By ManKing Associates Accountants, Jan 4 2016 05:42AM
Let me start by wishing you a very happy new year ahead.
We are now in the season of resolutions; eat well, exercise more, pick up a hobby, visit friends and family more, join a gym, change jobs, change careers, secure promotion, learn a trade, be more religious, and the list goes on and on.
However, some decide to embark on the journey into the “unknown”. Time to actively pursue those dreams that have been “cooking for years” and start a business. The question is: where do you start? As an accountant, I am inclined to say the starting point is an accountant, but let’s go back in time into 2015.
2015 was a record breaking year for business start-ups and the trend is expected to continue in 2016. According to the Telegraph, 600,000 new businesses started in 2015 compared to 330,000 in 2014.
The main drivers of this surge are;
• Decrease in start-up cost
• Increase in sources of finance
• Low cost employment
The cost of starting a new business is estimated to have fallen by a factor of ten in the last decade as result of new technologies that improve communication and automation of processes. The year also witnessed a steady growth in sources of funding such as peer-to-peer lending, crowd funding, invoice finance, and council grants. Even the central government is getting into the lending mix with the creation of the British Business Bank –owned by the government but run independently – for channelling more funds into small businesses and start-ups directly.
The expansion of the apprentice programme also enables businesses employ labour at significantly lower cost. Business can employ apprentice for as little as £3.30 per hour with some councils offering full financial support in the first year to businesses taking on apprentices.
Today, the first step in starting a business is “the individual”. It tends to involve putting pen to paper, noting why you are starting your business, what you want to achieve, how you will reach your goal and how you will know the target has been achieved. Once these questions are answered (or at least partially answered), the next step is to discus with an accountant/business adviser.
Here are some reasons why seeing an accountant should be one of the priorities on the “to-do list”?
1. Assist you with the business plan which you may or may not require to secure funding but will be beneficial to use as a “barometer” to measure projected performance against actual performance.
2. Find out about funding sources/grants for your business
3. Provide guidance on the first steps into self-employment (e.g. deciding to register as self-employed or limited company)
4. Advice on tax obligations and reliefs
5. Provide good tips on record keeping and bookkeeping.
6. And more.
Experience show that some clients who start a business, attempt to manage the accounting and bookkeeping (to keep cost down) but get stuck along the line later or it becomes a complex burden as the business grows. Some fail to separate business transactions from private transactions get entangled, whilst some actually thought they did not need to pay any tax on the income.
To sum it up, an accountant, can provide invaluable advice for your business and prevent you from getting into potential serious finance/tax hole in the future. In addition, they are usually flexible in the sense that they can provide as little or as much support as you want.
We are running free workshop for business start-up this January in partnership with Bassetlaw Council. If you’d like to find out more and join us, please click on the link below for more details.
For the Stats lovers:
• In 2015, 18% of entrepreneurs were female
• 80% increase in the number of female entrepreneurs
• 18k and 13k new companies registered in Birmingham and Manchester respectively in 2014 with London having 184k new businesses registered
• Cambridge has the highest start-up survival rate of 47%
• Bristol is the Best place to start a business according to the Start-up City Index 2015
• The Biggest peer-to-peer lenders in the UK are Zopa, Ratesetter and Funding Circle
• According to Ofcom figures, Bristol has the highest average broadband speed of 33.8 M/bits
• Oxford has the lowest crime rate of 30.71 per 1000 people