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Wendy and Laughton Ross, the husband and wife team behind Tonbridge Accountants, join me to discuss finances for small businesses, and share their wealth of experience and knowledge with us, to equip us with the right skills and know how to understand and grow your business. 

EPISODE NOTES

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In today’s episode, we’re going to talk about finances for small businesses. It’s an area that I personally as a small business owner knew least about and struggled with the most. So I’m really hoping this will be helpful for all of you. Here to guide us through it all are Wendy and Laughton Ross, a husband and wife team of chartered accountants with over 30 years of experience.

Together they run Tonbridge Accountants and they want to share their wealth of experience with like-minded entrepreneurs and ambitious business owners, supporting them to achieve their goals and grow their business. 

Wendy and Laughton are passionate about using their skills and knowledge to take care of the financial side of things so that you can focus on what you’re passionate about, which is your business. 

Listen in to hear Wendy & Laughton share:

  • An introduction to themselves and their business (02:35)
  • Why it is important to have an accounting and bookkeeping system (03:49)
  • The best ways to keep track of money going in and out of your business (05:40)
  • The pros and cons of doing your accounting yourself (07:24)
  • The information that you should be recording (11:11)
  • The importance of having a separate bank account for your business (13:21)
  • The difference between setting up as a sole trader and limited company, and things to consider (15:35)
  • Why it is important to understand where your business is financially (27:05)
  • The different business costs that you need to factor in (30:45)
  • Costs you may be able to claim for if you are working from home (37:21)
  • Their number one piece of advice for product creators (43:00)

USEFUL RESOURCES:

Tonbridge Accountants Website

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Tonbridge Accountants Instagram

Wendy Ross Linked In

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Transcript
Vicki Weinberg:

Welcome to the, Bring Your Product Ideas To Life podcast, practical

Vicki Weinberg:

advice, and inspiration to help you create and sell your own physical products.

Vicki Weinberg:

Here's your host Vicki Weinberg.

Vicki Weinberg:

In today's episode, we're going to talk about finances for small business.

Vicki Weinberg:

Um, couple of reasons I want to do this episode, really one is I think

Vicki Weinberg:

it's an area that is personally myself as a small business owner.

Vicki Weinberg:

This is probably the thing I knew least about and struggled most with.

Vicki Weinberg:

So I'm really hoping this will be helpful.

Vicki Weinberg:

Um, also as this week's guests, I say guests, we do have two of them point

Vicki Weinberg:

out getting your finances, right and knowing what to do can be massively

Vicki Weinberg:

helpful and avoid a lot of stress.

Vicki Weinberg:

And, you know, in the short-term and in the long-term really, and also

Vicki Weinberg:

this is something that people often ask me about, they'll say, well,

Vicki Weinberg:

should I set it up as a sole trader?

Vicki Weinberg:

Or should I set up as a limited company?

Vicki Weinberg:

Um, I don't know those answers.

Vicki Weinberg:

Um, and in fact, anything's of accounting wise.

Vicki Weinberg:

I don't know, the answers really and my advice would always

Vicki Weinberg:

be speak to an accountant.

Vicki Weinberg:

But what I'm hoping is that today's episode will give you a bit of an

Vicki Weinberg:

overview of what you need to do as a small business to manage your finances,

Vicki Weinberg:

the kind of things you need to be keeping track of the absolute fundamentals.

Vicki Weinberg:

And then of course, should you need more advice and support as I'm sure

Vicki Weinberg:

you will, from time to time than what's covered in this episode, then you can

Vicki Weinberg:

always go and speak to an accountant.

Vicki Weinberg:

But I think this might be just a really good starting off.

Vicki Weinberg:

So I'd like to introduce this week's guests, so that Laughton and Wendy

Vicki Weinberg:

Ross and Laughton and Wendy are husband and wife team of chartered accountants

Vicki Weinberg:

with over 30 years experience.

Vicki Weinberg:

So they run Tonbridge Accountants and they want to share the wealth

Vicki Weinberg:

of experience with like-minded entrepreneurs and ambitious business

Vicki Weinberg:

owners supporting them to achieve their goals and grow their business.

Vicki Weinberg:

They're passionate about using their skills and knowledge to take care

Vicki Weinberg:

of the financial side of things so that you can focus on what you're

Vicki Weinberg:

passionate about which is your business.

Vicki Weinberg:

So after that introduction, I would now love to introduce you

Vicki Weinberg:

to Laughton and Wendy and talk, all things finance and accounting.

Vicki Weinberg:

Say hi to you, both.

