Without the help of a Worthing accountant, setting up a new business
can be somewhat daunting, especially when it’s the very first time you’ve made
the leap from employee to being your own boss.
Aside from the excitement of finally going it alone, you have to contemplate all
the risks and potential rewards. You
also deal with the anxiety of making sure you get everything right, not landing
yourself in a more difficult situation particularly when you’re strongly committed
financially.
The really important point to understand is what your
business is actually all about. If you
have just started an electrical firm, or opened a shoe shop you may be focused
on getting out to customers and selling your goods and products, which is
great, but if get your pricing wrong and charge too
So, a key consideration of any business is to account for
all the finances, and in particular cashflow.
Accounting for Success in Worthing
Cashflow is all about what you actually have in the bank and
what you really need to spend it on.
It’s fine to have orders lined up for the next six months, but if you
can’t meet payroll and the VAT bill next week, you can still go bust. You have to account for the cash you have
available in the bank account at any one time, and then plan ahead.
Many people are not confident of doing this yourself, then
employ a bookkeeper or a Worthing accountant to help you out. It is another commitment, but the guidance you
get could be the difference between staying afloat in the long run or sinking
quickly. If you are happy to account for
the finances yourself, however, it does keep you in control and allows you to
set the right priorities on a day to day basis.
It need only take a couple of hours each week, but that investment in
the accounts will let you really decide what you have to do before events
overtake you.
The idea behind it is actually quite simple. You look at your bank balance, what your
income is going to be, and what bills and outgoings you can see and on what
date. Add them up and subtract them
accordingly and you can see how much money you will have left week by week, and
month by month. If things are (hopefully) going well, and you
have plenty of money, then you can also decide how much to put aside for future
commitments - to pay things like phone bills, rent, rates, VAT, tax and any
other outgoings you can think of that are going to be coming up.
If things are not going well, you can spot the problems
early on and have time to think about how to deal with shortfalls. You can make plans to do things like:
·
Can you negotiate with your suppliers and
creditors?
· Do you need to raise some short-term finance to get you through a lean period, and if you do borrow, will you be able to cope with the repayments on top of all the other bills?
· Do you need to delay drawing your own income to free up some money, and make up for it in future when the situation improves?
· Ask a Worthing accountant to take over the negotiations for you.
These are all tough decisions, but by keeping an eye on your cashflow you give yourself a chance to deal with the issues before you have a pile of final demands on your desk and a bailiff at the door.
· Do you need to raise some short-term finance to get you through a lean period, and if you do borrow, will you be able to cope with the repayments on top of all the other bills?
· Do you need to delay drawing your own income to free up some money, and make up for it in future when the situation improves?
· Ask a Worthing accountant to take over the negotiations for you.
These are all tough decisions, but by keeping an eye on your cashflow you give yourself a chance to deal with the issues before you have a pile of final demands on your desk and a bailiff at the door.
An Accountant in Worthing Pays Dividends
The main mistake that too many small business owners is not
building up a reserve for the future. This
is something a good accountant in Worthing will advise you on.
When everything’s going well it’s all too easy to assume
it’s going to continue forever and pay yourself accordingly. But when this is done there is nothing left
in the account to cope when business is not so good, which invariably does
happen.
Enjoying the fruits of some hard-earned success is
absolutely the right thing to do, but a business owner must be sensible and
live the good life once a reserve of cash is saved up and put aside. For every pound earned, cash must be saved
for tax and overheads. A further percentage
should then also be saved to build up the reserve.
While this is building up, the owner should try to keep
their own income at a reasonable level.
Once the reserve is in place, however, then the higher salary and perks
can begin.
In business cash is king, and all good accountants will
guide you to ensure that you always have enough to keep afloat, which then return
the favour for a long time to come.
