Martin Lock, Partner, Francis Clark LLP shares some insight
Francis Clark are the region’s largest independent accountancy firm, providing a full range of award-winning accounting, taxation, and corporate finance and fundraising services to businesses of all sizes. In my role, I see businesses at all stages of their business journey, in all sectors of the economy. Who says accountancy is boring!
One thing that unites all businesses I see is their desire to succeed. However, success means different things to different people; to some it may mean taking over the world, to others it may mean being able to support a good work/life balance. Whatever your ambitions, I can support and guide you with a Partner-led, relationship-based service, whilst also being able provide access to my Firm’s many specialists in areas such as taxation, VAT and corporate finance.
In this blog I will aim to address issues that, on first appearance, may seem to be applicable only to new businesses; however, they are also issues that would be beneficial for all businesses to review on occasion. I overview briefly four of the areas where I am regularly asked to support new and growing businesses, hopefully complementing the drive and enthusiasm of the owner with pragmatism and a focus on getting the ‘boring stuff’ right in an efficient manner, so that it does not become a distraction and a barrier to growth – or worse still a cause for business failure.
OK, I have started with the most boring aspect of running your own business – and consequently the item most often left until tomorrow! What I have seen work well is early establishment of a ‘system’ consistent with the complexity of your business and your financial information needs. These may well need re-examining as your business grows.
I work with many start-ups and growing businesses advising on appropriate systems for recording transactions and paper/ electronic record keeping. Sometimes I am asked to provide support with transaction posting, but in most cases when the entrepreneur moves away from posting items themselves, a bookkeeper is engaged (possibly part-time). I will then work with the bookkeeper to turn financial records into meaningful financial information for the entrepreneur and for others (e.g. a potential funder and/ or HMRC).
All start-ups should appreciate they will be brought into the “tax system”. This may encompass PAYE or VAT and certainly either Income Tax or Corporation Tax. As with ‘bookkeeping’, it is essential to establish systems for dealing with your obligations early on. The ideal is to be able to provide required information at the ‘press of a button’. This aim should drive the structuring of financial and other record keeping. Be aware of tax thresholds (e.g. for registering for VAT) and in particular mechanics for mitigating liabilities. Diarise preparation of required returns, and ensure funds are available to pay any liabilities on time.
With decisions on business structure, as with many aspects of business, detailed discussion and specific advice is required. But I would always say “start with the end in mind” – if you know that your proposition is going to require equity finance to take it to the next level, then a company structure would be the most appropriate. Understand the options and the implications, including tax and legal aspects. One of most overlooked aspects in a business operating as a limited company is that the company is its own legal entity, different from the individual who may run the business. This means, for example, matters such as intellectual property ownership and extraction of funds have to be carefully thought through.
Employing and engaging with others
Our payroll bureau deals with more than 1000 payrolls, indicating that for many entrepreneurs the processing of PAYE/NI payments and returns is a (necessary) evil that can be outsourced cost effectively. The recent introduction of Auto Enrolment is a further payroll burden that needs careful consideration – do you really have the time to deal with this yourself?
As your business grows, so will the support that you need from your accountant. That is why you should have a good relationship with your accountant, and in particular, you should be talking to them on a regular basis as your business evolves over time. Try not to be scared of the cost of talking to your accountant – a short conversation now could save you huge amounts of money down the line!