text: Blog Archive
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  The opinions expressed herein are my own personal opinions and do not represent
  my employer's view in any way.
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  This is something that we’re in the process of re-working as we have a variety of billing periods ranging from ad-hoc to annual. This is fine as long as you have some method of determining which method a client requires.
  Stacey has devised a very good suggestion that should also avoid any complications with large annual invoices:
  There are a few reasons I like this method:
  Payment periods are important, make sure every invoice has a payment period on it but don’t expect your clients to adhere to it. You’ll learn what each particular client is like at paying as you build your client base but many will wait until the last payment date to pay, if at all until you start to bug them (see: Processes and Procedures about having a dedicated admin day). Having a shorter payment period (or “Payment Required on Receipt”) will allow you to start chasing the client sooner.
  There are a lot of example invoices on Microsoft’s Template website [] but it’s simple, keep them simple (this is a nice example: Services invoice with hours and rate) and only contain the information you need. Have your designer design you a nice letterhead that you can use with your invoices, not only does it look more professional but it ensures your main contact details are contained on the invoice, if your letterhead is a little different you never know, they may pay it faster as it catches their eye!
  Again it depends on your particular line of business but I would suggest you have the following information on it at the minimum:
  It’s obviously optional and up to you but I think it’s nice touch to thank the client for their business on or with i.e. on a complimentary slip the invoice (see: Client and Supplier Relations) –yes, I love my clients!
  Buy an ACCA textbook and read it. You need to know about the tax system and how it works. ACCA is the best. Then go and find a good accountant.
  Buy an ACCA textbook and read it. You need to know about the tax system and how it works. ACCA is the best. Then go and find a good accountant.
  Jos Vernon
  I’m not an accountant myself but my (far) better half Stacey is a chartered management accountant with CIMA (an alternative to ACCA) and I ran this past her as I had concerns with it. Her response was rather than obtaining (expensive) textbooks that you’re unlikely to understand (I’ve seen them, I can understand them but they’re somewhat boring) the best thing you can do is read through the documentation from the Inland Revenue –mainly because as soon as that textbook is printed it’s out of date which can (obviously) have massive re-processions for you!
  There are many different accounting bodies and they all have their own specialities. It’s important to understand that a Chartered Management Accountant can’t necessarily help you with your tax return, in the same way a taxation specialist can’t necessarily help you with profitability analysis (whereas a Management Accountant can). One amusing ditty about Chartered Accountants (and I expect this covers other industries with multiple bodies) is that they all feel their chartering body is the most superior whereas they’re probably all much the same.
  It’s important to remember that it’s the same as your industry, it’s great that the client knows what you’re talking about but it’s highly unlikely they know as much as you.).
  John Mandia
  Get a fixed priced accountant, not one that charges in "6 minute units" (only accountants can come up with such a thing!)
  Get a fixed priced accountant, not one that charges in "6 minute units" (only accountants can come up with such a thing!)
  Ian Blackburn
  ...or a part-time booker who knows their onions. Cheaper, more loyal and usually more effective.
  ...or a part-time booker who knows their onions. Cheaper, more loyal and usually more effective.
  Mike A
  Again from Stacey, any accountant worth their money will save you more than they cost you, as with many things in business –recommendation is key, ask around friends and family or fellow businesses to find a reputable accountant and if at all possible get a few references.
  There are many accounting bodies out there (CIMA, ACCA, CIPFA to mention a few) but make sure when choosing your accountant that they are chartered in some way or another as this means they’re more likely to be up-to-date with their knowledge and to some extent being regulated. When you’re setting out, you should be able to have all your books done for under £500pa comfortably.
  Don't get paranoid about tax. Yes it's a big issue. However ultimately the best way to increase your income is to make more money.
  Don't get paranoid about tax. Yes it's a big issue. However ultimately the best way to increase your income is to make more money.
  The Inland Revenue are surprisingly helpful. The VAT people are superficially scary but actually a really good bunch. If you're nice to them they will help you. And unlike the banks they actually know what they're talking about.
  The Inland Revenue are surprisingly helpful. The VAT people are superficially scary but actually a really good bunch. If you're nice to them they will help you. And unlike the banks they actually know what they're talking about.
  When setting up The Site Doctor, I chose not to go VAT registered on the basis that the majority of our start-up contracts would be non-VAT registered companies. As it turns out I was wrong as every man and his dog these days is VAT registered but more than that I feel that many businesses perceive non-VAT reg'd companies more fly-by-night.
  Most people (especially in business) expect companies to be VAT registered so it hasn't affected potential contracts and we have the added advantage that we can claim money back ;). Sadly, the only people that suffer are non-registered people and at the end of the day they're unlikely to have the money to justify you not going VAT registered.
