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Starting a business and completely confused by the bookkeeping/accounti
Me and DH have decide to start our own business after he was recently made redundant. I am just so confused and overwhelmed by all the financial elements like the tax/vat. I'm scared we will end up making mistakes due to lack of knowledge.
Can anyone recommend any books/info that help explain accounting/bookkeeping/tax/vat/When would you get an accountant? My issue is we are only planning to start very small. Not take anything out the business and just keep hopefully reinvesting any profits to grow.
Congrats on your new business and I wish you the best of luck. I'm sure there are many great books out there, but there are also loads of videos on YouTube you can start with. I would also invest in accounting software which will make things a lot easier.
Pay a small flat fee to a local accountant now, and get some advice before you take the plunge.
They will know the right questions to ask you about whether you are better being a sole trader, a partnership or a Ltd Company - there can be big tax implications depending on your financial situation out side the business. They will also advise on whether or when you need to register for VAT and what sort of accounts records you need to keep.
It will be money well spent, and better to do it now and start off on the right foot than go off half-cocked and get it wrong.
Search "Small business accounting" on YouTube, I meant to add.
Yes to accounting software. I would start with figuring out what you actually need to do.
So for VAT, for example, you only need to register if your turnover is more than £85,000 (it's a bit more nuanced than that but the info below is very clear)
Once you've worked out what you need to register for then check deadlines for filing returns etc and make sure you put them in your diary.
There is a decent amount of government help for free when setting up a business just google
I'm a qualified accountant. The answers would depend on how small you're starting and what your growth plans are. What sort of turnover are you looking at, how complex is the business model, what sort of volumes of transactions/sales etc?
For tax matters, HMRC produces guides and delivers webinars on practically everything so is effectively a good source of free training. They are helpful on the phone too if you have a specific query.
However what I think you need to do is decide whether you can get comfortable with basic bookkeeping - how to record your sales and expenses. If you can produce a good set of books by yourself, you'll save money on accountancy fees versus handing over a box of receipts and invoices - then you could engage an accountant for the more complex things like tax returns and company accounts.
Could you find a business support organisation who organise courses on this type of thing?? That's what I did.
It may be more tax-efficient to be a Ltd Company and pay corporation tax on profits, or to be a sole trader or a partnership and pay income tax on your personal tax returns. Without knowing the amount involved it is not possible to ascertain which would be better for you. Nobody needs to pay more tax than they need to.
At the beginning I just made sure I recorded everything and put aside 25% of my profit for tax. That’s enough while you’re fine tuning.
Lots of accountants will give you a free initial consultation to get you started. For many new business start ups, it's all a lot easier than you think as there's usually no need to be VAT registered, set up a limited company or a PAYE scheme (huge numbers of people do one or all of these when they really don't need to, just because they read (misread) something on the internet!). Accountancy fees will usually be a lot less if your book-keeping is up to a good standard, so even if you have to pay an accountant for an hour or two's advice, it may still end up cheaper than paying them to sort out a mess at the year end.
In many areas there are employment charities who do CV help, how to look for a job, interview practice etc. Many of those organisations also help people with setting up businesses and becoming self employed etc. There are also various business mentoring schemes in a lot of areas. Just google things like that with the name of your town/area, and you'd be surprised how much free help is available.
Do the free OpenLearn introduction to bookkeeping module to give you the basics.
Keep everything (receipts, invoices etc). Record sales and purchases on excel and do a bank reconciliation monthly.
Use one bank account for everything. Try not to mix business and personal purchases.
I’d start with the uK gov website
For a small business you must be able to do some basic research and have a degree of self
Start there , get basics and then widen research
In simple terms you pay tax on your profit , but that’s offset by what you spend
Get the basics
What are running costs
What are product costs
I don’t think you should start a business I’d you can’t plan these basics (I don’t mean that nastily )
Knowledge is power
For a sole trader, you pay tax on your profit, NOT on how much you draw out or pay yourself. That's a mistake lots of people make. Also, that your own "wages" aren't an expense, in fact wages don't even exist for a sole trader - the business makes profits and the owner takes some/all of the profits as drawings.
Lots of accountants will give you a free initial consultation to get you started. For many new business start ups, it's all a lot easier than you think as there's usually no need to be VAT registered, set up a limited company or a PAYE scheme (huge numbers of people do one or all of these when they really don't need to, just because they read (misread) something on the internet!). Accountancy fees will usually be a lot less if your book-keeping is up to a good standard, so even if you have to pay an accountant for an hour or two's advice, it may still end up cheaper than paying them to sort out a mess at the year end.*
This exactly. Phone/email around or ask for recommendations, it may cost less than you expect and in the long term you should benefit from setting things up correctly from the start.
And why do my bolditalics not work?!
Message deleted by MNHQ. Here's a link to our Talk guidelines.
Get an accountant now.
We give a free initial interview and go through all the legal obligations plus advise on the structure to use, employment taxes, software choices and what to look out for even if you don't need it at the moment (like VAT registration limit and VAT options inc the possibility of voluntary registration now).
Where the discussion goes depends on your particular circumstances, so it's well worth starting a relationship now.
It's also beneficial to have help with tax right from the start.