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Do you have a budget/plan for at least the first year? – A business plan will help you to assess the viability of the new business and provide a budget for you to work towards.
Do you have enough cash to get the business started? – The actual cash needed to start the business may be far more than originally anticipated. Sales may take longer to grow and costs may escalate. Being prepared for the unexpected is important so that the business does not run out of cash before it reaches profitability.
Do you need accountancy software? – If so, which do you choose? Lilley and Co Ltd can advise on an appropriate solution and the pros and cons of using an online or a desktop version. We can set everything up for you and can take over the burden of the ongoing book-keeping and paperwork if required.
Do you need payroll services? It is essential to register the new business with income tax and social security. Lilley and Co can provide a full payroll service including quarterly returns for Guernsey, Jersey and the Isle of Man.
Appoint an accountant – it is often a good idea to engage an accountant from the outset as a good accountant will be able to provide advice and support on all financial aspects of your new business.
Regular Management Accounts including profit and loss account, balance sheet and commentary will give you a clear idea of how the business is doing and enable you to take remedial action before problems start to take hold. A simple report will show performance against your budget.
KPI’s (Key performance indicators) can quickly tell you each month whether you are on track with your budget.
Keep on top of your Cash Flow – If you are a sole trader a business bank account is often useful to keep a track of income and expenditure and keep your business and personal finances separate.
For limited companies it may be a good idea to have a 3 month rolling cash forecast to help identify the peaks and troughs in your cash balances before they happen.
Control your debtors – A good system to ensure your debts are paid on time will enable you to pay your suppliers when invoices fall due.
Sole traders will need to keep proper records of all income and expenditure from the beginning and keep all receipts and invoices. You should tell the income tax and states insurance departments immediately that you are self – employed. Tax is payable twice a year on 30th June and 31st December, although you can also arrange to pay this monthly.
You will be required to submit either a 3LA (3 line account form) or TPLA (Trading Profit and Loss Account) to the Director of income tax each year.
Limited companies are required to submit statutory accounts to the Director of taxes by 30th November following the year in question. These must be prepared by a suitably qualified accountant.
Depending on the size and complexity of the business your company may not be required to have a full audit and your accountant can advise on this.