Brush up your business in the new tax year

But what areas should you actually be looking at that will help your business run more effectively? Emily Coltman FCA, Chief Accountant to FreeAgent, who provide an award-winning online accounting system for small businesses and freelancers, highlights five changes to make that could have a major impact on your business performance over the coming year.

Review your customer list

Although it’s a good idea to keep your customers happy, it’s important to remember that not every customer will necessarily be beneficial for your business. For example, you may have someone on your customer list who insists on holding unnecessary meetings or spends ages quibbling over the most minor details of the work you do for them. Or perhaps you have a customer who routinely takes ages to pay you, or argues over the price that you’ve charged.

If you do work with these types of customer, you may want to think about whether you could stop working with them. Provided your business can afford to do so, it might be best to point them elsewhere – and then use the time you’ve saved to look for new, less-problematic customers to work with.

But remember, overhauling your customer list doesn’t need to just be about getting rid of problematic customers. If you have great customers who love working with you, why not ask them to refer you to their friends? You could even introduce a dedicated referral scheme so that they receive a reward for every person they successfully introduce to your business. Personal recommendations can often be the most powerful form of advertising that your business can receive.

Open your business to wider markets

With the new tax year about to begin, it’s a great time to consider taking your business down a new avenue. Could you start making a new product – or even offer a new service to complement your current operation? Provided you’ve got a good business case and have reviewed all of the potential costs and found that your business can afford to branch out, this could be the best way to increase your turnover, attract new customers and improve your profitability.

Alternatively, could you join the growing number of small businesses who are selling to different countries? Online businesses, in particular, can easily sell to anyone, anywhere – so why not check out sites such as Alibaba (for goods) and Elance (for services) to share what you can offer worldwide and broaden your horizons?

Review your bookkeeping system

If you haven’t yet started to re-evaluate your bookkeeping, just ask yourself how much time you currently spend on managing your business finances, or how much you spend on invoicing clients, forecasting your tax bills and chasing customers who haven’t paid you. Perhaps you’re still using a spreadsheet even when your business has grown to the point where your finances are becoming too complex for Excel, so that you’re spending whole days reconciling your books.

Remember, that is all time that may be better spent elsewhere in your business, such as developing new products, devising marketing campaigns or networking for new clients. So if your accounting year coincides with the new tax year, now would be the easiest – and least disruptive – time to consider making any changes to your business’s accounting system.  It’s a good idea to take a look at options which could make your life easier, including investing in dedicated cloud accounting software.

Alternatively, if you’re not yet ready to invest in an alternative set-up, take a look at changing your bookkeeping routine instead. Block out time each week in your diary and use it to stay on top of your invoices, chase up those clients who haven’t paid you, manage your bills and reconcile all the unclassified bank transactions in your accounts.

Once you’re routinely spending time on your books, you’ll then be able to see accurate, timely information about your business – including which projects are earning you money and what your up-to-date profit and loss account looks like. You’ll then be able to take that information and make informed decisions about what direction to take your business in next.

Stay on top of your tax

As a small business owner, it’s highly likely that you’re going to have to pay tax on your earnings. But unless you’re well organised, it’s easy to lose track of what tax you owe and when you have to pay it.

Make sure you keep a diary of the key dates when your tax is due and try to put money aside each month so that you can pay your taxes promptly. Remember – if you file your returns and pay tax, this will not only avoid interest and penalties from HMRC, but will improve your relationship with them. You don’t want to get on the wrong side of the taxman!

Don’t be afraid to ask for help

It’s tempting to try and do everything yourself when you’re running a small business, but this isn’t necessarily the best strategy. That’s because you can easily get overwhelmed and end up spending too long on a specific task – and other areas of your business may suffer as a result.

So if you’re concerned that you’re doing this, try looking for help or guidance from outside your business. Use your network, ask your contacts for help, and build more relationships so that you’ll always be able to ask an expert for advice – or at least get advice about where else to look.

And don’t forget to share your expertise in return. If you’re hoping people will help you, you may want to return the favour and offer some of your own skills to those who need a helping hand.

Emily Coltman FCA is Chief Accountant to FreeAgent, who provide a multi award-winning online accounting system specifically designed for small businesses and freelancers.  Try it for free at: www.freeagent.com

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