Getting Started

Why do most companies have a 31 December financial year end?

Posted on December 7, 2010 by Getting Started 0

Most companies have 31 December financial year ends.

Yet you have a choice as to when your company accounting period runs to in the UK – unlike in some other countries – so there is no obligation to follow the crowd. Actually, there are some quite compelling reasons why you should opt NOT to have a 31 December year end:

HAPPY NEW (COMPANY) YEAR! mug
  • the company tax year runs to 31 March so tax changes are often enforced with effect from 1 April. Companies with 31 December year ends therefore have to tackle complicated in-year hybrid tax rates and calculations compared to say 31 March year end companies;
  • the personal tax year runs to 5 April. Easier to plan your tax affairs for your owner managed business if your company tax year is more closely aligned with the personal tax year end;
  • the end of the calendar year falls into the Christmas and New Year holidays – do you really need the stress of closing your company books for the year end on top of the end of year festivities?
  • your compliance costs. Basic laws of supply and demand apply. If most businesses have year ends around the same time, most accountancy firms will be rushed off their feet between November to March so how much scope do you think they might have to share some cost savings with you…?

So how about having a 31 March company financial year end? Or if you want to be really adventurous you could have a 31 July year end? Wild, huh?

Note that there are Companies House documents to file and certain restrictions can apply in changing accounting periods – check with your accountant first or drop me a line in the contact section (tab at top)

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A business idea shared is a business (almost) launched!

Posted on July 23, 2010 by Getting Started Startups 1

As a budding entrepreneur, its understandable to want to hold onto and covet that killer business start-up idea.

If you are on your own and perhaps struggling to drive the new business idea forward, the danger is that with every day you let pass, someone else gets closer to climbing ahead of you and launching the same or similar business. Or the pain or need that your idea solves becomes obsolete or outdated.

You need to share your vision or idea with as many people as possible.

This has three main benefits:

  1. It allows you to develop and hone your idea from the feedback received from others. This will save you a lot of (potentially wasted) time, energy and money in the long run, AND
  2. It provides an opportunity for others to introduce you to the people who may hold the key to launching and making your new business a success. Either as investors, future partners or just folk who’ve been there and done it, these contacts can be invaluable. Heck, you might even stumble across these people directly if and when serendipity steps in to plays its hand! AND
  3. It holds you accountable to carry out your plan. It is an act of commitment. Once you share your idea with the world, people will either cheer you on your well earned success or scoff if you limply throw in the towel. Its like having millions of personal trainers. Speaking of which (sort of) – Just do it!

If you remain unconvinced by the prospect of sharing your idea with the world, I’ll leave you with the following two assertions to ponder:

  1. Most people are busy running their own lives with their own priorities, issues, hopes and fears. The chances of anyone you meet thinking “that’s a great idea, I think I’ll steal it and go do it myself” and then having your passion and your insight to see it through are remote.
  2. The best innovators are businesses that are unafraid of the competition. They have complete confidence in themselves as game-changers at the cutting edge of their industry. Therefore, as fast as anyone tries to copy them, they know these competitors will only ever be mere pale imitiations.  They also wallow safe in the knowledge that the well of creativity and ideas is without end – think Apple. Nuff said.

Are you ready to share now?

Caveat – the above advice should not be applied in the case of new intellectual property or technical specifications e.g. software coding; technical drawings or know-how etc, which should remain top secret and protected.

11 essential action points after starting your company

Posted on July 21, 2010 by Getting Started Startups 0

Better to be a disciplined entrepreneur from day one. Here is a checklist of 11 tips how:

  1. Get your company incorporation certificate, Memorandum & Articles of Association downloaded and on file. Plus a shareholders agreement if you have one. This will form the basis of your statutory books which you must maintain for any changes in shareholders, directors etc going forward.
  2. Complete and file Form CT41G with HM Revenue & Customs to register your company for corporation tax purposes and to get your employer payroll package ordered and registered with HMRC (or refer to point 11).
  3. Get the relevant documents (in point 1) plus your passport and a recent utility bill together ready to set up a business bank account (get used to pulling together these personal docs for routine money laundering checks for pretty much all financial services).
  4. Set up an A4 lever-arched file ready to collate all of your paper invoices received for amounts payable. Put a divider in the file to separate paid invoices (behind the divider) from the unpaid invoices (in front of the divider). Start numbering the invoices received sequentially to (ideally) match your online accounting software (see point 6).
  5. Decide whether it is right for your company to register for VAT (or refer to point 11).
  6. Choose a decent accounting package so that you can get all of your financial affairs including invoicing etc set up ready. I like Xero.
  7. Check your founder(s) shareholding allocation now e.g. if there are any shares to be allocated to key (present or known future) management / employees do it now or asap before the value in the business (and therefore shares) increases. If you delay you could store up some nasty capital gains tax, income tax and national insurance liabilities for the future…
  8. Get all your ducks in a row with regard to all industry certification and insurance requirements for your particular sector. Would be embarrassing and unprofessional to get this wrong.
  9. Think now about protecting your crown jewels. Is there any intellectual property, trademarks or patents that need filing, protecting or transferring before you launch your BIG idea or go head-to-head with the competition?
  10. Go get yourself a natty logo, stationery and website. Remember to include your company name, address, registered company number and VAT (if applicable) on your documentation. Get business cards too. Register your Twitter account. Start a blog. Tell the world.
  11. Get yourself a supportive accountant and tax adviser who understands your niche :)

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