  One thing to note if you’re setting up as a team is there is a limit on the turnover of the company at which point you are forced to be registered, this year (06/07) the limit was around £65k (refer to the Inland Revenue’s website []) so if there’s 3 of you in the team and you hope to take home £20kpa you’ll need to go registered straight away.
  You don’t need to be over the threshold to be registered as you can voluntarily register before you reach this threshold. There are a couple of benefits to voluntary registration that come to mind:
  One flipside however is the additional administration work..
  Sean Ronan
  Yes, a great tip and this is so easy to do if you've got access to internet banking through your bank, it also means you have a nice nest egg at the end of each year as Sean said -I did the same with my personal tax before going VAT registered.
  In the case of LloydsTSB they allow you to manage both accounts within the single login which makes it even easier, if you want to be really prepared, just halve each invoice, put one half in your savings account to cover VAT and Taxes etc and the other half is what you take home.
  Having a little money totting up on the side in this way allows you to have either: A nice little Christmas bonus (by this time you should know what your tax bill is going to be and you’ll have a reasonable idea of your Quarter 3 VAT return) -or- A tidy sum to invest into the business someway :)
  Also the VAT on expenses in the period running up to VAT registration can be claimed back, it may be 6 months - my first VAT bill was a credit, due to the expenses on hardware, software and start up costs.
  Also the VAT on expenses in the period running up to VAT registration can be claimed back, it may be 6 months - my first VAT bill was a credit, due to the expenses on hardware, software and start up costs.
  We recently registered for VAT and the official stance on claiming VAT back was:
  3 years on goods (hardware etc) as long as on the day of incorporation you still have the item, receipt and you've not sold it on.
  6 months of services (hosting, domains etc) as long as you have the paperwork.
  I was told that the Inland Revenue think nothing of start-ups and businesses in the IT sector to have a very low (or credit) first return (and if you're going registered from day one then the first few returns) due to the cost of setting up.
  For the latest up-to-date information check out the Inland Revenue’s website:
  It really is easy. It seems VAT accounting is often quoted here as a reason for getting an accountant involved - it just isn't.
  It really is easy. It seems VAT accounting is often quoted here as a reason for getting an accountant involved - it just isn't.
  Andy Henderson
  I couldn’t agree more, when you’re small, set aside a day a week to input your expenses into a database and as long as you’ve got your invoice lists to hand totalling up your income isn’t hard, the form’s dead simple (see photo) so there’s no need to worry about that. I’ve even uploaded the MDB that we’re currently using as a stand-in while our accounting system is finalised.
  While on the subject, in-house system development –choose it carefully, weigh up the costs of doing it yourself against buying an off-the-shelf solution. As a developer it’s all to easy to say “I’ll do it myself and save a few quid” –it’s not always the case, I’m only having ours custom built so I can tie it in with other areas of the business.
  Example Microsoft Access Accounting Database (21KB).
  Whatever you do, make sure you have a separate business account, it portrays a more professional image for your company (payments to your company will be addressed to your company name rather than your personal name).
  Make gross payments into your private pension plan from the company to reduce your corporation tax
  Make gross payments into your private pension plan from the company to reduce your corporation tax
  Alex Homer
  Stonebroom Ltd
  Keeping up a pension is important, talk to your accountant about the options available to you. It’s also worth considering alternative pensions such as property investment. I know a few business owners that own the property the business operates within..
  That’s a fine tip, using a personal account for your company savings can indeed earn you an extra 3-4%pa which soon adds up. Make sure however it’s a separate personal account that you don’t tap into and don’t top-up with personal funds. That way you’ll make life a whole lot easier when calculating the business’ income from interest.
  Abbey do a good business account with no charges (if you stay within a quota which should be fine for you guys).
  Abbey do a good business account with no charges (if you stay within a quota which should be fine for you guys).
  LloydsTSB also offer an e-banking option which is exactly the same as all other accounts except electronic payments (debit cards, e-pay etc) are free, paying in cheques however still costs (and a little more IIRC). It’s a good account to have if you’re web savy and can do the majority of your banking online.
  If you anticipate needing an overdraft facility in a year, go to the bank when the accounts look healthy and explain your plan. Much better to negotiate from a position of strength than accept the defaults because you are desperate for cash.
  If you anticipate needing an overdraft facility in a year, go to the bank when the accounts look healthy and explain your plan. Much better to negotiate from a position of strength than accept the defaults because you are desperate for cash.
  Good point, the banks love you when you’re doing well however expect to be charged for your overdraft –many banks now charge a (reoccurring) annual charge of £50-100 for your overdraft facility, it may be a better (and cheaper) option to loan the business from your credit card if needed –taking advantage of the 0% period etc.