Vicki Weinberg:

And thank you for being here.

Wendy Ross:

Hi Vicki, um, thank you for having us.

Vicki Weinberg:

No problem.

Vicki Weinberg:

Well, thank you for coming on and talking to me.

Vicki Weinberg:

Um, so can you start by giving an introduction to yourselves

Vicki Weinberg:

and your business please?

Wendy Ross:

Yes.

Wendy Ross:

Um, my name is Wendy and, um, I am the founder of this firm.

Wendy Ross:

Um, a little bit of a background.

Wendy Ross:

I used to work in the city with HSBC bank PLC.

Wendy Ross:

I gave up my career to look after my kids and, um, I got bored not long after, so I

Wendy Ross:

decided to set up my own accounting firm.

Wendy Ross:

Um, it wasn't an easy decision for us given our background.

Wendy Ross:

My husband is also a chartered accountant and he's on the call here a lot.

Wendy Ross:

So I made us with proposal to him about setting up a firm together.

Wendy Ross:

We have always been a big supporter of local businesses.

Wendy Ross:

And from speaking to local businesses and friends, we spotted a gap in

Wendy Ross:

the market where small businesses could really benefit from having

Wendy Ross:

an access to a great accountant, helping them to grow their business.

Wendy Ross:

Um, we focus on having a great working relationship with our clients

Wendy Ross:

so we can work as a team closely.

Wendy Ross:

So, yeah.

Vicki Weinberg:

And hi Laughton as well.

Vicki Weinberg:

Cause obviously you're here as well and I know we will hear

Vicki Weinberg:

from you a little bit later.

Laughton Ross:

Yeah.

Laughton Ross:

Yeah.

Laughton Ross:

That's great.

Laughton Ross:

Um, and yeah, we were happy to answer your questions today.

Laughton Ross:

Um, Wendy and I are going to uh, take those between us.

Laughton Ross:

I'm more of the techie one Wendy's more of a people person.

Laughton Ross:

So we'll, we'll share those out and hopefully cover everything.

Vicki Weinberg:

Yeah.

Vicki Weinberg:

Perfect.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

Well, I'm just going to throw questions at you and then I'll leave

Vicki Weinberg:

it up to you to who takes what?

Vicki Weinberg:

So let's start right at the beginning with why do small businesses need in

Vicki Weinberg:

accounting and a bookkeeping system?

Vicki Weinberg:

Perhaps?

Vicki Weinberg:

Actually we can talk a little bit about what those entail

Vicki Weinberg:

and what the differences are.

Vicki Weinberg:

And why is it important that they think about this right from the outset?

Wendy Ross:

With respect, um, bookkeeping is a highly skilled

Wendy Ross:

function when done properly.

Wendy Ross:

Most clients will never be able to do their bookkeeping

Wendy Ross:

at a standard we operate at.

Wendy Ross:

And we quite often have, have had to clean up a lot of mistakes when

Wendy Ross:

clients do their own bookkeeping.

Wendy Ross:

Um, the most important thing that micro businesses can get wrong is not

Wendy Ross:

bookkeeping, it is keeping records.

Wendy Ross:

They need to be diligent in your record keeping that.

Wendy Ross:

How many times have we asked, how is your records kept?

Wendy Ross:

And quite often we get along costs from new clients and then followed

Wendy Ross:

by what do you mean by that?

Wendy Ross:

Um, it is, it is quite vital.

Wendy Ross:

Um, I think bookkeeping sort of is probably a bit of a scary,

Wendy Ross:

big word for most people.

Wendy Ross:

Um, especially when you're businesses.

Wendy Ross:

Um, and we try and simplify and break it down to, you know, it's really just

Wendy Ross:

keeping tabs of your income and expenses.

Wendy Ross:

So you basically, in a nutshell, you know, have a have a folder of all your receipts

Wendy Ross:

and invoices and your bank statement.

Vicki Weinberg:

Okay.

Vicki Weinberg:

Perfect.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

So it sounds like what you're saying is most important thing is

Vicki Weinberg:

that you're keeping records of what goes in and out of your business.

Wendy Ross:

Yes.

Wendy Ross:

And I just want to add, like, for example, even if, uh, if the HMRC

Wendy Ross:

officer decides to look at your accounts and see your records are incomplete,

Wendy Ross:

how are you going to persuade HMRC that you didn't make that money?

Wendy Ross:

So, um, you know, the advice is you need to get a receipt for

Wendy Ross:

everything and write everything down.

Vicki Weinberg:

Okay.

