the money

Wherever your business is on its journey, the money is key: getting it, managing it, accounting for it.

Funding

Funding

Whether to meet initial start-up costs, to manage ongoing operational costs or to enable your business to expand, it is always the right time to be thinking about funding.  Potential investors, lenders and partners will expect you to be clear on this.

 

The main types of funding available are:

  • Grant/donation:  no need to pay back, although likely to be relatively small and with strict conditions attached as to what the money can be used for (eg R&D, product development, seeking intellectual property protection).   Most likely to come from government.

  • Loan: to be repaid or sometimes converted into shares.  May need to be secured against other assets or guaranteed.  May come from government, banks, venture capital investors, 'peer-to-peer' etc.

  • Equity: money in to your company in return for equity (shares) in your company.  Most likely from venture capital or 'angel' investors.

  • Crowdfunding: many people give a small amount of money in return for shares or supply of your new product/service when ready.

  • Litigation Funding: funding for all/part of legal disputes (including IP rights) in return for a share of any award made.

See Funding for more information on potential sources of funding, or click on the button below to see if Venture Adventures can help connect you with an appropriate scheme or investor.

There are other indirect routes that may help:

  • Tax Relief: see below.

  • Self-help: there are ways to make whatever funding you do have stretch that little bit further.  Try our Free/Low Fee page for ideas, and consider joining associations or networks that may offer help and discounts, such as IPSE, the association of independent professionals and self-employed if you are setting up as a freelancer.

If you need to improve your proposition or pitch, or develop your strategy for scaling up, or would like to understand how 'investor ready' you are, click below to see if we can help.

Accounts & tax

Records, Tax & Reporting

Accounts & Reporting

Maintaining good accounts and records is good business practice to stay on top of all the admin, and will certainly help to manage your finances, as well as to prepare and file accounting statements and tax returns.

  • Keep records: invoices, bank statements, business travel, stock, materials, etc.

  • Employees: file an annual payroll report with HMRC, and provide annual summaries of their pay (P60).

 

  • Limited liability company: file an annual accounts statement at Companies House.

Appoint an accountant to assist, and consider installing accounting software.

Tax

  

One of life's certainties.  There are various business taxes to deal with:

  • Income Tax: whatever trading structure you have, you will need to settle a final payment annual tax payment with HMRC in relation to your business income.  

  • Value Added Tax (VAT): to be paid quarterly to HMRC on all goods and services you sell (usually 20% unless qualifying for a lower rate or complete exemption - 0% for digital downloads, for example). 

  • Business Rates: if you run your business from a physical shop or commercial premises, you will need to pay a tax each year to the relevant council for use of  a building for non-domestic purposes.  

  • Employees PAYE: you will need to deduct from employees' monthly wages and amount for their income tax and national insurance contributions and pay this directly to HMRC under the Pay As You Earn system.

See Records, Tax & Reporting for more information.

Tax Relief

Try to appoint an accountant who can also provide appropriate tax advice, and help with all tax relief that may be available. 

 

For technology businesses, specific tax relief you may be able to benefit from includes:

  • R&D tax credits: for qualifying technology research and development.

  • Patent box: reduced tax rate for profits derived from your patented technology.

 

There are also tax relief schemes that help indirectly by making it more attractive for investors to provide funding of one form or another:

 

  • SEIS (Seed Enterprise Investment Scheme): tax rebates in the first year for investors taking equity in start-ups

 

  • EIS (Enterprise Investment Scheme): similar scheme for later stage Small & Medium Sized Enterprises.

  • VCT (Venture Capital Trust): tax relief on your investment in a publicly listed investment company that in turn invests in start-ups.

See Funding and  Records, Tax & Reporting for more information.

Banking & payment

You will need to have a bank account to handle income and outgoings, and set up arrangements for people to be able to pay you. 

 

  • Even if you are a sole trader, with no separate company, consider setting up a separate bank account to keep your business finances separate from your personal finances.  This will help you keep your accounts in order, tracking business income and outgoings separately from your personal expenditure.

  • You may want to open a further account to set aside provisions for regular income and VAT tax payments.

  • How will customers pay you?  You will need to set up ways for people to pay face-to-face, or online, perhaps over the phone or by email.  One advantage of selling via an online marketplace shop such as Etsy is that - in return for their small percentage - they process all payments for you and then pay you.  If you have your own website, think about enabling payments via debit or credit cards as well as, say, PayPal: the more options you offer to customers, the more chance you have of making the sale and you will look more professional.

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