168 brilliant start-up
I’d rather eat warm gravel than do my books. But that doesn’t
mean you can avoid them. So fairly early on in my business, I
made a ‘star-signing’. I employed ‘Aunty Nan’. Nan has been
a book-keeper for many years (I wont say how many), and
gets very upset if our figures don’t tally even by pennies. And
woe-betide anyone who’s claiming for a newspaper without a
receipt. Our figures are always spot on. And I sleep very peace-
fully at night.
So, you need to have a very good knowledge of how much
money you have in the bank all the time. You need to know
where you are making profit, or not. The cost of a part-time
book-keeper should be minimal and you probably only need
them for a few hours a week. (I wouldn’t use your account-
ant for this, unless they are particularly cheap or you have very
simple records.) And don’t forget the opportunity cost of your
time – all that time gnawing a pencil you could be out selling!
Be careful with cash
Entrepreneurs love cash. Mmmm! Lovely crisp notes! However,
cash can present problems for your business systems.
For many of your smaller purchases, you’ll be using cash from
your own pocket. That’s fine, just make sure you get receipts
for all of these. Then enter them into your books at the end
of the month, and pay yourself a
cheque from the business. Don’t get
into the habit of mixing up your per-
sonal and business bank accounts. It
can also help to get either a business credit card or a personal
one that you use only for your business.
When you get paid in cash, then you’ve got a different problem:
entrepreneurs love cash
Do your books 169
The only thing I’ll say here is that putting cash in your back
pocket and not declaring it, while very tempting, can lead to
much bigger problems. For a start, it’s sloppy thinking, and
you’ll never get an accurate picture of your business. And, sur-
prisingly, you are not the first person to have thought of this.
The Revenue are very alive to the industry sectors and types of
businesses that operate cash in hand. It’ll want very accurate
records for all your cash. Itll compare you with what busi-
nesses like you should be declaring. Tax inspectors have been
known to snoop through small ads and then check the busi-
nesses listed have declared the income in their returns. This is a
world of pain you just don’t want to enter.
To my mind, the whole point of being self-employed is to
live a life free from worry, obligation and control. If you have
to spend your whole life looking over your shoulder for the
taxman or being shopped by a disgruntled customer/employee,
then it ain’t worth it.
Yep, it’s that time. I’m not going to give an exhaustive guide to
tax bands and rates. The best place for this is HMRC itself with
its simple start-up section: www.hmrc.gov.uk/startingup/
You’ve delivered a service or product that morning. Your customer is
canny, and negotiates a ‘discount for cash’. They peel off a wad of
grubby bank notes for you. Then you find yourself in the pub that
evening, with a wallet full of cash and a thirst. You think, ‘Well, if I
declare this cash through my business, I’ll have to pay tax on it, and
I’ve already given a discount…’

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