Looking after the money.
Accounting - what comes in, what goes out
- keep track of who owes you money
- see how much you are spending on materials in services
- see the money coming in and going out
- make sure you don't spend more than you need
Invoices and Statements
- invoice - a bill that you send the client
- statement - a reminder
example of invoice
Essentials of invoice
- your business address
- your customers address
- the dave of invoice
- item by item details of the service or product provided
- total amount
Statement
example of statement
Essentials of a statement
- your business address
- your customers address
- a list of recent invoices you have sent out
- details of invoices paid and unpaid
- total amount outstanding
Terms and conditions
- designed to protect your rights and interests
- costs
- delivery arrangements
- payment terms
- credit limit
- your right to charge interest on overdue amounts and claim compensation for recovery costs
- a commitment to quality
- data protection
The Statement
- send out on day or before the due date
- send out every month thereafter
- how much is owed
- how long it had been outstanding
- a call to action
Accounting software
Bank Tree (£26) - basic bit of software, won't do invoices & statements but it will keep a track of everything
Quick Books (£75)
Online Quick Books essentials (£19 a month)
Sage (£240)
Bank Tree is the best place to start to get head around it then move on to online one.
You need an accountant
Certified accountant is best, always ask how much they will charge you before you begin.
What do businesses spend money on?
- Start up costs
- Overheads
- Direct Costs
Start up costs
- spend cash on new equipment
- design website
- register company name
- design logo - make signs
- decorare premises
- launch party
In order to get over this costs, a lot of people borrow this money to cover it
- many companies get a loan to cover these initial expenses
- pay back each month over 2-3 years
Where does the money come from?
- banks - barclays, natwest, hsbc, lloyds
- crowd funding - find them online
Funding organisations and investors
- the arts council,
- yorkshire forward,
- venture capitalists,
- shareholders
Prizes and Aards
- shell live wire
- make your mark
- bipp
- d&ad
What do investors want to know?
- marketing plan
- how much money do you need?
- how much money have you got?
- how will you spend the money?
- how will you pay the money back?
A solid marketin plan is almost better than a solid business plan.
Indirect Costs
- utilities - gas, water, electricity,
- office supplies
- etc...
These regular payments are also known as
- overheads
- fixed costs
- the cost of doing business
Direct Costs
Apply to anything that you sell to a customer that is tangible and they take away with them
- a cost directly attributable to the manufacturing of a product
- or, what the customers take away with them
Tangible Assets
Assets having a physical existence.
Intangible assets
- reputation
- company name
- good will of the customers
The difference between price and cost?
What it costs you is different.
- cost - what you spend
- price - what you charge
Capital
The money, property, and other valuables which collectively represents the wealth of an individual or business
Capital Assets
The money, property, and other valuable stuff that will come in.
When calculating, work with:
- receipts - money coming in to the business, eg from sales
- payments - money going out of the business, eg for rentals and materials
- cash flow or net cash flow - cash receipts minus cash payments
Balance - the amount of money in an account at any given moment
Profit - the positive gain from an investment or from a business operation after subtracting all expenses
Loss - a position in which a company's expenses have exceeded its receipts. A reduction in the value of an investment
Taxes
- income tax
- corporation tax
- VAT
- council tax
- business rates
What to do
- open a separate bank account for your business
- find a certified accountant
- find a local solicitor
- register your business with the inland revenue
4 places to get information
- business link - everything you need to know
- startups
- hm revenue & customs
- t-shirts and suits book - download for free from creative choices
