As your business grows you will need to ensure that you keep things in order. The key to a successful business is effective management on all levels and keeping on top of the books is one of the aspects that create the biggest headaches in the early days. This need not be the case now, gone are the days of heavy ledger books and endless tapping on the calculator, the internet is now bursting with bright, user friendly bookkeeping packages with more features than the average small business could ever need. Choosing the one that fit’s the needs of your business should be your main influence along with the ease of use and compatibility with other technology.
By keeping clear bookkeeping records, you will be able to monitor all aspects of the financial status of your business which will be particularly relevant in ensuring that you remain tax compliant especially as your turnover draws near to the VAT Registration Threshold, which is currently £83,000 and for ensuring that your business can afford to take on staff.
There are packages on the market now to suit just about every budget and manage everything from the basic day to day bookkeeping through to robust reporting and analysis tools. The latest trend is moving away from the desktop and into the cloud offering access from your PC and through smartphones. So how do you decide which is the best option for you? For the tech savvy small business owner on the go a package that offers a solid mobile app that can handle the everyday functions such as invoicing and recording expenses will prove to be an administration asset, couple this with an on the go payment processing app such as iZettle and you can virtually manage most things from the palm of your hand. For those who prefer the big screen option then there are no end of choices there too.
Most providers offer the opportunity of a free trial, usually one month, make the most of this and if time allows trial several simultaneously, this will allow you to evaluate them clearly using identical data, by the end of the month you will probably find that you are only working with one package, the one that works best for you!
The other big advantage linked to cloud based packages is the ability to share information in real time, this can be valuable if you find you need assistance.
Taking on employees
As time goes on you may find that you need to take on an employee to assist with some aspects of the business. It is vital that you manage this correctly as failing to do so will result in penalties and fines.
When you decide that your business is ready to take on an employee you will need to ensure that the correct processes are followed, in the majority of cases you will need to be registered as an employer with HMRC and report your payroll information in real time using appropriate software. Most Accountants will be happy to offer compliant payroll services. Don’t forget to take into account your responsibilities in terms of your employee’s eligibility to work in the UK and so forth. You can use background checking services such as uCheck in order to ensure you are aware of anything that may have appeared on their criminal record.
You will also need to ensure that you clearly understand your obligations as an employer, employment law is complex and the penalties for employers in breach can be astronomical, one of the best resources for employers is Acas, originally set up by the government in 1896 as a voluntary conciliation and arbitration service, Acas have now separated from the government and now give advice to 800,000 callers per year with respect to employment related questions, resolving disputes and promoting good practice through their training courses.
As mentioned previously, the current VAT Registration Threshold is £83,000, put simply, this means that once your business turnover reaches this level within any 12 month period you should register for VAT. This is compulsory. In some cases, it may be advantageous to register voluntarily before you reach this level, this is particularly beneficial if your business sells a high volume of zero rated or exempt goods such as Children’s clothing and certain cold foods for example, in this instance you would then be able to reclaim VAT on eligible expenses.
When to register
If you are registering voluntarily then you may do this at any time; however you should take appropriate advice to ensure that it would be clearly in the best interests of your business to do so.
If you have reached the VAT Registration Threshold then you must, by law, register for VAT within 30 days of your business exceeding the threshold, if you register late then you must pay the VAT from the date from which you should have been registered, and HMRC may also add an additional penalty depending upon how late the registration was notified and how much VAT was due.
Once registered for VAT you will need to complete and submit your VAT Returns, usually every 3 months. You should ensure that your returns are correctly calculated and that all records are kept in order.
You may wish to instruct your Accountant to manage your returns.