Vicki Weinberg:

So it sounds like right from the start, the important thing is that

Vicki Weinberg:

you keep track of what you spend, you keep track of what comes in.

Vicki Weinberg:

Um, and how, how would you do that?

Vicki Weinberg:

Or what are some options for how to do that?

Vicki Weinberg:

I mean, is it okay just to have a folder full of receipts, or should

Vicki Weinberg:

you be logging this somewhere?

Vicki Weinberg:

What would you recommend?

Laughton Ross:

Well, let's take a typical small business or new business because I

Laughton Ross:

think the complexity of your bookkeeping really, it depends on the size of

Laughton Ross:

your your outfit, what you're doing.

Laughton Ross:

Um, it's just one person and you're doing something straightforward.

Laughton Ross:

Your record keeping is going to be a lot more simple than a huge big

Laughton Ross:

organization with a dozen employees.

Laughton Ross:

You know, something like that.

Laughton Ross:

So, You can really start off, you know, in the simplest terms, just

Laughton Ross:

with a manual set of records and keep all it, keep all the bills, keep all

Laughton Ross:

the invoices, write everything down.

Laughton Ross:

Um, you know, that that's, if you've got quite a small number of transactions,

Laughton Ross:

but that might be suitable for you, um, as you grow and you've got more passing

Laughton Ross:

through the business, you're going to find that that's a, you know, time intensive

Laughton Ross:

to, to complete that so you might want to look into a spreadsheet, possibly some

Laughton Ross:

software, a simple Excel workbook might be fine for, you know, growing business.

Laughton Ross:

As you, as you get a few more transactions in, you might want to have accounting

Laughton Ross:

software to deal with it for you.

Laughton Ross:

Just pick a system that's going to save you time.

Laughton Ross:

Now, you want to spend the time growing your business, developing new

Laughton Ross:

business, dealing with your customers and not updating spreadsheets all day.

Laughton Ross:

So the software can really can really speed up some of that bookkeeping.

Vicki Weinberg:

Yeah, that makes sense.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

And I know we're jumping around a bit in terms of what we're talking about,

Vicki Weinberg:

but I think that leads on nicely to, so I know that, bookkeeping, as you

Vicki Weinberg:

mentioned, Wendy is quite a skill and it can be quite time consuming.

Vicki Weinberg:

So is it possible for small businesses, particularly when they

Vicki Weinberg:

start out to do their own accounting?

Vicki Weinberg:

Um, I know that ideally, you know, maybe you would work with an accountant, but is

Vicki Weinberg:

it something you feel that people can do?

Vicki Weinberg:

And if so, what are some of the options for things like software

Vicki Weinberg:

that might help out a little bit.

Wendy Ross:

I think this, I think this is quite a, it's a little bit tricky

Wendy Ross:

question because, um, you know, you can, you can absolutely do your um,

Wendy Ross:

accounting or your bookkeeping, if you know what you're doing, um, you

Wendy Ross:

know that there, a lot of people have different expertise or knowledge.

Wendy Ross:

So, um, we have, we have clients who, uh, to do their own bookkeeping and as well

Wendy Ross:

as we have clients who are completely uncomfortable, when you talk about, you

Wendy Ross:

know, keeping invoices or receipts, um, I think for, for, for our clients, If

Wendy Ross:

their business is simple and very small, they can use an Excel spreadsheet to

Wendy Ross:

keep tab of their income and expenses.

Wendy Ross:

Um, but most of our clients use an accounting software.

Wendy Ross:

We work with Xero and, um, it, it's a great, it's a great tool.

Wendy Ross:

Uh, but then again, um, it's quite important for us to be able to, uh,

Wendy Ross:

I think for clients, we use Xero.

Wendy Ross:

We have, we have, um, an overview where we shared, um, we can actually

Wendy Ross:

see what they're trying to do, and if they, if they struggle with any,

Wendy Ross:

um, transaction or anything in Xero, where we are able to, um, go in and

Wendy Ross:

support, um, and you know, correct, correct the errors, if there's any.

Laughton Ross:

Just to add to that Wendy the, you know, the software

Laughton Ross:

these days is great, it's all, cloud-based, it's really easy to use.

Laughton Ross:

It's really user friendly.

Laughton Ross:

Um, but the guys who designed it do such a great job with their marketing.

Laughton Ross:

They have everyone convinced that the software does everything for you.

Laughton Ross:

Um, and it really doesn't, you kind of, you need to understand what it's doing,

Laughton Ross:

how it's working in the background.

