Business Startup Basics

There aren’t many things you need to do start up a business as a Sole Trader.  But these are the essential things you absolutely, definitely can't do without!


Register with HMRC
When you become self employed you must register with HMRC within the first 3 months.  Either call the newly self-employed hotline on 08459 15 45 15 or register online.  Make this your Number 1 priority - if you don't register in time you'll face a fine!

Find the right place to keep your money
Don't use your personal bank account for your business, open a separate business bank account. It'll be much easier to keep track of how much you're selling and how much you're spending, and when you do your tax return. 

Make it easy for people to pay you!
You can make your invoices as simple or sophisticated as you like, but there's some essential information you must include that will help you get paid on time. 

Get insured
Depending on what you're doing some insurances are compulsory.  Others are optional but well worth considering. 

Do business on your own terms
Make sure your customers know what to expect by having clear, written terms and conditions of business.
You can keep this very basic with just a simple description of what you're supplying, the price you're going to charge and what your payment terms are.

What's in a name
Check out our do's and don'ts of choosing a name for your business

And that’s basically it!  You're ready to roll!
You'll find more information, including links to help you with all these points, at NowLet'sGetStarted

That quarterly ritual!

Unless you're on a special VAT scheme, there's a quarterly ritual every business that's registered for VAT has to go through. And that's submitting your quarterly VAT return. 

We've just done ours and it's reminded me how easy it is now compared with many years ago when we did it manually via spreadsheets! (plug for moving to an online accounting service ASAP - for only £15 or so per month it's definitely worth every penny in the amount of time it saves!) 

If you're on the standard quarterly VAT scheme it's worth taking a look to see if there's another scheme more suited to your business.

• The Cash Accounting Scheme allows you to account for VAT only on the invoices you've received payment for, but you can only claim VAT on your purchases if you've paid for those purchases.  
• Annual Accounting Scheme The Annual VAT Accounting Scheme allows you to make a yearly VAT return rather than a quarterly one, and to make interim payments before paying the balance (or claiming a refund) when your annual return has been submitted.  
• Flat Rate Scheme The Flat Rate VAT Scheme allows you to calculate your VAT payment as a fixed percentage of your total turnover. The percentage you use depends on your type of business.  
• Retail Accounting Scheme If you sell high quantities of relatively inexpensive items to the general public, you may be able to use a Retail VAT Scheme. If you're using the Retail VAT scheme you don't need to record VAT separately in your accounts for each sale so it can save you a lot of time with your record keeping.  
• VAT Margin scheme If you sell second hand goods, art, antiques etc the VAT Margin Scheme allows you to account for VAT only on the difference between the price you paid for an item and the price at which you sell it - your margin. 

 So take a look before you go through the quarterly ritual - it maybe that you can do it differently next time!

We all want to get paid on time, right?

But do you know how to create invoices properly so you DO get paid?

Your invoices don't need to be works of art, but it looks good if they at least use the same logo or colours as your business cards/website/any other documents or stationery.

But did you know there's some specific information that MUST be included on an invoice?  Including the word 'invoice'!

If you're a sole trader you don't need to include as much as a Ltd Company would, but there are still some VERY IMPORTANT bits of information that must be there.

For everything you ever wanted to know about creating invoices go to nowletsgetstarted.co.uk/YourFinances/Invoicing

For some of our tips on how to improve your chances of getting paid visit nowletsgetstarted.co.uk/YourFinances/Improvingyourcashflow

Had a tough morning? 5 ways to ease yourself back into the working week

1. Check your bank balance – if it’s less than you’d like it to be, get thinking.  If it’s more than you expect, keep doing more of the same!
2. Create your ‘to do’ list so the week doesn’t run away with you.  Take 30 minute or so to focus on improvements you can make, and where you want your business to be in 6 or 12 months’ time.  
3. Write a weekly report.  It will remind you of what’s been achieved and helps you monitor work in progress.  Don’t do a weekly report? Start one now!  Keeping track of achievements and results is a great motivator, and the reports will create a company history which makes for a really interesting read in years to come!
4. Write down your goals and put them somewhere you can see them daily.  It's another great motivator and helps create a sense of order and purpose.  Everything you do should be focussed on achieving these goals.  
5. Put a date in your calendar: sign up for a webinar or course or local networking meeting.  You can never stop learning and there are always people you can learn from.  They may not be in your industry or even from your immediate community but there is undoubtedly someone, so make the effort to find out who they are and how you can access their knowledge and experience.

