4 Key Choices to Make as a Start-up From The Get-Go
Author Janet Collins, LHP Director and Start Up Advisor at LHP
There’s nothing quite like a pandemic to stimulate change. Start-ups are on the up and necessity is after all, the mother of invention.
We’ve noticed an increasing number of start-ups coming to us for help with their finances lately, similar to the upswing the world is reporting right now (FT 2021). People come to us wanting a rounded level of help and support with their business plans, cashflow forecasts, funding needs and general year-end accounts from the outset. Well, if this is you, look no further.
It’s a known fact that people recently found without a job, often try a business idea or out of necessity turn to their talents to go it alone. Magazines are littered with stories of ‘I started up when I was made redundant and never looked back’. But now it’s even harder to break the mold, with a potential recession looming on the horizon.
- A friendly mentor
At LHP we cater to new starts. As a female business mentor in the local business community in Carmarthenshire, I support a lot of female entrepreneurs (and male ones too). I’m quite seasoned at helping this type of client. Being a local councillor also complements this role. I love helping people thrive and adapt over time.
It is important to help new business owners with things like their market research, supply chain logistics, equipment sourcing (I even help some clients pick vehicles over WhatsApp) and much more.
At LHP we’re as much your trusted mentor as your financial specialist and we believe in the personal touch. That’s not to say we don’t have all the expertise in core accounting you would expect from a modern accountancy firm. It’s that we have that and more on top.
A new business needs a good business plan. One that considers the future, the Covid environment and as much as possible looks ahead a year or 2 to assess challenges and opportunities. There’s a skill to this.
2. Structuring your business
One thing you will need some help with, is structuring your new business in the best way for you, and help with your business plan.
It is so important that every element of the business is right from the start. Do you for example set up as a sole trader? Or is it better for your circumstances to incorporate as a limited company straight away? What are the risks in being a sole trader and how does being limited affect NI and tax? Are the tax reliefs worth incorporating for? How will this impact on other areas of your life?
We can advise on best set up so that you either get a self-assessment or limited company return for your business. And whether it be a partnership, company, or sole trader affair, we will walk you through it and advise on the pros and cons.
3. Attracting grants and reliefs
We are already seeing Covid-related funding popping up for various businesspeople, start-ups are no exception.
Having enough cash in the business is key to being able to grow the company – investing in capital for example. As a limited company, you can use tax reliefs like super deduction tax relief (130% relief) to help buy equipment in the company for the coming 2 years, which you could not if you were a sole trader. This is just one small example.
At LHP we can help source grants, and advise you of what is out there at any given time in your local area. (See our blogs on grants). We take the time to explain tax reliefs and support schemes and like to put new starts in touch with the right people, should they be interested in building their networks. And at the same time as all of this, we of course help with sales and cashflow forecasts.
4. Getting the right tools for the job from the get-go
LHP specialises in real-time digital accounts. They are simple to use and have great time and money-saving benefits. Digital accounts allow you a real-time view of the business, so you can make fast decisions and impress investors. Banks and investors are going to ask difficult questions and it’s important you really understand your finances and that the forecast is realistic and you have a grasp on figures in the medium and not just short-term.
We are a Platinum Xero Partner and use Xero cloud accounting to allow you to keep digital records and sales forecasts with real-time insights. Couple this with knowledge of how to use tax reliefs and allowances and you can soon have a healthy heartbeat as a new business.
In our experience, we find that those people who use our expertise can actually focus on their business, while we do wonders with the business finance and steer them in the right direction.
The government is introducing ‘Making Tax Digital‘, businesses are all moving to the Cloud between last year and 2023. Digital tax is something everyone needs to be using if not now, soon, to avoid penalties by HMRC. It’s so much easier if you set up as you mean to carry on long-term from the get-go, rather than making a time-consuming switch in around a years’ time.
If you need help as a start-up please reach out for a chat. We’re more than just accountants, we take the time to understand you, to find the right mix of tax compliance, advisory and strategic advice.
Drop us a message on Let’s Talk and we’ll get back to you for a chat. As an award-winning dynamic firm with offices in five locations across Wales and 85 years’ track record, you are in safe hands.