BEING your own boss sounds great, but running a small company comes with plenty of headaches – everything from handling cashflow to hiring staff and staying on top of new rules and regulations.
TV property queen and entrepreneur Sarah Beeny and accounting guru Bobby Lane have been touring Britain as part of a campaign by accounting software experts QuickBooks to help small business owners prepare for the launch of the Government’s new Making Tax Digital initiative.
We took the opportunity to get their input on the most popular questions from The Sun’s army of small business owners…
Q1. My business needs more cash so I’m thinking of putting up some of my house as security on a loan. Am I doing the right thing?
Keith, 37, a gardener in Essex
Sarah: It’s all about risk management and you should never risk something you’re not prepared to lose. Personally, I would never put my house up. I’m quite compartmentalised about my own money and the business money, and keep them totally separate.
Bobby: Always look at the Armageddon scenario and never put your entire personal financial survival at risk. For most people, the only security they have to offer is their house – and do you really want to risk losing it? If the answer is no, look at other options such as a new partner or investor. Also, ask yourself why your business needs cash in the first place – then see if you can make changes to the way you work instead.
Q2. Every quarter I spend a whole weekend trying to get on top of my paperwork – it’s a chore. What do other small business owners do, and is there a better way?
Samantha, 49, a florist in Birmingham
Sarah: For me, little and often is the key. It’s also worth investing time and money on systems that will automate processes as much as possible. There are some amazing accounting systems out there and they really do take away the pain and give you back lots of valuable time.
Bobby: The key here is to make sure that you are in control of the business not the other way around. There are now accounting systems, such as QuickBooks, that will allow you to get on top of your paperwork. They can automatically upload invoices and receipts, and even raise sales invoices straight from the system. You can do away with lots of your paper, and work in tandem with your accountant if you have one. Of course, with Making Tax Digital coming in, having an HMRC-recognised digital accounting system – like QuickBooks – in place means, you’re all set to go, and it makes life so much easier.
Q3. I set up my business without any experience of running a company and little experience in my sector. It feels like I’m making it up as I go along. Do you think getting a business mentor is a good idea?
Helen, 28, a cafe owner in Leeds
Sarah: I’ve never had a professional business mentor, but I’ve learnt from so many people over the years. I’m lucky as I work with my husband and we bounce ideas around; my dad was an architect so he was my property expert; and I often call my tax accountant just to check things over. Ask questions of anyone who might be useful and never be ashamed of not knowing something. Often pride gets in the way of learning, but only stupid people don’t ask questions.
Bobby: You are not alone! Many of the most successful business owners still believe they are making it up as they go along – but you have got this far so you are definitely doing something right. The key is to recognise your strengths and look for people who can bring you skills in weaker areas. It doesn’t have to be an official business mentor – there are some great networking groups for business owners facing similar challenges and questions, and they could work just as well.
Backing you: QuickBooks insider tips
- Stay compliant
As a small business, the last thing you want is to get on the wrong side of the law. HMRC’s Making Tax Digital for VAT came into force on April 1. If you are to comply, you’ll need to use software such as QuickBooks to submit your VAT return. Remember, when you’re choosing new accounting software, make sure they offer great customer support, too. - Spend more time on what matters most
Did you know that online accounting software could save you up to ten hours a month? Spend the time you’ve saved perfecting your craft, creating new products or expanding your services. The right tools can remove the headache from financial management and allow you to focus on what you enjoy most. - Get to grips with your finances
It can be tempting to focus on the more exciting parts of launching and running a business, but don’t neglect your firm’s financial health – especially when online accounting software can automate the bookkeeping tasks that most of us dread. It’s also wise to seek advice from an accountant as your business starts to grow. They can help you lay the groundwork for a healthy financial future.
Q4. I’m thinking of packing my business in – I earned more in my previous job with a lot less stress. It was my dream, but I’m exhausted!
Gary, 26, a builder in Southampton
Sarah: Before giving up a secure job with a guaranteed pay packet, everyone should consider the disadvantages of working for yourself. Yes, you call the shots, but if your work-life balance is in chaos, that’s not good. Before abandoning your dream, I’d suggest going back to your business plan and rewriting it to be more realistic. Is there a way to remove some stress while keeping the business going?’
Bobby: This is something I often hear from clients. They start off with a big boost, and then there’s an energy dip and the inevitable questions asking if it’s all worth it. Stop and think about why you want to work for yourself. Look at your business plan and put together a three-year forecast showing what you could achieve and what that means financially. If it’s not the type of money you want, and independence is not enough of an incentive, then you have your answer.
Digital Tax: what you need to know
- The Making Tax Digital (MTD) deadline is looming
From April 2019, businesses with a turnover above the £85,000 VAT threshold will be required to keep digital records as well as file their VAT digitally to HMRC every three months through compliant software. They will no longer be able to log on to HMRC’s online service to submit VAT returns. - Why is MTD being introduced?
MTD aims to make tax admin simpler and more efficient. Ultimately, it could mean the end of the annual tax return and the frantic rush to get accounts in on time. Instead of one big return, eligible taxpayers and SMEs will submit digital summaries at least four times a year, so they will always stay on top of their accounts. - How to get ready
Sign up to an HMRC-recognised MTD software solution, such as QuickBooks, to start filing directly to HMRC the compliant way.For more information visit quickbooks.co.uk
Q5. How do you know when to take on staff? I want to build my business but I’m worried about the responsibilities.
William, 44, a driving instructor in Plymouth
Sarah: As soon as you take on staff, you’re on an expansion journey with lots of responsibilities. In some ways, you’re actually less free. Really consider where you want the business to go and how you want it to grow. Do you really want or need a bigger business? It may be that the answer is yes, but it’s not something to rush into lightly.
Bobby: The first thing to do is identify what is taking up your time and why you feel you need more people. Can some processes be automated? Systems like QuickBooks can take a lot of the strain, and if you do go ahead and employ staff, it can even handle things like payroll. If you go ahead, be prepared so you’re not caught out by all the additional costs associated with being an employer.
Could you take on an apprentice instead? The Government is encouraging this so you might get help and support. Either way, prepare a forecast showing whether the additional business will outstrip the costs of another staff member. Taking on people can be a great way to expand, but you need to go into this decision with your eyes open and with a solid financial plan.
Q6. My bank manager is useless and does not understand my business, but I’m nervous about moving. Help!
Sophie, 31, a fitness instructor in London
Sarah: Be bold and switch! My bank manager is supersonically helpful – he even popped in for a coffee the other day to offer some advice. There are two real options – either go with a bank that’s cheap but there’s no service, or pay for decent service. If you decide to pay, interview potential bank managers until you find someone who understands your business. You need flexibility, and a decent bank will help with all of that.
Bobby: Move your account. Some banks have recognised that businesses might want more traditional relationship-based banking, so look around and find one that’s right for you. Remember, focus on your needs both now and into the future. If you will need a lot of support as the business grows, then that relationship is critical.
