Brighton Chamber: Top tips on accounting for small businesses

A good accounting system and strong processes are vital to small business owners at the start of their journey.
Alex Koupland is an accounts manager at Plus AccountingAlex Koupland is an accounts manager at Plus Accounting
Alex Koupland is an accounts manager at Plus Accounting

1) Select your business structure carefully

A limited company may not necessarily be the most suitable option. There are alternatives involving unincorporated structures such as, a sole trader, a partnership or an LLP.

If you are just starting out on your own in a low risk business the tax savings that could be made by operating through a limited company might not be available until you build up the business. Importantly, if the business is likely to make a start-up loss owing to high initial investment, an unincorporated owner can offset that loss against his/her previous year’s taxable income and generate a tax credit of up to 45%. Once the business becomes profitable, it is usually possible to transfer to a limited company structure. Make sure you seek professional advice when setting up your limited company.

2) Register for the right tax at the right time

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When starting a business the first thing you should do is inform HMRC that you have commenced trading – you don’t want to miss any deadlines. Should you register for VAT when you start trading? There could be an opportunity for savings to made on the VAT incurred on costs. For businesses exceeding the VAT turnover threshold of £85,000 per annum (on a rolling 12 month basis) it is compulsory to register for VAT. It is important to know what business and personal taxes you are liable for. Tax due is usually payable in arrears so it is not always obvious at the start when the first tax bill will arise. It is always better to be aware as early as possible of any tax due so you have an idea of what needs to be put aside. Most importantly – Put this cash aside!

3) Keep good records

It is important to have well-kept records so you know where a business stands. Bookkeepers can take the headache away from the business owner and allow them to concentrate on growing their business.Also there are more tools than ever to simplify record keeping, such as Xero, where bank transactions can automatically be ‘fed-in’, and apps such as Receipt Bank, can scan and record receipts automatically.

4. Talk about it

It is important to find out how other business owners look after their business, an easy way of doing this is networking. You never know what you might discover!

Alex Koupland is an accounts manager at Plus Accounting Chartered Accountants. This month he ran a Bite-sized Learning session all about getting to grips with basic accounting skills for small businesses. For more information on upcoming Brighton Chamber training events, visit: www.businessinbrighton.org.uk/events

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