Emily Coltman FCA, Chief Accountant to FreeAgent – which provides an online accounting software specifically designed for freelancers, contractors and micro-businesses – gives her top tips for resolutions to consider.
Keep your books in better order
Bookkeeping isn’t usually something that fills small business owners with joy, but it’s nevertheless an incredibly important task to get right. Without well-managed accounts, you’ll struggle to know how much money you’re making, and that will impact business decisions such as whether you can afford to change your pricing or start renting new premises.
Promise yourself that this will be the year you make bookkeeping an integral, but manageable, part of your work. Dedicate just an hour a week to reviewing your bank transactions, logging your expenses and managing your invoicing – rather than leaving everything to pile up – and it’ll be easier for you to see at a glance how your business is performing.
Get your Self Assessment done early
If you’re running a small business, it’s likely that you’re one of the millions of people that has to submit a Self Assessment tax return this month. But do you make sure that you get this done in plenty of time. Make it one of your New Year’s resolutions to tackle Self Assessment as early as you can, and to submit your tax return to HMRC with plenty of time to spare. That way you won’t be doing everything at the last minute, you’re less likely to rush and make mistakes and you’ll save yourself a huge amount of stress in the process.
If you need help getting set for Self Assessment, check out our handy guide for some more tips on tackling your tax return.
Review your customer and supplier lists
Try looking through your customer list and find customers who take ages to pay, or who argue and quibble about what you’ve invoiced them for – or even just those that you don’t like dealing with. Then, provided you feel that your business can afford to do so, think about whether you could politely point them to another supplier.
In addition to weeding out your problematic customers, it’s a good idea to find the ones who you do enjoy working with – and potentially ask these customers to refer you to their friends. Or perhaps introduce a dedicated referral scheme so that they receive a reward for every person they successfully introduce to your business.
This is also a useful exercise when it comes to your suppliers. Make a list of all the suppliers that you buy from, and think about what it’s like to deal with them. How good are their products and services? Do you find yourself continually having to check to see if they’ve made mistakes, or supplied everything that they promised? Do they deliver on time, or do you have to continually chase them? Will they go the extra mile for you, to help you fulfil a rush order from a customer? And is there a cheaper alternative.
However, if you’re looking at competing suppliers be cautious of just going for the cheapest, because this could reduce your own brand quality – for example, if you switch to a cheaper printer of business cards, then you may end up with flimsy, poor-quality cards that won’t impress your customers.
Collect your cash faster
Many small business owners are far too nice to customers when it comes to chasing the money they’re owed. They don’t follow up invoices quickly – often because they’re worried about offending their clients – but that’s a dangerous mindset to have when it comes to business. You need to get the cash if you’ve done the work, because if there isn’t enough money coming in to pay the bills, your business could to struggle to survive.
Try setting clearer payment terms and make sure your customers know when they have to pay you – and then keep to these terms. Of course, when clients are in genuine difficulty you can give your them more time to pay, but being strict about your payment terms will help you deal with those customers who repeatedly fail to pay you on time for no reason.
If you’re worried about managing or chasing your invoices, you could also invest in specialist invoicing or accounting software that will send out automatic reminder emails to customers when they don’t meet your payment deadlines. You may find this easier and quicker than chasing them manually and having that awkward phone conversation about money with them.
Keep on top of your taxes
You can’t escape the taxman when you’re running a business. There will be taxes to pay and you need to know when these are due and how to pay them.
Keep track of your tax bills as they come over the horizon, and consider whether to open a separate business savings bank account, to put money aside to pay your taxes. HMRC will charge you interest if you pay your taxes late so don’t incur this extra cost for your business – know how much you’ll have to pay and when, and pay it on time.
Emily Coltman FCA is Chief Accountant to FreeAgent. FreeAgent provides an online accounting software designed to meet the needs of freelancers, contractors and micro-businesses.
Try it for free at www.freeagent.com