Financial common sense for business start-ups
If you're operating as a sole trader here are some basic tips to help you organise your finances in the early months of your new business.
Choose your business bank account carefully
Most banks offer 12-18 months free business banking but their service levels vary a great deal. Shop around and choose one that offers the level of service and support you’re looking for, and the lowest charges for the services you’re most likely to use.
Alliance & Leicester is currently offering free business banking AND interest on your balance. Find out more about free banking on business current accounts.
Have a dedicated business bank account
Set up a new dedicated business bank account - don't be tempted to use your personal bank account. Pay all your business earnings into your business bank account and pay all your business expenses from this account as well. It will make it much easier to keep track of your income and expenditure and it provides a double check for your bookkeeping figures. It also means that your personal bank account does not form part of your business records.
Take as little money out of the business as possible
Transfer your ‘wages’ into your personal current account so your personal spending is separate from your business spending. You can move your money around quickly and easily using online banking, but make sure the PC you use has up-to-date firewall protection software and is free from virus threats as these could compromise the safety of your bank accounts.
Save for your tax bill
Open a high interest savings account and put aside a proportion of your profits each month to pay your tax bill. Ask your accountant for advice if you have one, or consider registering for HMRC’s free ‘Self-Assessment for the Self-Employed’ workshop. The handouts from this workshop contain tables to help you estimate how much you should be saving each month to enable you to pay your tax bill.
Visit the Now Let's Get Started Tax Bookshop, in association with Taxcafe, to find out How to Complete Your Tax Return
Keep costs to a minimum until you become more established
Don’t, for example, splash out the latest mobile phone or laptop when older models will perform just as well. Work from home if you can, at least in the early days, until you can afford to rent office space.
Ask us about cost-effective mobile phone packages especially designed for small business users.
Get the cash flowing into your business
- Start selling from day one, if not before
Don’t spend money on expensive advertising or marketing campaigns thinking business will come to you - you'll have to go and find it. Cold call prospective customers, get your friends and family to spread the word, and network like crazy.
- Invoice as quickly as possible
Make sure your invoices are clear and accurate and contain all the relevant information Consider invoicing in stages if your customer agrees.
State your payment terms and methods of payment are clearly stated on your invoice and do not be embarrassed to chase overdue payments.
Further Reading
Sales tips and techniques
How to invoice
Tips to help your cashflow
Financial common sense for business start-ups
If you're operating as a sole trader here are some basic tips to help you organise your finances in the early months of your new business.
Choose your business bank account carefully
Most banks offer 12-18 months free business banking but their service levels vary a great deal. Shop around and choose one that offers the level of service and support you’re looking for, and the lowest charges for the services you’re most likely to use.
Alliance & Leicester is currently offering free business banking AND interest on your balance. Find out more about free banking on business current accounts.
Have a dedicated business bank account
Set up a new dedicated business bank account - don't be tempted to use your personal bank account. Pay all your business earnings into your business bank account and pay all your business expenses from this account as well. It will make it much easier to keep track of your income and expenditure and it provides a double check for your bookkeeping figures. It also means that your personal bank account does not form part of your business records.
Take as little money out of the business as possible
Transfer your ‘wages’ into your personal current account so your personal spending is separate from your business spending. You can move your money around quickly and easily using online banking, but make sure the PC you use has up-to-date firewall protection software and is free from virus threats as these could compromise the safety of your bank accounts.
Save for your tax bill
Open a high interest savings account and put aside a proportion of your profits each month to pay your tax bill. Ask your accountant for advice if you have one, or consider registering for HMRC’s free ‘Self-Assessment for the Self-Employed’ workshop. The handouts from this workshop contain tables to help you estimate how much you should be saving each month to enable you to pay your tax bill.
Visit the Now Let's Get Started Tax Bookshop, in association with Taxcafe, to find out How to Complete Your Tax Return
Keep costs to a minimum until you become more established
Don’t, for example, splash out the latest mobile phone or laptop when older models will perform just as well. Work from home if you can, at least in the early days, until you can afford to rent office space.
Ask us about cost-effective mobile phone packages especially designed for small business users.
Get the cash flowing into your business
- Start selling from day one, if not before
Don’t spend money on expensive advertising or marketing campaigns thinking business will come to you - you'll have to go and find it. Cold call prospective customers, get your friends and family to spread the word, and network like crazy.
- Invoice as quickly as possible
Make sure your invoices are clear and accurate and contain all the relevant information Consider invoicing in stages if your customer agrees.
State your payment terms and methods of payment are clearly stated on your invoice and do not be embarrassed to chase overdue payments.
Further Reading
Sales tips and techniques
How to invoice
Tips to help your cashflow