Category: Outsourcing

The Most Dangerous Accounting Mistakes For Your Small Business

Posted on | by Jessica Weston | Leave a Comment on The Most Dangerous Accounting Mistakes For Your Small Business

Starting your own business is an amazing thing to do but it’s also notoriously risky. There’s a lot to think about when you first start out on your own and it can be tempting to put accounting on the back burner, but that would be a huge mistake. Good accounting is crucial to the financial health of your business and mistakes can be devastating, especially in the early days. It’s important to know which mistakes to avoid to ensure that your small business is around for years to come.

1. Bad Bookkeeping

New business owners are often overwhelmed and tend to neglect bookkeeping. However, it’s essential that you keep the books up to date and record all of your earnings and expenses. Without this data, you won’t have a clear picture of how you’re faring financially, which can lead to a myriad of nasty problems.

Meticulous bookkeeping allows you to spot trends, understand your spending and examine which practices generate the largest ROI. You can then leverage this data to improve the financial health of your business, maximise your profits and manage your cash flow. Staying on top of the books allows you to stay one step ahead and put out fires before they start.

2. Confusing Cash Flow and Income

The money you take isn’t the money you make.

£100,000 in revenue sounds great, but if you had to spend £30,000 on equipment, insurance and employees to make that money, you’re actually left with £70,000 profit. You’ll then have to pay tax on your gross profit, so the net amount will be smaller again.

It’s vital to know not only how much money is coming into your business, but how much is going out. Getting carried away with gross numbers is a common mistake that new business owners make, and it quickly lands them in hot water. It’s important to stay grounded in reality and know how much you’re really making so that you don’t overspend.

3. Using Outdated Practices

You’re a 21st century business and your accounting practices should reflect that. Online accounting and bookkeeping softwares are faster, easier and dramatically more efficient than ledgers and Excel spreadsheets.

Online accounting software is easy to learn and significantly reduces the margin of human error by automating processes and calculations for you. This means that you’re much less likely to make mistakes on your tax return. It also reduces the risk of making the wrong financial decisions due to inaccurate information.

With this type of software, you won’t have to spend hours updating and organising your financial information. Another benefit is that it allows you to locate and cross-reference information quickly and easily, without having to spend hours searching for the right files. It may be more expensive than the DIY approach initially, but using online software will save you many man hours.

4. DIY Accounting

Accounting is complicated; there’s a reason it takes accountants years to fully qualify. Trying to manage your accounts all by yourself is a surefire way to waste time and stress yourself out. Besides, without extensive financial knowledge it’s unlikely that you’ll be able to save a significant amount of money on your tax return. Furthermore, you’ll be heavily penalised for making even a minor mistake on your return which could cause financial problems for your business.

Trying to manage on your own is a drain on your resources so the sooner you seek professional help, the better. Investing in the services of an accountant is one of the best decisions you can make regarding the financial health of your small business.

Summary

It’s important to avoid the above accounting mistakes in order to set your business up for success. Neglecting or mismanaging your accounts can have serious consequences, so it’s best not to take any risks. Whilst it’s tempting to put accounting off until later, you need to make it a priority right from the very start. Good businesses and bad accounting just don’t go together.

7 Most Common Money Mistakes for Start-ups to Avoid

Posted on | by Jessica Weston | Leave a Comment on 7 Most Common Money Mistakes for Start-ups to Avoid

Smart financial management is essential for any business, no matter how big or small. However, it can be difficult to get things right, especially during the start-up stage. Poor financial planning is one of the most common reasons that start-ups fail, so the sooner you take ownership of your business’ financial health, the better. Dealing with your finances head-on from the get-go is the best way to set yourself up for lasting success. Careful planning can help you to avoid common money mistakes and shows potential investors that you’re serious. Here are the most common financial mistakes that start-ups make and how to avoid them.

1. Prioritising Instinct over Information

Whilst following your gut is generally a good principle, it’s a dangerous game to make assumptions about your finances. It’s vital that you meticulously track your revenue and expenses and closely monitor your cash flow. If a small mistake goes unnoticed for too long, it could prove very damaging for your business. During the start-up stage, using an Excel spreadsheet will suffice but be prepared to upgrade to bookkeeping software later on.

2. DIY Accounting

Managing your accounts by yourself will suffice for the initial setup of your business, but it’s wise to hire a professional accountant as early as possible. Juggling self-taught accounting with running a small business will eventually result in a backlog of errors, which can prove costly. Professional accounting services save time, money and stress, allowing you to focus on growth. You don’t need to hire a whole team. Start by outsourcing your taxes or setting up quarterly meetings with a financial consultant for help and advice.

3. Failing to Assign Project Budgets

Assigning a budget to a project prevents it from draining your finances should something go wrong. A clear budget will allow you to reassess your finances should the project require more money and make smart decisions that won’t damage your business.

