It can be difficult to get practical advice for micro business, especially when you’re on a budget.
In an effort to share good advice and help every business thrive despite the current restrictions the team at North Devon’s Business Action magazine has developed a “Business Activist” feature. I’m delighted to have been asked to chip in with some answers to readers’ questions regarding business finances, and so it makes sense to share that advice here too.
All of the advisers who have joined the team are happy to give general advice to businesses who contact them, so if there is a burning question that you’ve never found the right person to ask then you can call me, or email your question to email@example.com
Question 1 (Autumn 2020): Can my micro business benefit from automating our accounts?
It depends what you mean by automating. Usually this means adding programs to cloud accounts software (Xero, QuickBooks, etc) to save time processing bills and invoices; what’s not to love about that? But getting value for money and for the time you spend is crucial.
I like to keep things simple; your time costs money but in a startup/ micro business you will always be directly responsible for making sure all the bills get paid. Whatever you do it is vital that you know what’s likely to happen in the bank account. What bills do you need to pay and when do you expect customers to pay you?
So accurate records are most important. You can do this on a spreadsheet, especially if you are not VAT registered. Actually a simple spreadsheet can be the best tool even when you have an accounts system as well.
What you may not realise is that now most accounts software will automate a number of tasks for you. It can link directly to your bank, offering huge time savings on copying details from a statement as well as helping you keep track of which customers have paid. In addition to this you can set up repeating invoices, send customer statements and see summaries of outstanding bills as well as much more to save you time and help you stay on top of your finances.
This is usually enough for most micro businesses; good value for both the money and time involved.
Question 2 (December 2020): Should I register my business for VAT?
If your sales come to more than £85,000 in any 12 month period you must register for VAT. But if sales are less than this the answer is very specific to what kind of business you’re in:
If you think registering for VAT is right for your business then really you need an accountant’s advice. Keeping good records is essential, along with making sure you know the deadlines for reporting and paying HMRC.
Find out more about how I help busineses here