A guide to finance for start up business

When you start out in business, then it’s likely that, while you might have done you research, you still may not know or understand much about the world of businesses finance – and that’s okay! We’ve put together this helpful guide that covers the basics of business finance for startup businesses.

When you start out in business, then it’s likely that, while you might have done you research, you still may not know or understand much about the world of businesses finance – and that’s okay!

We’ve put together this helpful guide that covers the basics of business finance for startup businesses.

One of the first times you’ll encounter business finance is when you are looking for the money to finance your business.

Start-up funding can come from a variety of places, such as savings, government grants, small business loans and investors.

It's important to do your homework when it comes to start-up funding, as each method has its own pros and cons and has different requirements. So, it’s important to make sure that you find the right type of funding for your business.

The best option for most new or small businesses plan is a government-backed start-up loan which will allow you to have fixed-rate interest feeds and longer loan repayment periods.

It is important that when you start you business that you keep your personal and business finances separate. This is important for a few reasons. For starters, your business is taxed separately from yourself so having separate accounts for you and your business is the most logical and easiest way to do this.

This is also the best way to avoid the crossover of funds or any possibility of using a personal account for business purposes and purchases and vice versa.

Your best option, in this case, would be to get a business current account for your start-up. These accounts are great for businesses as they are specifically designed to manage business banking and offers all of the same services (including the option of an overdraft) that a regular personal current account offers.

Keeping track of what you owe and what is owed to you is vital for business. This is where accounts receivable and accounts payable come into play. Accounts payable are the amounts that your company owes to its suppliers, while accounts receivable are the amounts that are owed to you by customers.

The two are often compared for liquidity analysis to ensure there are enough funds coming from account receivable to pay the outstanding accounts payable.

As a small business, handling your taxes for the first time can be a little overwhelming. It’s vital that you understand the basics of paying your taxes, which are:

What type of taxes you need to pay

How much you have to pay

When you have to pay your taxes

How you pay your taxes

These four basics depend on the legal structure of your business. Whatever your business entity is, you’ll need to know how it affects your taxes.

If you fail to file your Company Tax Return by the given deadline, then you become liable for penalties. For 1-day late taxes you will be fined £100, as well as another £100 for 3-month late feeds. 6 months late sees HM Revenue and Customs (HMRC) estimate your Corporation tax bill and give you a penalty of 10% the unpaid tax bill, with 12 months seeing another 10% of any unpaid taxes.

It is also important to note that if you file your tax return late three times in a row, your penalties increase to £500 each time.

Finances for your business can be overwhelming, especially if you are handling them on your own for the first time. However, if you take the time to do your research and employee these tips, you will be fine.