

Even if you have an expert accountant handling your tax returns, knowing and understanding your tax obligations as a business owner is still essential, so you can mentally plan for future tax demands.

The good news is that a great accountant will take the time to ensure that you understand your tax situation thoroughly while they handle the technical aspects.

Our Final Thought: When starting a new business, set yourself up for success with solid accounting procedures.

When you build your business on a strong financial foundation, the rest of the journey will be much more straightforward, and you can focus on the aspects of your new business that you enjoy & get you fired up!