It is crucial to recognise when a hobby becomes a business, and running your finances professionally becomes a necessity. Over the last year, we have seen a huge number of people decide to take the leap and start their own business, with a reported 407,510 new businesses forming in 2020 alone. In fact, history tells us that after a period of economic downturn or a recession, it often results in an increased uptake in self-employment. Self-employment has contributed strongly to employment growth in the labour market, with self-employed people representing 15.3% of employment overall in the UK.
Influencers, vloggers and bloggers are examples of new professions that can be started with very little upfront costs and from the comfort of your own home. This makes it a very attractive role for many during a time where there is a decline in employment, evidenced by the Office of National Statistics (ONS) unemployment rate for adults at 4.9%. Many may start this as a hobby or a side project, however, if you are earning money online, from the likes of royalties, advertising, appearance fees, or if you have received gifted items, products or hotel stays, then you are likely liable to be taxed and will need to submit a tax return.
Behind every good business is a great entrepreneur and behind them, you’ll find a reliable and efficient accountant. Accounting helps a business stay in full control of its finances, while minimising business taxes and other overheads. People with a talent for running a business may not have the knowhow, or the time, to successfully and meticulously handle the accounts. A good accountant can do far more than just free up your time to spend on situations that require your valuable expertise.
Businesses, or individuals, that hire a good accountancy firm can also benefit from a wide range of other services. For example, working with Nordens’ Strategic team will allow you to save money through strategic planning, managing growth by monetising and developing your brand, as well as planning ahead with cash flow forecasts. Cash flow management is very important for your business, as even a highly profitable business without sufficient cash will soon collapse. Using expert analytics, forecasting and presentation skills, it will help to visualise any major issues your business may face due to economic uncertainties, trend changes and new regulations that could affect or impact profitability or sustainability.
Do I need an accountant or bookkeeper?
Accounting and bookkeeping can seem rather confusing for many. It’s important to ask yourself these questions;
- Do you feel confident regarding your finances?
- Do you have a thorough understanding of bookkeeping?
- Can you competently read a set of accounts?
If the answer to any of these is no, or the thought of doing your tax returns or your accounts makes you nervous, then an accountant will be a huge benefit to you. When your business has grown beyond a certain size, it is good sense to hire a specialist to handle the accounting. If you’re ready to take the plunge and go self-employed, assistance with the formation of your new company is crucial. Obtaining a tailored online accountancy package, which is specific and appropriate to your business and the unique challenges you’ll face, could be the difference between success and failure.
Every business, irrespective of organisational structure, has to carry out bookkeeping functions. Through the use of comprehensive bookkeeping, your business will be able to keep track of all its financial activities, ingoings and outgoings. With this information readily at hand, management will be able to make informed decisions regarding operations, investments and loans. Therefore, it is key that you find the best bookkeeping service for your business.
I’m at the stage of employing help, how do I pay my staff?
No matter the size of your business, it is recommended that you outsource a payroll program. Submitting Real Time Information (RTI) and generating payroll records for your employees for submission to HMRC, not only benefits you but also your employees. Businesses with employees need to operate payroll effectively and in-line with payroll regulations. Not doing payroll properly can result in fines, unhappy employees and huge backdated tax bills which can incur huge costs in the long run. It doesn’t matter if you’re hiring a part-time assistant or a full-time manager, if you are unsure about how the payroll process works, it is advisable to seek help from our expert payroll team.
Having an accountant is not just about looking after your money, it can also help you save money too. Claiming expenses at the end of the year is an important aspect of accounting for small businesses, as it enables you to cover up most of your costs. Keeping track of your expenses, whether manually or digitally, will enable you to save huge amounts that you maybe weren’t previously aware of. For example, if you use a phone, laptop, vehicle, software or even applications for sole business purposes, it is possible to claim back on these and seek a rebate from HMRC.
These are just some of the ways an accountant can help you and your business achieve its goals and expand its growth. We hope this has outlined to you some of the steps that an accountant can benefit your new business. If you require any more information on starting your own business and the processes around it, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.