5 great ways to avoid the Friday afternoon slow down

Let's face it, Friday afternoons are HARD WORK.  

Well when you run your own business evey day is hard work, but if you naturally come to a slow down at the end of your working week here's 5 things you can do to still make it productive:

• Check your bank balance – always a great way to remain focused!

• Chase anyone who owes you money - You’re not a charity, you’re a business and giving your customers free credit by paying late is just not good business! 

• Clear your ‘To Do’ list - Do all the things you’ve been meaning to do but putting off all week so you can start the next working week with a clear head/desk/email in box/voicemail/order book. 

• Review the results of your sales and marketing activity. How many sales have you made, for what products, what proportion of your sales comes from which sales channel (eg your sales team, clicks from your email marketing messages, enquiries from advertising, orders from your website) who is the best performing sales person, which adverts are making you the most business, how many people have linked to your website from your Blog/Twitter/Facebook/LinkedIn/Pinterest/any other social media account, what key words are visitors using to find your website.  These may not all be relevant for your particular business but you get the idea.  The end of your working week is a great time to review what’s happened and make plans to improve.

• Take a look at the big wide world.  There may be changes going on that could change the opportunities for your business overnight – for good or for bad.  Use PEST (politics, economics, social, technology) to structure your thinking.

Is it really THAT difficult to give service with a smile?

During a shopping trip the other day I got an unwelcome but stark reminder of how NOT to engage with customers.  So marked was the difference between 1 outlet and another I thought it’d be useful to share.

Picture this:

My first stop was to a well-known car and bicycle accessories chain.  Upstairs first, to the bike counter to get a new inner tube.  “How are you today” one chap asked. “I guess I’m OK” I answered honestly as wasn’t having the best of days, meanwhile someone else offered to find what I needed.  There followed a pleasant, not earth shattering, but pleasant conversation about cycling, the weather and the merits of exercise (one chap was particularly large and clearly not familiar with exercise at all).  And then downstairs for a valve to pump up my Pilates exercise ball.  Again someone found exactly what I needed.  “Thank you” I said, “pleasure” she said.  Simple as that, but it was enough to lift my spirits and turn an OK day into quite a nice one really.

Next stop was a major DIY chain.  Having found what I wanted I approached the checkout.  Both members of staff were busy chatting to each other, barely acknowledging me. My purchase was scanned and the card payment machine pushed in my direction.  Still not a word, or even a glance.  “Thank you” I said when the transaction finished wondering if there was going to be any response at all.  What did I get? “No worries” upon which he quickly resumed his conversation.  Not a smile, not even a glance in my direction but a “No worries”.  

It didn’t turn my nice day back to an OK-ish day, but was a salutary reminder to never forget that your customers are king and should be treated as such.

Tax made simple

As the tax deadline for payments on account looms (it’s 31^st July by the way) we thought you may appreciate a quick reminder of how tax works for sole traders:

First thing to remember is that the tax year runs from 6^th April to 5^th April the following year.

The deadline for completing your tax return online, and paying the amount of tax owed for the previous year, is 31^stJanuary (ie 9 months after the tax year has ended).

When you file your tax return online the amount of tax you need to pay is calculated there and then.  For your first year in business this will be for the whole of the previous tax year.

You may also be asked to make a ‘payment on account’ which is half of the estimated amount tax due in the tax year you’re in.  So a pretty steep tax bill for the first year you're in business.  But don't worry, it's not always this way!

Then on 31^st July you pay the other half of this estimated amount.

When you fill in your tax return for the following year (by 31^st January remember) if there is any difference between the payments you’ve made and the actual amount of tax you owe it’s called a 'balancing figure' and will be added to your bill there and then.

So for the second year you’re in business onwards, your January tax bill will be the balancing figure for the previous year plus the payment on account for the current tax year.  See, we told you it would get better!

Easier to see by example? Here it is:

If your first year of business is in the 2012/2013 tax year:

On 31 January 2014 you'll pay

• tax on the profits for the whole of the tax year 2012/2013
• a payment on account for 2013/2014 tax year

And on 31 July 2014 you'll pay

• the rest of the tax due for 2013/2014 tax year

And on 31st January 2015 you'll pay

• the balancing figure from 2013/2014 (if there is anything outstanding)
• a payment on account for 2014/2015

Go to nowletsgetstarted.co.uk/YourFinances/Taxbasicsforsoletraders if you need the detail