Laughton Ross:

Um, and also that, what it produces is only as good as what you put into it.

Laughton Ross:

So if you don't know what you're feeding in when you're doing that and

Laughton Ross:

why you're doing it, you're not going to get a reliable data out of it.

Laughton Ross:

So that's, that's something we spend time with people on just

Laughton Ross:

explaining how it works and getting them into a little routine.

Laughton Ross:

I think with a lot of this stuff, once you're in a routine with it,

Laughton Ross:

you know, as long as nothing changes, you can progress quite nicely and be

Laughton Ross:

comfortable doing your own things.

Wendy Ross:

So you asked me, you know, can small businesses

Wendy Ross:

do their own accounting.

Wendy Ross:

That's almost going to say it's a bit like, you know, If it's,

Wendy Ross:

it's probably an equivalent of a household or saying to a professional

Wendy Ross:

plumber, for example, I'll just go ahead and plumbing my new bathroom.

Wendy Ross:

Um, it is all fine until you, you know, for example, you have an unpleasant

Wendy Ross:

leak through your ceiling and having to call the plumber back, you will

Wendy Ross:

have to then pay emergency agency fee and you probably have to even

Wendy Ross:

have your whole bathroom ripped up.

Wendy Ross:

So, um, you know, it is, it is okay until something goes wrong.

Wendy Ross:

Um, and for, from, from our perspective, you know, if, if we are a plumber,

Wendy Ross:

Um, you know, how would we feel if our customers insist to, you know, do their

Wendy Ross:

own plumbing and the re the remedial work and repair work, it's not gonna, you

Wendy Ross:

know, we, we, most of the time it takes probably longer time to work out what went

Wendy Ross:

wrong and how do we go about to fix it?

Wendy Ross:

And you probably end up with higher cost than what you were going to start from.

Vicki Weinberg:

Yeah, thank you.

Vicki Weinberg:

I think you're right.

Vicki Weinberg:

And one key thing I'm taking from everything you've said is that it doesn't

Vicki Weinberg:

matter what software you use, or if you have a spreadsheet or you use something

Vicki Weinberg:

else, it's all about what you put in and what you used to keep track of.

Vicki Weinberg:

So what are some of the uh, things that you need to keep track of as

Vicki Weinberg:

well as income and expenditure.

Vicki Weinberg:

So what let's let's maybe get really specific.

Vicki Weinberg:

So what kind of expenditure should you be?

Vicki Weinberg:

Should you be tracking?

Vicki Weinberg:

Um, and what is it and, you know, is there any kind of business expense that

Vicki Weinberg:

might just be quite helpful to people to kind of think about the things

Vicki Weinberg:

that need to be taken in to account?

Laughton Ross:

Okay, so I'd start by saying you need to capture

Laughton Ross:

every single pound spent by the business, whatever that spends on.

Laughton Ross:

So that's, you know, it all needs to tie back to your bank at the very

Laughton Ross:

beginning, set up a separate bank account.

Laughton Ross:

If, you know, if you haven't done that, it's really, really important to have

Laughton Ross:

a separate account for your business.

Laughton Ross:

So that the funds that are related to the business, aren't mixed up

Laughton Ross:

with whether we have personal stuff.

Laughton Ross:

A lot of people don't do that at the beginning.

Laughton Ross:

And they have a very hard time working out, you know, what's their own income

Laughton Ross:

and expenses versus what's the business.

Laughton Ross:

So I think that's a starting point.

Laughton Ross:

Get that done.

Laughton Ross:

You put your bank statements then, which will, we'll give you all of the income

Laughton Ross:

and expense and you can track that.

Laughton Ross:

Separate to the bank statement you need.

Laughton Ross:

Yeah.

Laughton Ross:

You need to write down everything you need to categorize it.

Laughton Ross:

So what's the money being spent on.

Laughton Ross:

And in very simple terms, you're either buying assets to use in your business.

Laughton Ross:

As you might be buying equipment, you might be buying things you

Laughton Ross:

actually use to make things with.

Laughton Ross:

Um, you could actually just be incurring expenditure.

Laughton Ross:

Now it could be a designing, a website or buying some materials or paying

Laughton Ross:

some, some wages or someone to help you.

Laughton Ross:

So you need to categorize it into those.

Laughton Ross:

So those different things and knowing exactly what you're, what

Laughton Ross:

you're spending it on and why so that it can be recorded correctly.

Laughton Ross:

Um, it's really important, particularly on the, on the asset side of things,

Laughton Ross:

because you do get tax allowance.

Laughton Ross:

Um, things that you're spending money on.

