Do I need a cashflow forecast for my startup?
Do I need a cashflow forecast for my startup? If you are self-employed or an incorporated company it’s very important that you stay on top of your finances. You should be aware that if your finances are not organized your business will run out of cash and your business will fail no matter how great your business model is.To read our blog on why your business might have click here A GENERAL BUSINESS RULE YOU SHOULD FOLLOW: There is an important business rule and it is that the business money should stay in the business. To keep the business money separate you should have a separate business account which is maintained only for the business transactions.This way you will have a fair idea of how much you can invest in your business or whether you have enough money to pay your suppliers and other liabilities such as taxes. Also you should pay yourself salary at market rate or if you are borrowing money from your business for your personal loan make sure it is accounted in your business account as directors loan and treated accordingly. WHY IS CASH FLOW FORECAST IMPORTANT FOR MY BUSINESS With a good business model and an effective business strategy you should have a very efficient financial model. If you are not an accountant you might want to hire professional accountants to make your startup business a success. Cash Flow forecasts will tell you your business’s financial position. You calculate the net cash flow which means you will estimate the cash coming in and subtract the cash that is expected to go out in the future to see how much cash you will be left in hand. This will help you predict how much money you are left with to reinvest in the business or It also helps to understand when you have to raise funds and how much you have to raise. It is usually based on estimates and forecasts. If in the forecast you don’t see cash coming in your company will become insolvent. If you are starting a business or have just started a business you should make a cashflow forecast. It’s going to take a little longer for the first time however it will take a few minutes next time. You can do cash flow forecasts regularly, some businesses do it weekly, some monthly and some do it quarterly. If you are a small business you will have to do it weekly. Startups should look at the weekly projections because they evolve so quickly. WHAT SHOULD I INCLUDE IN THE CASHFLOW FORECAST You should consider cash flowing in and out. The figures are estimates and therefore there is a chance of error, you should be well aware of the business and completely understand why you are making a cash flow forecast. For a startup this can be trickier since there are no historic figures and you might go wrong in predicting the income for the sales. You might be dealing with different currencies for example you might be getting your supplies from a variety of countries, this might result in inaccuracies. The cash coming in can be from the sales of your business product, any loans or from other sources. The costs that are incurred (cash outflows ) will vary from business to business. For example if you are selling items online your cash flow forecast will include the costs such as the following: The above list is only an example and it can include other costs as well such as depreciation costs. If you are a startup and you want to hire a professional startup account in Croydon contact Taxaccolega at 020 8127 0728 and our expert team of accountants will sort out the numbers for you and give you advice so you can make informed decisions.
Best accounting firms in Croydon
Best accounting firms in Croydon What to look for in an accountant when choosing an accountant for your company. Are they qualified? When choosing an account you should look for an accountant’s qualifications and experience. If they are qualified they will be associated with a relevant professional body such as Acca and ICAEW. At Taxaccolega we have qualified bookkeepers, certified accountants and chartered accountants. We make sure that the accountants in our firm have professional competence and strictly adhere to the ethical code of conduct. This includes objectivity, integrity, cofendiciality, professional competence and due care, professional behavior. Since as your accountant we will be dealing with confidential and sensitive information we make sure that we keep it conference and not disclose it to anyone. Easy to talk to They should be friendly and you should feel comfortable talking to them .This is very important that you are comfortable with your accountant when you talk to them for the first time . You should feel free to talk about the fees that they will be charging. For example, are they going to bill you per hour or is there a quarterly or an annual package? discuss what you expect from them and what they expect from you. The clearer the things are between you and the accountant the better it is for you and your business. You should not feel shy asking them questions related to accounts and taxes. You might want your accountant to explain to you what the numbers mean and how they affect your business. Since you run a business, it’s not necessary that you know the financial side of the business and an accountant should understand this and answer all your queries patiently. You should hire an accountant who does not only prepare your accounts and other financial statements but is also able to explain the numbers well. Meeting deadlines A good accountant will be an accountant who will deliver on time . He will meet all the deadlines. He will ask for any information required to make the accounts on time . He will make sure that no penalties are incurred. A good accountant will remind you of your deadlines in the timely manner rather than expecting you to remember them. Communication Skills A good accountant is an accountant with good communication skills. He will keep you in the loop with everything they are doing A good accountant will keep you informed . If your deadline was on 7 Feb and your accountant usually submits by 27 Jan however due to some reason the accountant won’t be able to do it this month it would be good for you if they tell you clearly that due to some reason they won’t be able to submit it until 6th Feb . When you are informed you will have a better understanding of the situation. This also shows a sense of responsibility towards the client and the client in turn will have more confidence in the accountant. Scale of the firm and the size of your business When you are looking for an accountant, their scale should match your business. For example if you are a small business you should go for an accountant who is a small firm. If you are a startup or a growing business you should look for medium to large firms. Taxaccolega deals with both small and medium sized businesses. Experienced You should also make sure that your accountants have experience in the type of business you are in. For example if you are in a real estate business it would be worthwhile going to an account who has an experience in the real estate business. Your accountant should be able to tell you frequently made mistakes by the client in this business and you can also learn from the experience of the client. At Taxaccolega we deal with a large number of clients who are in the real estate business and therefore if you are renting your property we will be able to advise you on the business structure and other related taxes. We are also experts in the inheritance tax law and we can provide you with expert advice on inheritance taxes that will include how to save your taxes and also how to Pay the taxes. These taxes can get tricky as everyone is in a different situation and a relief that applies to you might not apply to the other individual or a business, an accountant who is experienced can advise you on how to save taxes by utilizing the reliefs available to you. Taxaccolega, as one of the best accounting firms in Croydon deals with a variety of clients such as contractors , freelancers, sole proprietors, small business owners. We provide tools for clients who are selling on platforms such as Amazon, Ebay so the accounting is made easy for them. Since we are a team of accountants and chartered accountants we won’t only do your bookkeeping but we will also give you professional, unbiased advice on your financial matters. For example, we will let you know how you should run your business either as a limited liability , sole proprietorship or a partner. We will even tell you by looking at your individual circumstances when you should switch to a different business structure in order to save taxes. Are they easily approachable? When looking for an accountant you want an accountant who is approachable. You can talk to us on the phone in case you want to discuss anything with us, you can walk in our office or arrange a video call with your accountant. Here at Taxaccolega, although the whole team of accountants will be working on your accounts there will be one specialized accountant allocated to you who will do all the correspondence with you this is to avoid confusion and to have consistency in the work. When one accountant is allocated to the client this develops an increased rapport and the accountant gets to know the client and his business well. Efficient
When do I need an accountant for my startup business?
