10 SAVVY MONEY MOVES FOR START-UPS

Thought about ditch­ing the 9-5 and go­ing it alone? Check out this fi­nan­cial ad­vice first

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1 MAKE A MONEY PLAN

You need to get to grips with the nitty-gritty of how your busi­ness will work. Be­fore you start, write down your short, medium and long-term busi­ness goals – then think about how you will achieve them. What do you need to sac­ri­fice to get there? When you have a big­ger goal, you’ll find the im­pe­tus to sac­ri­fice the small stuff. If you want to se­cure a loan from a bank or in­vest­ment from other sources, you’ll need to un­der­stand and ar­tic­u­late how much it costs to run the busi­ness, what your turnover will be and when you will make a profit. Need help? Find lots of ad­vice at gov.uk/busi­ness-sup­port-helpline.

2 FIND THE RIGHT BANK

You may be able to get a busi­ness loan or an over­draft from a bank if you meet its lend­ing cri­te­ria (which in­cludes hav­ing a good credit rat­ing). For more in­for­ma­tion and ad­vice, visit bba. org.uk/cus­tomers/busi­ness-bank­ing. But you shouldn’t just head to the bank you have your cur­rent ac­count with – in­stead, look for one that re­ally meets your small busi­ness needs. See and com­pare op­tions at busi­ness­bankin­gin­sight.co.uk. This site also has info on credit cards and other ser­vices de­signed for small and medium-sized-busi­ness own­ers.

3 GET HELP FROM THE GOV­ERN­MENT

As long as your busi­ness hasn’t been fully trad­ing for more than 24 months, you can ap­ply for a loan of be­tween £500 and £25,000 from the Gov­ern­ment. Men­tor­ing ser­vices to new busi­nesses are also offered. Go to gov.uk/ap­ply-start-up-loan to ap­ply.

4 CON­SIDER OTHER FUND­ING SOURCES

Loans aren’t the only way to source cap­i­tal for your busi­ness. Crowd­fund­ing lets you pitch your ideas to the gen­eral pub­lic and get in­vest­ments from peo­ple who be­lieve in your busi­ness. You can ei­ther of­fer po­ten­tial in­vestors an eq­uity stake in your busi­ness or swap cap­i­tal for ben­e­fits and dis­counts us­ing a site like Kick­starter. Find out more at ukcfa.org.uk. You could also look into peer-to-peer lend­ing, which is sim­i­lar to, but not to be mis­taken for, crowd­fund­ing. It en­ables in­vestors to lend funds di­rectly to bor­row­ers. In­ter­est rates offered are typ­i­cally at least as good as rates on loans pro­vided by banks. Find out more at mon­eyad­vice­ser­vice.org.uk, and check out lend­ing plat­forms like zopa.com, fund­ing­cir­cle.com and rateset­ter.com.

5 ASK AN AC­COUN­TANT

The right ac­coun­tant will be an in­valu­able source of guid­ance as your busi­ness grows, and can make sure that your day-to-day book-keep­ing is up to scratch. Try start­ing with the In­sti­tute of Char­tered Ac­coun­tants for Eng­land and Wales (icaew.com), which has a search ser­vice and also lots of re­sources for new busi­nesses.

6 IN­VEST IN GOOD SOFT­WARE

Bills, VAT, PAYE, na­tional in­sur­ance and staff costs… keep­ing track of all these is much eas­ier with the right ac­count­ing soft­ware, such as Sage, Xero or Quick­books. It will be money well spent in the long run, as hav­ing ev­ery­thing in one place will help your ac­coun­tant spend less time pulling it to­gether at the end of the tax year.

7 MAN­AGE YOUR FINANCES ON­LINE

There are plenty of ac­count­ing pack­ages to choose from, so be sure to com­pare and read reviews be­fore you com­mit. It can be handy to choose one with an easy-to-use app, so that you can ac­cess your busi­ness finances any­time, any­where, as well as gen­er­ate in­voices on the go.

8 GET TO GRIPS WITH TAXES

Dif­fer­ent tax rules ap­ply depend­ing on whether you are a sole trader (you run your busi­ness as an in­di­vid­ual) or a lim­ited com­pany (you’re the owner and an em­ployee of the com­pany). Get­ting on top of your per­sonal and busi­ness tax, as well as na­tional in­sur­ance, is cru­cial, or you’ll end up in trou­ble with HMRC. Visit hmrc.gov.uk, the de­fin­i­tive start­ing place for ev­ery­thing tax-re­lated.

9 SORT OUT YOUR PEN­SION

If you’re self-em­ployed and pay­ing into a per­sonal pen­sion, you get the same tax ad­van­tages as if you were em­ployed with a com­pany pen­sion. As a gen­eral rule, you should be pay­ing at least 8% of your in­come (ide­ally closer to 20%, if you’re over 40) into your pen­sion. One op­tion if you’re self-em­ployed is a flex­i­ble stake­holder pen­sion so you can stop and start pay­ments. Start re­search­ing at mon­eyad­vice­ser­vice.org.uk.

10 BE A SMART EM­PLOYER

If you’re tak­ing on staff, you’ll need to make sure you have em­ploy­ment con­tracts in place, pay staff on time, deduct tax ac­cu­rately and com­ply with other le­gal re­quire­ments, such as au­to­mat­i­cally en­rolling them into a pen­sion where ap­pro­pri­ate. Check gov.uk/em­ploy­ing-staff for a run­down for first-time em­ploy­ers. Your ac­coun­tant will be able to help with as­pects such as pay­roll, but also in­volve a lawyer. Re­mem­ber: late pay­ments can be a big headache for small busi­nesses. For ad­vice, con­tact small­busi­ness­com­mis­sioner.gov.uk.

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