Reasons To Be Self Employed

Being Self Employed

So you’re thinking about becoming self-employed? Well, first things first you need to contact HMRC. You should tell them that you want to register as self-employed and also the date you started your business. You then need to start paying Class 2 National Insurance. This is a fixed weekly sum. The two ways of paying this are monthly or half yearly. However, if your total income is less than a certain amount each year, you are able to get an exemption from paying class 2 National Insurance, although it can be a good thing as it does help contribute to your basic pension. Once registered you will get your unique tax reference. It is a 10 digit number that is only issued to those who are self-employed.

If you are self-employed, you will have to fill out a self-assessment tax return each year. In April or May, HMRC will send through a letter asking you to complete one of these. This is just so HMRC have information about your profits from your business and any other income you may receive that you should be taxed on. It allows them to work out how much national insurance you should pay. The more detailed the information and the more accurate the records you keep the easier and quicker it will be for HMRC to process, and also for you to answer any questions HMRC may have for you. At Abacus, we can help fill out your tax return for you, to make sure you have everything covered and you don’t have any nasty surprises.

Also, if you are self-employed you need to make sure you separate business and personal expenditure - having another bank account could really help you here. Furthermore, you need to make sure you keep every piece of paper that is business related! Look at keeping all sales invoices that you send out, all expense receipts, a spreadsheet of the amount of business miles consumed, (by car, motorbike or bicycle). Also, all bank statements, paying in books, cheque stubs and credit or debit statements are also important to keep hold of, as well as any letters you receive from HMRC. Organisation is key. Although looking at possibly having an accountant can help you with this as well. Here at Abacus, we have a great online book keeping system that can really help to organise you and your business. Talk to us about it today!

What Causes Business To Go Bust

What causes businesses to go bust?

Businesses run into problems for all sorts of reason but most of them are avoidable. Here are some of the most common problems we come across.

Failure to understand your market and customers
Think about who your customers are and consider the best ways to reach your target audience. Research into your customer’s other suppliers may help you identify gaps in what they are receiving – gaps that you and your business could fill.  What makes you different? What can you offer that others can’t?

Choosing a product or service that isn’t very profitable or doesn’t have a wide market
You may gain a lot of interest and activity when starting out, but if the profits aren’t enough to sustain your business needs, then a re-evaluation may be in order. As a company, if you are targeting a very niche market and a narrow audience you need to stand out from your competitors to ensure high sales numbers.

Unable to react to trends and competition
If competitors are up and coming and are following the current market trends, it can be easy for your business to be pushed aside if you aren’t doing the same. Think about what your competition is doing differently, as what may have worked in the past may not work in the future.  So be willing to change and adapt to new ideas and technology to maintain your business.

Failing to offer a reasonable price for your product/services
When it comes to pricing, again competitive awareness is key – you want to be viewed as good value for money when your customers review their options, while also ensuring your business remains profitable. Promotional offers for new customers or running deals for a limited period of time can help to grab attention initially but remember longer term to sell your company or products benefits.

Cash flow problems
Cash reserves are vital when starting a new business. Enough cash to keep you afloat for at least the first sixth months and managing how much cash you are receiving and paying out is essential. You may have a slow start but if this is still happening after the first year, is it time to look at budget cuts and possibly a different financial angle? Should you take more upfront payments? When should credit be given or not given to customers?

Management and delegation
You can’t do it alone, and being unable to manage your business efficiently is never good, so although you may see your company as your ‘baby’ employing someone with the necessary skills to help means there is more stability and a better action plan for your business. Try not to do everything yourself or your product or service level may slip putting your whole business in danger.

Not asking for help!
Asking for help in the early stages can really help when dealing with all manner of business concerns. For example, here at Abacus we know from experience that speaking to your financial advisor or accountant early on means you can have ongoing support, and if there are tough times ahead, they may be able to help you identify issues and get your business back on track before it’s too late.

Having a good adviser is crucial to getting ahead in business. If you would like some free impartial advice then please feel free to contact one of our friendly team on 01376 343535 or email us at


The Importance Of Business Insurance

Some business owners don’t consider business insurance as being essential and feel it’s an expense they would just rather avoid. However, even with the financial considerations, this should definitely be a incorporated into your budget. Accidents unfortunately do happen, no matter how hard we try to avoid them, so the protection that an insurance policy brings will support the success and growth of your business in the long run.

Having business insurance will mean that in the event of a major loss, you are still able to keep your business up and running, rather than losing what you have worked so hard for.  When a company carries insurance, loss and closure are normally only temporary following an incident or accident - rather than potentially permanent if there is no cover in place at all.

Many people think business insurance simply covers events such as fire or floods; however you also need to consider liability. If a client trips over a wire in your office and is hurt, or one of your products has a defect and results in injury to a customer; this will likely cost much more in legal fees if you have no insurance cover, than the price of taking out the policy would have cost. 

You will need to consider aspects such as liability, theft, fire and flood, litigation, and personal injury and illness. The level of coverage you take will depend on your industry and the size of your business. When you exhibit at trade shows, or even just set up a small stall in Braintree town centre for example, you will be asked to prove you have public liability insurance. Without it, you are uninsured and liable.

