Brilliant Start-Up, 2nd Edition

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 won’t 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. It’ll 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.

Tax

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/

index.htm.

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…’