When do I need an accountant for my startup business? You are starting a business because you have a brilliant idea which you want to commercialize. You should know that business is not only about ideas. You cannot succeed as a businessman if your targets are not achieved and the target of a business is to make profits. That is why you need an accountant – to maximize your profits. HOW EARLY SHOULD I HIRE AN ACCOUNTANT? It is a good idea to hire an accountant at the planning stage. I have encountered a number of entrepreneurs who were so excited about pursuing their idea and introducing it to the world that they didn’t bother about the numbers. You might have an innovative idea but you have to make sure the financial aspect of your business is covered as well. An accountant today is not only the bookkeeper, he can act as your financial advisor at the early stage of your business. For example, when you are planning your business you should know the financial feasibility of your project etc. An accountant can prepare a cash flow forecast for your business. A cashflow forecast tells you how much cash you will have after deducting all your expected expenses and costs. An accountant will not only prepare the forecast he can explain to you what the figures mean and the importance of the figures for your business. A cashflow forecast will tell you 2 important things: do you have enough money to pay to your suppliers and do you have enough funds and when and how much will you have to raise funds to keep your business running. Since the figures used in the cashflow forecast are an estimation there is an increased chance of an error. This is especially true for a startup business at the planning stage since the business is new and the estimation is based on the prediction and there are no previous figures to look at. This chance of error can be decreased when you have an accountant who has worked for a similar business. Your accountant can help you decide if you should run your business as a limited company, sole trader or a partnership. The structure you choose should be chosen wisely because it affects the taxes you pay and the way you report to HMRC. The fact is that the type of structure you choose to run your business depends on the individual circumstances. There’s no one answer to this even if you are in the same type of business. For example if you chose to run your business as a sole trader and you have personal assets as well on which you have to pay taxes you might end up paying more tax which could have saved if you were running your business as a limited company. An accountant makes sure that you utilize all the reliefs available to you so you can maximize your profits but reduce the tax costs. You will also need your accountant if you have to register for VAT. They can help you file your VAT returns, fill in the self assessment tax returns if you are a sole trader and file them on time, prepare your accounts, file your accounts and do all the necessary book keeping. If the returns are not filed on time and taxes are not paid on time you will have to bear unnecessary extra costs. If you are looking for a startup accountant in Croydon or a startup accountant in London call us 020 8127 0728.
4 reasons why you should incorporate your property business
4 reasons why you should incorporate your property business When we are in any kind of a business we are looking for ways to save taxes. Tax is a cost which cannot be avoided but there are ways to reduce the taxes we pay. For example, by choosing the right structure of our business we might be able to save taxes. There is no correct answer as to what the structure should be; it depends on your individual circumstances. In recent years there is an increased trend in incorporating the property business, by property business we mean buying the property to rent for business purposes. Why is incorporating becoming a popular choice of business structure. We have listed 5 reasons why you should incorporate your business: If you are in a property business there are 5 reasons why you should run it as a limited company 1. The Tax Rates The corporation tax rate for the company profits is 19% and this is less than the tax you pay on your personal income which is 20%, 40% and 25% depending on which tax band your income falls into However, there is no tax allowance available to the company profits which means that you have to pay taxes on all the profits that you make. Whereas, although the tax rates are high on the personal income there is a tax allowance available and you won’t have to pay any taxes when you earn upto £12, 570. This means that if you deduct all the expenses from your income and you are left with the profit of £12, 570 it would be worthwhile running the property business as self employed provided you don’t have any other income which uses your personal allowance. If you have your personal allowance already used up for example if you are doing a job or you have invested somewhere else as well you might want to incorporate your business to save taxes by paying tax at 19% 2. The Finance Cost The finance cost is the cost incurred which you pay when you borrow money to buy the property. In this case it will be the interest and other costs which you pay on the mortgage. You can deduct these costs when you are running the business as a corporation but these are not allowable expenses when you are self -employed. When these costs are deducted they will reduce your taxable profits and therefore the taxes that you will pay to HMRC. 3. Low rates of capital gains tax You pay capital gains tax when you are self-employed and you sell your assets such as your property. When you sell the property which is a residential property and it’s not your main home you will pay CGT at 18% or 28% depending on which tax band you fall into. If you are a limited company you will pay corporation tax(19%) on selling the property. 4. Maintaining your income If you have income from other sources as well you might want to restrict your income to save upon some personal taxes. If your property business is incorporated it is a separate entity and you can limit the income which you take from the company. You can take the income in the form of salary, dividend income and you can even take out the dividend loan. If you are thinking of starting a business or you a landlord and you want to incorporate your business do not hesitate to contact Taxaccolega, accountants in Croydon at 020 8127 0728 or message us here and we will be happy to help you
