Worthing Accountants & Cashflow in the Small Business

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.  

http://www.sussex-accountants.com/

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.

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.

https://www.gov.uk/government/groups/hmrc-accounting-and-tax-group