Laughton Ross:

So it's really important to know what you spent it on and why,

Laughton Ross:

so that you can make sure you're getting the right credit for that.

Laughton Ross:

But when it comes to recording it in your tax return.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

And we'll move on to talk about tax returns in a minute.

Vicki Weinberg:

I think that was a really good point.

Vicki Weinberg:

You made about the bank account because I, I agree that probably

Vicki Weinberg:

a lot of people don't do that, particularly if they're going to be

Vicki Weinberg:

operating as a sole trader initially.

Vicki Weinberg:

Um, but I suppose in that situation, there's nothing wrong with you taking

Vicki Weinberg:

out another account in your name that you used solely for your business.

Vicki Weinberg:

Uh, she, and that's perfectly fine.

Vicki Weinberg:

You don't need a business to have a separate account for your business.

Vicki Weinberg:

This is what I'm saying do you.

Wendy Ross:

Yeah.

Wendy Ross:

And I think, you know, new businesses shouldn't be, you know, put off with

Wendy Ross:

the thought of like, oh, I, I I've heard reasons like, oh, I don't want to set up

Wendy Ross:

a separate bank account for the business.

Wendy Ross:

And you ask why, and they say to you is the cost, you know, but I think you

Wendy Ross:

have to, you have to respect and treat your business like a proper business.

Wendy Ross:

Um, if you don't, then you're never going to sort of like.

Wendy Ross:

You know, have that mindset of actually trying to run a business

Wendy Ross:

properly with whatever costs that associated to running a business.

Vicki Weinberg:

That makes sense.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

And would you recommend in that case that you would get a business bank account?

Vicki Weinberg:

Because I know they operate slightly differently to personal bank accounts,

Vicki Weinberg:

even let's say we'll talk about the differences in a minute, but even if

Vicki Weinberg:

you're running as a sole trader, for example, would you still suggest that you

Vicki Weinberg:

get a business bank account or does it not matter so much is the more important

Vicki Weinberg:

thing that you have a separate account?

Laughton Ross:

Uh, from, from an accounting point of view,

Laughton Ross:

it doesn't really matter.

Laughton Ross:

It's just the fact that it's separate is the main thing.

Laughton Ross:

Um, but from a, from a banking point of view, they, you know, they all

Laughton Ross:

have sort of different requirements, different rules, different products.

Laughton Ross:

So I'd say it's definitely worth checking with your bank

Laughton Ross:

to see, to see what's suitable.

Laughton Ross:

But what I find these days is, you know, banking industry is very competitive.

Laughton Ross:

They want business banking customers.

Laughton Ross:

There's some great products out there and a lot of them they'll do special

Laughton Ross:

deals where it's maybe there's no fees for the first, so many months or, um,

Laughton Ross:

you know, some of them have really, really low fees or really good deals

Laughton Ross:

that say, What puts people off, they think it's gonna be really expensive.

Laughton Ross:

It's not always, so it's worth just researching that and checking, but

Laughton Ross:

the main thing is it's keeping it, it's keeping it separate so that

Laughton Ross:

you've got your personal stuff and business stuff away from.

Vicki Weinberg:

Okay.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

So now we've touched on this a little bit, um, about, I mentioned

Vicki Weinberg:

sole traders and limited companies.

Vicki Weinberg:

And I guess the question that even I hear people ask quite a lot is what's

Vicki Weinberg:

the difference and which one should I do?

Vicki Weinberg:

So could you talk about that a little bit?

Laughton Ross:

Absolutely.

Laughton Ross:

Yeah.

Laughton Ross:

Um, I can start with this one.

Laughton Ross:

Um, I'll try not to go into too much detail cause this

Laughton Ross:

can get really complicated.

Laughton Ross:

It it's what I would say is it really, really does depend on your circumstances.

Laughton Ross:

So when someone says, should I be a limited company?

Laughton Ross:

Should I be a sole trader?

Laughton Ross:

There isn't just one answer.

Laughton Ross:

Um, there's a lot of different factors to it.

Laughton Ross:

And what might be suitable for one person might not be suitable for someone else,

Laughton Ross:

even if they're in the same business or the same industry that, you know,

Laughton Ross:

depending on their other circumstances, um, it, it can really affect it.

Laughton Ross:

But to start off with, just to keep it simple, you know, sole trader is,

Laughton Ross:

is the most basic way of operating.

Laughton Ross:

Um, it probably has the least amount of requirements in terms

Laughton Ross:

of tax and filing regulations.