If you are not covered, you risk losing your assets and worst case your business altogether if the incident were something major. As the owner or director of a company, it is essential to understand the role that business insurance plays and how your organisation will benefit from it – even if it is only from the peace of mind it brings.

Growing Your Business

When starting your business, you are always going to invest a lot of time, money and effort into getting your business off the ground and up and running. However, there comes a time when you realise there are more doors to open and roads to explore in developing your business. So what do you do now to try and grow?

It is great to be the manager of your own business, as you are then able to make a difference and decide that it’s time to make some changes.

Within business, you need to be able to have a solid business model, with targets and goals to hit. Setting realistic and easy goals are good if you are hitting them, but it also means you don’t strive as much to hit and exceed harder targets. In order to grow your business you need to be able to successfully put in place, understand and constantly improve your business model.

You could look at opening another location. This doesn’t always work for everybody, but it is an option you may want to consider. However, make sure you have been stable within your cash flow, with a steady growth over the past few years. Furthermore, you will have to have a strong team behind you who are happy to help set up and get you up and running. Also, make sure you look at how you are financing the new location- you do not want to get into something and then run out of money half way through.

Another option is to look at franchising your company. It allows you to branch out into a whole new area, and market outside of your home territory. This means you are targeting a whole different audience, and making people more aware of your products and your services. It also means that you are allowing others to have more control over your business and you trust the company name in the hands of somebody else. You have your businesses being run across the country without you having to have loads of control over each one.

Looking at setting up partnerships to advertise and grow your business can also be an option. This means you can delve into another company’s client base and through referrals and word of mouth you are able to expand marketing for your business. Partnering up with a company who offers a service that you can complement means you can join together and strengthen your services, as well as making a profit at the same time.

For more business advice, or to see if there is any way we can help benefit your business, pop in for a free, no obligation chat today!

When To Incorporate

Generally a “Limited” company will end up paying less tax than a Self Employed person – depending on how much is earned and the nature of the business expenses. A very rough guide is around 3K+ of tax saved for someone on 50K per year.

Accounting costs are usually slightly higher when limited but given the tax benefits this is usually inconsequential. If you are earning more than £20,000 profit, then it’s usually a good time to start thinking about becoming limited.

It’s now really easy to set up a limited company, and it can be done within a matter of hours online. This means there is no more waiting for paperwork to be processed, so if you are worried about a dreaded wait from Companies House, you need worry no more!

A limited company also has its own legal identity and this means third parties liaise with the ‘company’ rather than just the directors. It also means the only way the company will cease is if it is liquidated or formally wound up. It can also help employees feel more security because the business is perceived as being structurally safer.

Furthermore, many suppliers and customers will not deal with a business that is not limited. Therefore being a limited company can help build strong relationships with partners and other companies, and also allows you to show you have strong and effective management processes in place.

There are also tax benefits when becoming a limited company. As a sole trader and partners in a partnership, you pay income tax. However, if you are a limited company you pay corporation tax. As a director, you can mix a basic salary with dividends, and if structured correctly, this means the company doesn’t have to pay national insurance.

Sound like going limited could benefit your company? Pop in for a free, no obligation chat to find out more.

Benefits Of Cloud Accounting

Cloud-based systems are slowly but surely becoming the preferred method of choice in many areas of business. There is an array of advantages around using cloud-based systems; here we explore some of these so that you are prepared for your next step into ‘The Cloud’…

·         Cost efficient - No server costs or package upgrade costs, once you’re on that’s it!

·         Some cloud-based systems, such as Xero, offer pay as you go payment plans. This way costs can be split up, meaning you are only paying for the package you use, not the server and IT costs as well.

·         Available anywhere- Wherever there is an internet connection you are able to connect to cloud-based software, whether it is on your smartphone, tablet or computer (‘there’s an app for that’)! This also means you can access your software wherever you are in the world, no matter of time differences or location.

·         Allows you to easily share and modify documents and files with others.

·         Recovering data is easy, as everything is backed up into the cloud. So in case of system failure on your computer, the data is all saved and backed up in the cloud so there are no worries about lost records or documents.

·         Using the cloud is more environmentally friendly. Using fewer resources means consuming less power - and we all want to be eco-friendly where we can.

·         A cloud-based system can be easily set up with instant access given, meaning there is no waiting period or delay - you can start using the system straight away to benefit your company.

·         Allows you to have almost unlimited storage so you can store a lot more data than you could on your computer server. Therefore you don’t have to upgrade your computer hardware system when you need more space - saving you money!

·         Cloud-based storage systems are very secure and in fact, often more secure than storing locally on servers; ensure that no unauthorised users can gain access to your information by encrypting data.

Using our cloud-based book-keeping software system Xero, means you get all the benefits of the user friendly software and as certified Xero partners Abacus can also supply additional support and assistance.

We have access to the full suite of reporting tools within Xero to help you run your business more efficiently and more profitably - if this sounds of interest to you, get in touch today and arrange to pop in for a coffee and a demonstration.