4. Disorganized Files

The importance of balancing bank statements and keeping receipts in order cannot be overstated. Patchy bookkeeping can cause chaos for your business and result in a lot of trouble, not to mention wasted man hours trying to resolve the problem. Keeping all of your receipts and cross-referencing your accounts with your bank statements is vital for transparency and future success.

5.  Misunderstanding Your Target Market

In order for your business to be successful, you need to understand what your customers need. Knowing your target market helps you to reach them, as well as how to appropriately price your products and services. Here are some questions to consider:

What is your market position?

What need do you fulfil for your customers?

How much value do your products or services provide?

Who is your competition – and what makes you stand out?

Miscalculating prices can prove to be a grave error for a small business, but knowing your market well will help you to figure things out.

6.  Hiring Quantity over Quality

Over-hiring is an expensive mistake to make. Hiring employees is one of the most costly parts of running a business, so going overboard is a huge waste of money. It can also damage staff morale and productivity, and lay-offs further down the line will only amplify the problem.

Bad hires are another threat to a small business. Hiring the wrong employee can create an imbalance within the company culture. In turn, this can negatively impact other staff and even damage your business’ reputation. Don’t rush the hiring process. Taking extra care to avoid mistakes can save a lot of trouble in the long run.

7. Miscalculating Expenses

In order to keep your business afloat, you need to know exactly how much cash your business burns each month. Keeping a meticulous record of your expenses allows you to understand where your money is going, and how much you’ll need to survive. Underestimating your cash burn can land your business in hot water, so create a projection of your monthly expenditure and be sure to monitor it closely, making adjustments whenever necessary.

A successful business needs a strong financial foundation, so keep these mistakes in mind. No business is invincible and it really does pay to be cautious and always stay one step ahead.

If you want help to ensure that your new business gets off to the best possible start click the link below to arrange your free discovery call.

www.sunnysideaccountancy.co.uk/contact/

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Why outsourcing is beneficial for your business – Gaining back more time.

Posted on | by admin | Leave a Comment on Why outsourcing is beneficial for your business – Gaining back more time.

There’s a dream surrounded with the idea of becoming your own boss and dictating your own business which can be rewarding and very advantageous, it allows you to have a chance of running the field in a certain area of interest you feel passionate about or if you decide you want to turn your hobby into your full-time income.

Although for many people this dream becomes a reality, the realization of how much added work there is to become your own boss can be daunting and off putting. The recognition of having to source your own HR, Accounts, IT, and Legal Department as well as having to be your own Head of Customer Service. This puts many people off the idea of running their own business and doing what they love day in day out as the dream doesn’t all seem so attractive after you’ve had these daunting realizations of all the added on ‘extras’ that come as a side parcel.

With outsourcing these aspects of your business, it allows you to thoroughly enjoy being your own boss and many other benefits such as;

GAINING MORE HOURS IN YOUR DAY

You’re the master of your business and what you do you wouldn’t trust anybody else to style your regular customers hair the way you have been for the past couple of years or to run your award winning pub that’s been passed down through your family for many generations. Ideally, you’d want to work your standard office hours, go home and enjoy the rest of your day but as many business owners will know that after completing your normal office hours during the day, you then have to go home and complete your paperwork and admin. By outsourcing, you can wave goodbye to the stress of having to work more hours to complete your paperwork.

TRUST THE EXPERTS

Whilst you may be the master of your own business, you cannot be the master of absolutely everything. As many people will know, paperwork tends to get shoved to the side and ends up at the bottom of your To-Do list. By allowing an expert to deal with all your paperwork, you gain back more time and don’t have to worry about getting it all completed on time which also allows you to gain more hours back in your day!

AN EXTRA PAIR OF HANDS

Sometimes you could be fully booked in the diary and other times you may have too much spare time you don’t know what to do with it all, Because of this roller-coaster that comes as a added extra when your self employed you would need somebody else to be employed to help around the house but you also don’t want the added expense of paying another employee.

FOCUS YOUR MIND

Once you’ve outsourced these tasks you have time to work ON your business and not IN your business. You’ve probably got great plans for the future, but have you ever thought how you’re ever going to achieve these if you haven’t got a chance to step back every now and then.

BETTER WORK AND LIFE BALANCE

Many people think setting up their own business is going to give them more free time to enjoy, although unfortunately in many businesses this isn’t the case. By getting somebody to help, you won’t be tied to your desk or laptop and you’ll be able to spend your time doing things you love the most.

HOW CAN SUNNYSIDE ACCOUNTANCY HELP YOU?

We are very flexible which enables me to be specialized to every client’s individual needs and requirements. Having worked alongside different industries, this has allowed us to have a further understanding in many different businesses to provide the right support for your business. We can provide extra support where needed and can help you gain more hours back in your day to focus on the bigger picture of your business.