Everyday Entrepreneurs

Running a small business can be a lonely gig - here's a few tips and ideas to chuck into the mix

The Basics

You run a business of up to 100 people and it can be a lonely gig. The buck always stops with you. Or you might be in the process of starting up a new venture, looking for funding and how to take those crucial first steps. Maybe you’re even ready to quit the day job…!

No matter what stage of business ownership you’re at, we've tackled key financial questions to provide that all-important sense-check. We’ll also share tips from others like you.

1. Early Days?

With any new idea, if you’re not planning to self-fund you will need to convince someone that you are credible and capable. Good ideas are all very well, but the ability to execute those ideas is more important for those who would invest with you. Finding funding is your first step!

Any potential investor will want to see a clear estimate of your start-up costs will be. That will include any premises, staff costs or equipment. It should also include business licenses, insurance policies, and start-up documents you need, right down to apparently trivial expenses such as postal or photocopying costs. There are some helpful start-up cost calculators here.

If possible, do some research to find people who have already started businesses like yours. Ask them what their start-up costs were. We’ve got a few case studies for you – links are in the Your Options step at the end of this learning path.

2. Got Some Employees?

If you already have employees, straightening out their workplace pensions is something you’ve got to grit your teeth and get sorted.

  • Staff now pay 5% of their salary into a pension at work, and you will need to add another 3%

  • Nest is the bog standard (and OK) Government option

  • No point in trying anything fancier if you've fewer than 5 staff

  • Qualifying earnings = wages between £6,240 and £50,000

  • Got a nanny? A Cleaner? Sorry, boss. You probably need to auto enrol them!

Once the business is up and running, you’ve also got to think about payroll and business banking. We’ve got plenty of info on that for you coming up.

The Auto Enrolment Thingy

Automatic Enrolment happened because the powers that be in Westminster saw that no-one was saving up for retirement.

Gone are the days of comfy final salary schemes AND everyone’s living longer, so people increasingly faced the prospect of retiring with no big handouts from the State OR from their employer.

The law has changed and every employer now has to offer their staff a pension. No ifs. No buts. Every business has to provide a pension for its staff – whether you’re British Airways, the local chippie or even if you employ a nanny or carer.

As a boss, this means you need to choose a pension and set it up, if you haven’t already. You also need to tell your staff what this means for them. It's costing you - so sell it as a benefit!

At the moment, as an employer, you should be paying 3% of wages (or ‘qualifying earnings’ which may be less) into a pension with another 5% from your staff’s wages. It is a bit complicated. If you pay a lot of bonuses or overtime talk to an accountant as it gets head-bangingly difficult.

Finally - don’t forget to factor these extra payroll costs into the Masterplan.

Not sure which provider to choose? In the third episode of our autoenrolment X Factor blog, Holly runs through our top rated providers and the kinds of companies they suit.

  • Nest is the bog standard (and OK) Government option

  • No point in trying anything fancier if you've fewer than five staff

  • Qualifying earnings = wages between £6,240 and £50,000

  • Got a nanny? A Cleaner? Sorry, boss. You probably need to auto enrol them!

Banking and Payroll

Passion for Payroll

Most people who leave the world of paid employment to set up their own business soon realise something pretty quickly. We have to be the finance guy as well. Deep joy. From VAT, to tax returns, payroll and now auto enrolment, if you don’t keep on top of it, you could be looking at a chunky fine.

Fortunately, there are several online software tools that can help. You can now get software to send invoices and chase people up if they don’t pay, ‘talk’ to your bank and HMRC, complete accounting and tax returns, while also looking after expenses, bills, sending estimates and producing reports. Magic, eh? But which is the right one?

  • We use Xero chez Boring and we love it - why did we ever muck about with Excel?

  • HMRC's free payroll software is limited in which other systems it can 'talk to'. It's 'free' - but depends how much you value your time. And sanity?

  • When choosing accounting software, start by making a list of the features you need so that you don’t end up paying for stuff you don’t use.

  • Discount codes are often available, which can lighten the cost.

  • Make sure the data is in the UK and the company is UK based.

  • Can your accountant access it? There are times when he or she will need to have a dig around. Ask them for their tips and recommendations.

  • Check out the support available. With some it’s a real DIY approach, but others have superb support provided by real life accountants which can be extremely helpful.

Our suggestions for good payroll solutions include SageOne Payroll, Freeagent

Business banking

Unless you’re a sole trader, you obviously need a separate bank account for your business. Unlike a normal bank account, banks charge for pretty much everything on a business account – paying in cheques, paying out cheques, withdrawing cash, talking to you, and so on. There will also be lots of ancillary services on offer, from tax advice to business funding. The key is to work out what you are going to need, what’s extra fluff and pick your bank account accordingly.

We can't write a piece on business banking without a big fat phishing scam alert. These are on the rise. Make sure your accounts staff see email as a very unsafe communication tool and sharpen up your controls and sign-off procedures!

Your Options

1. Funding

With more and more of us becoming self-employed, funding a business is a challenge millions of Brits face. Here are some stories from people who’ve been there. There are various routes open to you, and our Guide will give you helpful links and ideas along the way.

2. Workplace pensions for your staff

If you employ people you’ve probably already sorted out the now compulsory pension scheme. From April 2019 your minimum contributions went up to 3%.

Your staff now pay in another 5% so that’s 8% in total. These numbers apply to qualifying earnings which is between around £6,240 and £50,000 of someone’s annual pay packet. People can opt-out but you can’t push them down this path.

  • Don’t know which provider to choose? We’ll tell you who we like and why. Check out our Best Buys.

  • Here’s our comprehensive auto enrolment guide, with straightforward, step by step info on what you should be paying, when and to whom.

3. Private Pensions: Don't forget to pay yourself

Chances are you’re heavily invested in your business and every penny is in your property and your business. But it is worth taking a second to consider a separate retirement income stash. The Government does a pretty limp job of selling the main benefits of saving for this. You get £20 for free for every £80 you put into a pension. More if you’re a higher rate taxpayer. That’s the “Why bother” bit. Free money!

As for how, well, you can start from £25 a month, do it online in a tracksuit and manage it via an app.

Find out more in our guide to private pensions.

Check out our podcast on saving into your 40s.

4. Business banking and payroll

Unless you’re a sole trader, you obviously need a separate bank account for your business. Unlike a normal bank account, banks charge for pretty much everything on a business account – paying in cheques, paying out cheques, withdrawing cash, talking to you, and so on. There will also be lots of ancillary services on offer, from tax advice to business funding. The key is to work out what you are going to need, what’s extra fluff and pick your bank account accordingly. Check out paraplanner Richard Allum's reviews of payroll software providers.