30 January 2024

Practical tips for setting up a new business

Setting up a new business in Droitwich can be exciting and challenging. Creating the right foundations for your business will be crucial to its success. This blog post will provide practical tips on setting up a new business, focusing on five key areas: business bank accounts, accounting software, payroll, VAT registration, and consulting with an accountant or bookkeeper.

In writing this blog, we have assumed that you have already decided on what products or services you will be selling, the name and contact details for your business and also what type of trading structure you want, for example, being a limited company, sole trader or partnership.

Setting up a new business bank account

Opening a dedicated business bank account is one of the first steps you must take when setting up your business. This is vital for several reasons. Firstly, it separates your personal finances from your business transactions, simplifying tax filings and financial tracking. A business account also adds a level of professionalism, allowing you to accept payments in the business's name. Additionally, it helps build a credit profile for your business, which can help if you want to secure funding in the future. 

Choosing scalable accounting software

As your business grows, your accounting needs will change too. Invest in accounting software that can scale with your business. This means looking for software that handles your current requirements and can accommodate future complexities as your business evolves. Features to consider include invoicing, expense tracking, payroll processing, and financial reporting. Scalable software can save you from the headache of migrating to a new system when your business outgrows the old one.

If you need help determining which accounting software package will be most suitable for your business, JRMA are happy to advise and can provide accounts training and set up services.

Setting Up Payroll

Setting up a payroll system is necessary if you're hiring employees. A reliable payroll system ensures your employees are paid accurately and on time, regardless of whether they are paid weekly, fortnightly, monthly, or infrequently. It should be able to handle individual employee allowances and deductions such as statutory sick pay, maternity or paternity pay, pensions and auto enrolment and produce payslips, P45s and end of year P60s.

The right payroll system can also help you manage employee records and comply with employment laws.

Keeping abreast of the latest payroll regulations and ensuring your employees get the right amount of money paid at the right time can be stressful for business owners. JRMA handle the payroll for many Droitwich and Worcester based businesses. To find out more, click this link.

Registering for VAT

If your turnover exceeds the VAT threshold, currently £85,000, in a 12 month period (not just at the end of your financial year) you must register for VAT. Even if you're below the threshold, voluntary registration can be beneficial as it allows you to reclaim VAT on business expenses. VAT registered businesses in the UK must also comply with HMRC's Making Tax Digital for VAT (MTD for VAT) scheme, which requires businesses to digitally keep and submit their VAT information to HMRC using only MTD compatible software.

VAT registration adds a layer of complexity to your accounting, but it can also enhance your business's credibility and financial efficiency.

Please click the link to learn more about MTD for VAT and the VAT services offered by JRMA.

Talk to a local accountant or bookkeeper

While it's possible to manage many aspects of your business finances on your own, consulting with an accountant or bookkeeper can be invaluable. They can offer personalised advice tailored to your business needs, help you navigate the minefield of tax regulations, and provide financial growth and efficiency strategies.

While it may feel counterintuitive, using a local accountant or bookkeeper will likely save you time and money and give you the time and head space you need to focus on running and growing your business.

Conclusion

By implementing the above points when setting up a new business, you will help to give your business the best possible start and a great foundation from which it can grow.

In addition to the above pointers, we have created a separate business start up checklist, which provides more information on what you need to consider when setting up a new business.

How can JRMA help

As management accountants and bookkeepers in Droitwich, we work with businesses throughout Worcestershire. Many of these clients came to us as start up businesses and we have supported them with bookkeeping, payroll and VAT services over the years to help them build successful and profitable businesses.  

If you would like to discuss your business plans and what steps you need to take to get started, we offer a free initial consultation. We would be happy to hear about your business and provide you with some pointers on how best to get your business off the ground. To book a free, no obligation consultation, please call us 01905 796512 or email info@jrma.co.uk.

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