An Accountant’s Guide to Handling Your Finances as an Entrepreneur

Posted on 11th November 2020 by David Rudd

Entrepreneurs are often required to wear many hats which includes having to manage the finances and taxation of a business. Owners use a variety of methods when it comes to sourcing capital for their business such as loans, crowdfunding and share capital. However, methods on how to effectively understand and manage the financial information of your business are often the last resort for many. 

With entrepreneurs already having a lot on their plate, we created this quick reference article to give a quick overview of the key areas you’ll need to focus on and as a new business, taking the right advice is crucial to get you up and running smartly.

A Business Plan

Ensure you have a well-thought-out business plan in place for yourself and for third parties

A business plan is a very useful and widely recommended document that will prove valuable to your business. When it comes to accessing debt, securing investment or analysing your business, constructing a well thought out plan of your businesses goals and objectives will enable you to gain a competitive advantage over those who do not have a plan in place. The benefits of a business plan are that it allows you to identify the business’ long and short term targets, spot potential issues and measure your progress.

The plan should be kept short and only provide the user with what they need to know. It should also be based on realistic inflows and outflows, as over-optimistic business plans will be quickly seen through and business credibility can be damaged.

Our startup advice service can help you to get this in place.

Budgeting

Start using budgets to drive your business decisions

For entrepreneurs, budgeting can help you control your company finances, plan your business costs in advance and prepare for unexpected financial changes.

Budgets are a tried and tested method of improving business efficiencies. Using a variety of fixed and variable income and costs when planning your budget will allow you to evaluate areas in your day-to-day activity which require attention.

Cash flow

Understand your cash flow to prevent running out of money

Monitoring the money that is coming in and out of your business is just as important as monitoring your profit. It is possible to have a high profit and a low cash flow if you aren’t being paid or if you are overspending. 

Cash Flow statements can be used to track your finances each month, keeping you up to speed. At Steven Burton & Co, we find  Xero very useful for small businesses as it can provide you with a clear overview of your business activity. It is perfect for small businesses, designed to give you a complete overview of your accounts including your cash flow. We draw on the information in the software to help us guide you on your next business decision. But this can also be used by you to keep on top of your finances and operations. Take a look at the range of accounting software we’re experienced with.

Expenses

Record and itemize your expenses to track the running cost of your business

Running a business requires outgoings that should be tracked regularly. Self-employed entrepreneurs can reduce their tax and national insurance liabilities by offsetting tax-deductible allowable expenses, such as office and travel costs, against business profits. Keeping a record of your expenses is a requirement by HM Revenue & Customs and will be required for your self-assessment tax return.

We use Dext (formally Receipt Bank) with some of our clients at Steven Burton & Co, as Dext is a software that allows you to upload your receipts and purchase invoices by simply taking a photo of them. It then creates a PDF back up so you no longer have to worry about losing your receipts.

Professional Advisors

Surround yourself with a team of professionals to help guide you through the legal and financial requirements of running your business

We know how important it is to have a team of dedicated professionals by your side to help with any financial or legal implications that you may face.

Ensuring you have a good accountant that can help make sure you are registered for the right taxes with HM Revenue & Customs (HMRC) is fundamental when starting up your business. Whether that be income tax, VAT, CIS or PAYE, it is important to have these in place to avoid any unwanted communication from HMRC.

Other advisors may include independent financial advisors, lawyers, insurance brokers or even IT specialists. These professionals and others are there to ensure that you have the safety net you need, should you need it. Our team of accountants here are Steven Burton & Co are able to support you with all of your business accounting needs as well as business coaching and growth services.

Simplify accounts

When it comes to handling your finances as an entrepreneur there is a lot to consider. At Steven Burton & Co, we can help simplify your accounting, freeing you up to run your business. As well as Xero and Dext, we can help you manage your Sage and Quickbooks accounts too. We are a team of Chartered Certified Accountants experienced in dealing with new and long-standing businesses. Need a solution? Get in touch with us today.