Laughton Ross:

It's less complex than if you are a limited company and therefore it's

Laughton Ross:

just slightly less than, um, you know, you don't have to, if you're a sole

Laughton Ross:

trader, you don't have to produce annual accounts in accordance with

Laughton Ross:

accounting standards, file them with company's house, um, comply with all

Laughton Ross:

the company law, you know, that this volumes and volumes of laws you have to

Laughton Ross:

comply with as a, as a company director.

Laughton Ross:

Um, you avoid all that as a sole trader that saidas a sole trader,

Laughton Ross:

you don't have limited liability that you would get with a company.

Laughton Ross:

So, you know, you are the business, any, any liabilities

Laughton Ross:

that you incur on your own.

Laughton Ross:

So if you're, you know, if you're taking part in something, which from a business

Laughton Ross:

point of view might be slightly high risk

Laughton Ross:

you just have to be aware that you actually putting

Laughton Ross:

your personal assets at risk.

Laughton Ross:

Um, so just, just to keep that in mind, if you're doing a straightforward

Laughton Ross:

business, that's very simple.

Laughton Ross:

That probably doesn't matter.

Laughton Ross:

Um, if you're kind of borrowing money to invest in premises and things like

Laughton Ross:

that, that might be something you wantto consider in a bit more detail.

Wendy Ross:

Um, I think it's all very like case on case basis.

Wendy Ross:

Isn't it?

Wendy Ross:

Because we also have to take into account of the client's tax position.

Wendy Ross:

Um, before you decide whether limited company option or a

Wendy Ross:

sole trader will be better.

Laughton Ross:

Yeah, that's right.

Laughton Ross:

Wendy.

Laughton Ross:

I mean, a lot of people sort of, depending on what you do.

Laughton Ross:

So let's just say, if you have a job and you've maybe started at business

Laughton Ross:

um, aside from that, maybe you've got something you're really interested in.

Laughton Ross:

You're thinking, I'm not sure if it's viable business, you kind of you'd grow

Laughton Ross:

it a little bit and you're doing that alongside your other work, but maybe you

Laughton Ross:

don't want to be a sole trader because you'll, you'll, you're gonna want to

Laughton Ross:

decide when you take money out of the business, because as an individual,

Laughton Ross:

you get taxed on everything you earn.

Laughton Ross:

So if you're a sole trader that, that those profits just get out of, it's

Laughton Ross:

all your other income and your tax.

Laughton Ross:

If you're a limited company, you can leave the funds in the

Laughton Ross:

business, invest them and draw those down as, and when you need them.

Laughton Ross:

So you've got more flexibility over actually taking funds out the business.

Wendy Ross:

Yeah, and I think we'd like, everything else, flexibility will

Wendy Ross:

come with a bit of a price as well.

Wendy Ross:

You know, like it costs more to run and operate it in the

Wendy Ross:

company versus sole trader.

Wendy Ross:

So there's always, there's always pros and cons, but, um, this is

Wendy Ross:

where it's important, where if you speak to an accountant, they can,

Wendy Ross:

you know, um, what is the best, uh, the best setup that you should take.

Vicki Weinberg:

Yeah, thank you.

Vicki Weinberg:

I think that's very useful cause I know lots of people do get hung up on that.

Vicki Weinberg:

And I think I'm right in thinking aren't I that there's nothing wrong

Vicki Weinberg:

with starting as a sole trader and then registering a company a bit later.

Vicki Weinberg:

What I'm trying to say is it shouldn't start, stop you from starting.

Wendy Ross:

Yeah, definitely

Laughton Ross:

Not at all.

Laughton Ross:

I think, you know, it, you can change it over time.

Laughton Ross:

Um, you know, there's lots of companies that I've seen that

Laughton Ross:

have started they've started.

Laughton Ross:

One thing has gone to something else that maybe later on they'll change back again.

Laughton Ross:

And, um, you really just need to do what's best for you and your

Laughton Ross:

business at the point in time, you know, tax laws, change rules, change.

Laughton Ross:

You need to constantly reassess that your structure is right for you.

Laughton Ross:

So I'd say it's definitely worth revisiting that you know, don't, don't

Laughton Ross:

pick something and stick with it forever.

Vicki Weinberg:

Yeah.

Vicki Weinberg:

And that's really helpful.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

And it sounds like it's definitely worth if you're not sure speaking to

Vicki Weinberg:

an accountant and talking about your individual situation, because as you say,

Vicki Weinberg:

depending on that, that will make it have impacts on which will be best for you.

