You have a great idea, you’ve got a website and your business is starting to take orders/turnover money, so now what?
On top of the day to day running of your business you also need to make sure you aware of your reporting responsibilities. Accounting can be a very complex area and you may feel a little out of your depth. So what are the most common accounting questions for business start ups?
One question that comes up a lot is; How should I structure my small business?
There are a few choices and each one will impact taxes, how you pay yourself and your control.
The 3 most common structures are sole trader, partnership or Ltd company.
We would recommend looking at the pros and cons of each, seeing what you feel most comfortable with. A ltd company reporting structure is more complex than a sole trader but you and your business may benefit more from being a Ltd company, alternatively it may be best to be a sole trader. A decent amount of research about all possible types of structure will help you decide which is the best fit.
Business bank account or can I use my own?
Whilst you may not need a business bank account (depending on your business structure Ltd etc), it is wise to separate your business transactions from your personal. This really helps to create clarity and separation – you will thank us for it at year end or just with your monthly bookkeeping. Mixing personal and business can create a bit of a headache.
Is there any help for me as a start up?
Check out your local growth hub – they offer good impartial advice and sometimes run start up workshops to really help you focus. Details for the Cornwall one can be found here.
How should I record transactions?
Seriously don’t leave it to the last minute! This can be costly and stressful, instead start as you mean to go on. Find a good bookkeeping software, link it to your bank and watch some training tutorials to give you an idea of what to do. If you feel out of your depth consider outsourcing. It is better to get the right people to work on the elements of your business that you are unsure of. A good small business accountant can help with.
Cash based or accrual?
Cash based is the simplest form, transactions are only recorded when you receive or make a payment but this may not be the best way to record your business finances. Read our handy guide on accruals and cash-based accounting to find out more about this. If your business is a certain size, you won’t have a choice about how you record your business transactions.
Debits and credits…
Do you need to know this? Actually without this you won’t be able to make journals which are essential for making sure business transactions show in the right place. They are the basics of double entry bookkeeping and whilst software may do a lot for you, it is very beneficial to understand them.
Profit or loss?
Every business strives to make profit, if you are constantly running at a loss – what’s the point? You may not even realise that you are running at a loss. A business accountant can really help to identify if you are making a profit.
Business Accountant Cornwall
If you have read this and feel a bit lost, consider getting a small business accountant. Tidal Bookkeeping is based in Cornwall and offers a great service to put your mind at ease and allow you to focus on what you do best – running your business.