Why You Should Use An Accountant to Create Your Business Plan
Starting a business is exciting, but it also comes with many challenges, that can be made even harder if you don’t have the right business plan in place, especially in an unfavourable economic situation.
Approximately 20% of start-ups don’t see their first anniversary, with 60% failing within three years of business. That’s why receiving advice and assistance on creating a formal business plan and services, such as audit and accountancy and corporate funding, are key to starting a successful business or growing your current one.
Read on for the expert opinions of our Chartered Accountants in Birmingham and the Midlands to find out what you should consider and why it is important to get advice from an accountant to improve your chances of success!
Creating a strong business plan
When creating your business plan, especially to attain funding for your business venture in the current economic situation, it is important to consider that corporate funding may be harder to attain, as business ventures will be considered high risk.
To increase your chances of receiving funding, you will need to have analysed several financial factors of your business and include the following in your business plan:
1. Business expenses
Your business expenses are anything you spend money on, such as any product or software licenses you use, rent or mortgage payments, utility bills, payroll costs, advertising, and more.
You will need to break down these costs in a clear way to help potential lenders understand where some of your money is going.
2. Financial projections
Here you need to break down your expected income from sales, which is considerably harder if you are a startup with no prior financial data. You may wish to look at the wider industry to help generate these figures.
3. Financial statements
You will need to include any income statements, cash flow statements, and balance sheets for a set period. These can be based on projections if you are operating a startup with no prior history.
4. Funding requests
Since you’re asking for funding from a lender, you will need to specify how much you are looking to borrow and the terms of the loan deal. You will also need to outline why you are requesting the money and what it will be used for.
Working with an accountant can help you ensure that every area is considered and included in your business plan.
Registering for business taxes
When setting up a new business, whether as a sole trader or a new limited company, your business will be liable for taxes on its profits. Firstly, it is important to understand the difference between the two to ensure your company is registered correctly.
You are a sole trader if you’re self-employed and own your business with personal liability. A sole trader will be liable for self-assessment tax on its profits and will need to register for self-assessment with HMRC.
You will need to be registered by the 5th of October in your business’s 2nd tax year.
Limited liability company
A limited company, however, is legally separate from the owner, with a unique company identity. This will mean you need to be registered with Companies House and will be liable to pay corporation tax on its profits, and therefore will need to register for corporation tax with HMRC.
Your business will need to register within 3 months of starting to operate and may incur penalties if you register late.
The most suitable structure for you will depend on your situation and your future plans. The decision you make will have repercussions on the way you are taxed, your exposure to creditors and other matters.
Working with an accountant can ensure you have completed all necessary steps when it comes to taxes and setting up your new business. On top of this, it helps you remain compliant, register for taxes on your business profits on time, and prevent any penalty charges.
If required, an accountant can also help businesses register VAT, PAYE and National Insurance.
Setting up an accounting system & getting your bookkeeping right
When making the decision to become your own boss, you will also need to set up an accounting system and start bookkeeping.
Setting up an accounting system
An accounting system is an important part of any business and will help your business understand its finances, including its income, the money it owes and your customers’ outstanding accounts.
As part of this, you will need to set up a bank account for your business so you can accept and make payments, make a list of creditors, pull together a list of the company’s possessions and choose an accounting system for your data.
Managing your bookkeeping
Bookkeeping differs from accounting, as it involves the day-to-day management of your finances – including making payments, chasing customer payments, ensuring your business pays the correct taxes, and managing payroll.
If you are not well-versed in business accounting or bookkeeping, a specialist accountancy firm like Edwards is the perfect business partner to approach for assistance.
We will help you set up your accounting system, understand the accounting records your business needs to keep, and find the best solution for your bookkeeping, including cloud accounting options which can help you streamline your financial administration and gain access to your business’s numbers in real-time.
Get in touch
If you’d like to discuss your business options with our expert Chartered Accountants in Walsall and the Greater Birmingham area, we’re always on hand to help. Our team can help talk you through the creation of your business plan document and work with you to provide accurate financial information.
We can also help startups and established businesses alike through our corporate tax planning and cloud accountancy services, while also having a full team of expert Walsall auditors to meet your requirements.
If you need any help with the financial management of your business, get in touch with one of our team today.