Wendy Ross:

Yeah, because we are, I'm going to admit, like we have

Wendy Ross:

seen businesses come to us as limited company structure where they could

Wendy Ross:

have just done it via sole trader would have made a lot of, um, you

Wendy Ross:

know, make their life a lot easier.

Wendy Ross:

But, um, again, this is, that's why it's dangerous.

Wendy Ross:

Do not just take advice from, from, you know, from what you read

Wendy Ross:

or what you hear from friends.

Wendy Ross:

I think you really need to know and speak to someone.

Vicki Weinberg:

Yeah, thank you for that.

Vicki Weinberg:

And also just to dispel something else that I hear quite often

Vicki Weinberg:

setting up as a limited company is quite straightforward, isn't it.

Vicki Weinberg:

It's not very expensive and it's simple to do.

Vicki Weinberg:

Would you agree with that?

Laughton Ross:

Yeah.

Laughton Ross:

Yeah, it can.

Laughton Ross:

It's very simple.

Laughton Ross:

Um, you know, you can, you can do it online.

Laughton Ross:

It's very quick.

Laughton Ross:

You can kind of wizz through it in a few minutes.

Laughton Ross:

Okay.

Wendy Ross:

It's something that means very easy, but I think where

Wendy Ross:

people fail to understand is the responsibility that comes with that

Wendy Ross:

being a company director, that's a lot.

Laughton Ross:

I think that's the thing that I think that made it so

Laughton Ross:

easy so quick, but some people just automatically go down that route

Laughton Ross:

even without thinking it through.

Laughton Ross:

I think, you know, if, if you've done your research, you've decided that's for you.

Laughton Ross:

It is easy, you know, go ahead and do that online.

Laughton Ross:

Make sure you understand what you're taking on when you do it.

Laughton Ross:

Cause there's a lot of responsibility that goes with it and there's a lot

Laughton Ross:

of rules and laws to comply with.

Wendy Ross:

And how many times have we seen businesses setting up I've

Wendy Ross:

done it and then they realize after six months is not working in, oh,

Wendy Ross:

I need to wind this down again.

Wendy Ross:

This costs and you know time and it is not the most straight forward.

Laughton Ross:

Yeah.

Laughton Ross:

Opening.

Laughton Ross:

It's very quick.

Laughton Ross:

Very easy.

Laughton Ross:

Closing it down.

Laughton Ross:

Yeah.

Laughton Ross:

Not so much.

Laughton Ross:

Um, so yeah, think very carefully that it's the right thing first, because you

Laughton Ross:

could end up with a bit of a mess on your hands if you, if you rush into it

Laughton Ross:

without knowing what you're taking on.

Vicki Weinberg:

Okay.

Vicki Weinberg:

And what are some of their key things that you think people should know?

Vicki Weinberg:

If they are thinking of setting up as a company?

Vicki Weinberg:

I know there's so many laws and so many requirements, but what are the

Vicki Weinberg:

sort of the key ones that you think people absolutely need to to know?

Laughton Ross:

You're obliged to produce a set of accounts with

Laughton Ross:

the company and they have to be prepared to, uh, a set of standards.

Laughton Ross:

And there are strict rules around that.

Laughton Ross:

So, and they have to be filed with Companies House there's deadlines.

Laughton Ross:

If you don't meet the deadlines there's fines.

Wendy Ross:

You've got responsibilty to HMRC as well.

Laughton Ross:

You've got your corporation tax returns to prepare again there's

Laughton Ross:

a complex set of rules around those there's deadlines for filing the returns

Laughton Ross:

there's deadlines for making the payment.

Laughton Ross:

Um, you know, there was, there were similar deadlines for individuals,

Laughton Ross:

but just with a company, with a company, there were a lot more, and

Laughton Ross:

there's the standards that you don't have to adhere to are more stringent.

Wendy Ross:

And I think a lot of, um, again, from experience, a lot of

Wendy Ross:

directors of a limited company, they don't understand that they don't realize

Wendy Ross:

that they have a duty to actually, again, the most hates at work bookkeeping.

Wendy Ross:

They have to keep records.

Wendy Ross:

Um, um, you know, there, there are times where they come to you and they have not,

Wendy Ross:

they haven't got any records being kept.

Wendy Ross:

And this case of trying to rebuild what it should be for the last 18 months.

Wendy Ross:

Again, most people don't know that, oh, have I got a duty to keep, to keep that?

Wendy Ross:

Yes, you do.

Laughton Ross:

Um, probably a third thing to mention, just to add to that

Laughton Ross:

briefly, is that with a sole trader, you know, you are the business.

