There can be many different reasons why a small business owner decided to go out on their own; personal circumstances, lifestyle change, employment changes, mid-life crisis, won Lotto.
But do any of us actually see the benefits of that decision? Let’s be honest, it is a major risk take and to me felt like closing your eyes, holding your nose and jumping without really knowing what was at the bottom!
Over the past five years in my business I have slowly started to realise that my ‘why’ is multi-sided. Yes, I started out to be able to work around my kids and their schooling, sicknesses, after school activities etc., but it’s become more than that. It’s not all about me, it’s now also about the people I help. You realise you can support someone else in their own business ownership journey, you can offer them solutions, make them feel important, and also make their lives easier and less stressful.
After five years, today I finally saw my ‘why’ in action. I had a meeting with a relatively new client, 2020 had taken its toll on them. We sat down to go over the accounts and put a plan in place for the future. The relief on their face, the hug I got when they left my office; absolutely, totally worth it!
Go and follow your WHY!
The idea of setting up payroll for your new employee/s can seem a very daunting prospect. It poses many questions that need very serious consideration. Getting payroll wrong can cost you and your business dearly. Where do you start?
To get straight to the point, did you know you can outsource your payroll? No, I hear you say! Won't that cost me a lot of money? Not necessarily. There are many payroll companies in the market that have different levels of service with various price tiers. Depending on how organised you are with your processes you can keep your payroll subscription to a minimum.
Clients I talk to are unaware of these particular services being available. I recently put a client on to a payroll intermediary service that could offer very reasonable rates. If the client submitted the timesheets for a two-day turnaround then they could save an extra charge per employee per pay run. If the turnaround was overnight then they would pay the maximum charge per employee. The payroll service then collects the payroll total from the client, they then pay the employee/s and file the returns with the IRD.
Who wouldn’t want to leave the hard bits to someone else? In New Zealand, payroll is very complicated especially when it comes to calculating leave entitlements. Payroll intermediaries are trained in compliance and should be able to keep you on track in that respect.
Take a look to see what options are out there for you, and make peace with your payroll.
One thing I learned when I first started out in small business was to open some operating bank accounts dedicated just to the business; one of them being a tax account. The small business I used to work for always put a portion of their GST away into the tax account so they could cover any GST to pay at the end of the period - thumbs up, good business practice.
After five years in my own business I have seen how very easy it is to forget or not be able to put that portion of sales aside to cover the GST. In reality it's a challenge, you have an expense pop out of the blue, or you haven't quite budgeted properly to manage your outgoings. It's a learning curve for new business owners and we can all muck it up from time to time.
However, I have seen the opposite thing happen. Small business owners suddenly have income from great sales, there is a lot of money sitting in the main business account. It is very tempting to take that money as drawings, after all you've worked hard to earn it! But before you know it, a few GST payments have been missed. There are penalties and interest and it all adds up. You are a bit scared to call and arrange weekly/monthly repayments. You bury your head in the sand and hope it all goes away. It won't.
The best thing to do is accept you are behind. Call and arrange repayments as soon as possible (you won't get in trouble), and get back on track. Work out a budget, get someone to help you with your cashflow reporting, open that tax account and start putting some of your sales revenue into it. It really is that simple.
Technology has made doing things yourself a lot easier nowadays. We DIY our houses, retaining walls, websites, you name it! But what about our bookkeeping software? Accounting and project management software are now more user friendly and pretty looking. They are built to be intuitive and to save you a heck of a lot of time. But how do you know which one to use, which one is suited to your business and how you like to do things?
In a world of add-ons the sky's the limit for choice - some can multi-task, some just do one operation, some are cheap, some are very expensive. I see many a business owner sign up for a subscription to a well known software program only to find that down the track it really doesn't do what it needs to do. That is a lot of time and money spent with little or no outcome.
Bookkeepers are here to help in this respect, we don't just do the reconciling. Discuss what you want your accounting software to do for you. Does it need to talk to your project management system? Do you need to manage inventory? Is there a system that does it all? Bookkeepers can set you up with the correct software; sometimes they may even be able to pass on a subscription discount. They can train you up on how to use it, iron out any problems that may arise once it's up and running, and be there for follow-up help down the track.
Now you can carry on being the DIYer of your small business!
When I talk to small business owners there always seems to be one niggling factor to owning their own business - the late nights trying to sort out their accounts. You may not have a partner to do it for you, or a sister-in-law that is an Accountant.
Business accounts are usually the last thing on the priority list, because let's face it, most business owners are experts in a completely different field. They spend their day with customers and/or staff; they are doing the 'fun' stuff. All of sudden it's the night before the GST is due and the reconciliations haven't been done. You have two months worth of coding to do which takes you a couple of hours, and then just when you finally think you've finished, the bank statement doesn't balance!
The solution is a weigh-up of your precious time and the cost to outsource someone to do it for you. Think of why you went into business in the first place? The lifestyle, wasn't it? Hiring a Bookkeeper is a cost-efficient way of staying on top of your business accounts and tax compliance.
So now you can read that book in bed or stay up late catching up on those recorded episodes that you've had no time to watch.