Did you know that there’s a special day just for us micro business owners? Celebrating and supporting the community, #MicroBusinessMatters Day is the only day dedicated to businesses with 0-9 employees. Whether you’re a freelancer, sole trader, or run a company with a tiny team, the 12 tips below will help you succeed with your accounts.
Using payment services such as Stripe and GoCardless greatly increases the chances of your invoices being paid on time. Accounts software such as Xero can automatically add a link to pay online, making it really convenient for customers to pay. If you have clients on monthly retainers it’s a no-brainer to use GoCardless to sign them up to regular direct debits, super easy to set up and means you don’t need to sit wondering whether your invoices will be paid on time.
If you don’t know about it, you can’t account for it so you could end up paying more tax that you really need to, and who wants to do that?!
While we’re talking about tax, do you know what you can and can’t claim for? If not, get to grips with this sooner rather than later. For example, you might know that if you work from home you can claim a portion of your costs, or a set amount per month if you use HMRC’s simplified expenses. However, a lot of people don’t realise that if you’re a sole trader then in order to be tax deductible your costs need to be wholly and exclusively for the purpose of the business.
Another one about tax, but we are in January so it’s something I’m spending a lot of time looking at right now! Always, always, always submit your statutory returns on time to avoid fines and surcharges. There’s an automatic £100 fine if you fail to submit your self assessment return by 31st January, even if there’s no tax to pay. Submitting early doesn’t mean you have to pay earlier, so why risk it? I personally like to submit mine in April, as soon as the year is over and everything is fresh in my mind. Not convinced? I wrote in April about why it’s a good idea to submit early.
Poor cash flow can sink a business quicker than anything else. Successful business owners always mention having a good handle on their cash flow as a major factor in their success. Got outstanding invoices that haven’t been paid? Chase them now!
Definitely so if you have a limited company, but I always advise sole traders to do so too. It’s so much cleaner and makes it much easier to see where money is being spent and what is coming in.
If you employ staff, make sure you keep up with changes to things such as the national minimum/living wage and pension auto-enrolment. Are you prepared for the minimum total auto-enrolment contribution increases to 5% from 2% on 6th April? As at least 2% of this needs to come from the employer, it could have a big impact on your finances, so the earlier you can plan for this the better.
Excel is fine, but dedicated software opens up access to things such as automatic credit control emails, links to bank accounts, and detailed reporting that will really help your business. If you’re not sure how moving to cloud software could benefit you, I discussed some of the benefits on the blog last year.
If you’re VAT registered, don’t forget that you need to pay that VAT over to HMRC at some point! Set aside the money in a separate account when you invoice (or when you’re paid, if you’re on the cash scheme.)
As well as setting the money aside, it’s also a good idea to sign up to pay the VAT you owe to HMRC by direct debit. The amount due is automatically updated from the details on your return, so requires no further input once it’s setup. It’s as easy as VAT 😉
You’d be amazed how many people don’t actually include their bank details, or when to pay by, on their invoices. 10 points to Gryffindor if you’ve followed the first tip and are including a direct link to pay online.
Don’t feel that you have to wait until the end of the month. Contract states that you’ll invoice on completion and that happens to be the 6th? Get that invoice in!
Want to discuss how I could help your business? I’d love to hear from you, so get in touch.