Laughton Ross:

Because there's no separation with a Limited Company.

Laughton Ross:

Um, the company is, uh, is a, uh, you know, like a, a

Laughton Ross:

legal being in its own right.

Laughton Ross:

It's completely separate too, just because you own it.

Laughton Ross:

And you're the shareholder people don't realize that there are

Laughton Ross:

very strict rules around what you can take out of the company.

Laughton Ross:

You know, they, people get very confused and they think,

Laughton Ross:

well, it's, it's my company.

Laughton Ross:

I can kind of take money out whenever I like.

Laughton Ross:

There's very strict rules around what you can take, how much when,

Laughton Ross:

you know, whether it, when you pay it back, there's tax laws around that and

Laughton Ross:

there's all sorts of things to consider.

Laughton Ross:

So it's um, yeah, it's a lot more complicated.

Wendy Ross:

Yeah, I'm definitely getting that sense.

Wendy Ross:

And, and I think as well though, it sounds like, um, that if you are thinking of

Wendy Ross:

setting up as a company, you probably that is probably a situation where

Wendy Ross:

you probably do need an accountant and you probably don't want to be

Wendy Ross:

doing your own accounting, unless of course that's your backgrounds and

Wendy Ross:

your expertise, because it sounds like the requirements for running a company

Wendy Ross:

are something that you possibly might not be able to adhere to on your own.

Wendy Ross:

Is that fair to say?

Laughton Ross:

I'd say it's more challenging.

Laughton Ross:

I wouldn't say you can't do it.

Laughton Ross:

Um, I think it's just making sure you're set up in the right way.

Laughton Ross:

So if you talk to a good accountant, they can work with you.

Laughton Ross:

If you express an interest in saying like, I really want to be involved in

Laughton Ross:

the bookkeeping, the best thing is just to have that conversation and say, this

Laughton Ross:

is how much time I've got to spend.

Laughton Ross:

I want to be involved.

Laughton Ross:

What's the best way for me to do that and let them guide you because

Laughton Ross:

they'll say right, don't touch this bit because it could go wrong very easily

Laughton Ross:

and cause you a lot of problems, this bit's fine spend your time doing that.

Laughton Ross:

Uh, you know, they'll, they'll build it up with you over time.

Laughton Ross:

If you become really confident in an area and you express an interest in

Laughton Ross:

taking on more, they can guide your through, well, you know, the next steps

Laughton Ross:

and say, well, now you might want to think about getting involved in this.

Laughton Ross:

Um, I'd definitely say don't just kind of go off and do it all without being sure.

Laughton Ross:

So it's really important to have that conversation.

Laughton Ross:

And I think it's just that level of trust.

Laughton Ross:

You know, they trust you, you want to do the right things, you the best you can,

Laughton Ross:

you know, um, you trust that, that, that they, they're gonna sort of have that

Laughton Ross:

discussion and build that relationship, take your advice and you work together

Laughton Ross:

and you know, you have that flexibility.

Laughton Ross:

You can really make it work.

Vicki Weinberg:

Yeah, that makes sense.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

I think, yeah.

Vicki Weinberg:

I was thinking from my point of view, which is that a lot

Vicki Weinberg:

of this seems very daunting.

Vicki Weinberg:

Um, but I also take your point that, you know, I think you

Vicki Weinberg:

need to sort of be involved.

Vicki Weinberg:

You do need to be involved to some degree, and I guess that's

Vicki Weinberg:

the sort of, then the last thing I'd like to touch on with you is.

Vicki Weinberg:

why, well, first of all, I'm assuming that it is important to

Vicki Weinberg:

know where you are financially.

Vicki Weinberg:

Um, but I love, I should probably pose it as a question.

Vicki Weinberg:

So, um, do you feel that it is important to know where you are financially

Vicki Weinberg:

as a business owner, whether that's as a sole trader as a company

Vicki Weinberg:

and, um, what and why that helps?

Vicki Weinberg:

Because I'm thinking that for my point of view, I'm thinking that

Vicki Weinberg:

probably from two to some sort of degree, you need to know what's going

Vicki Weinberg:

on with your money in your business.

Vicki Weinberg:

Can you talk a bit about that please?

Wendy Ross:

I'll make a go and then Laughton can add on, um, so healthy

Wendy Ross:

cash balance is crucial for the survival and success of any business.

Wendy Ross:

However, just by checking the cash balances, it doesn't

Wendy Ross:

give you the full picture.

Wendy Ross:

Um, when looking at the strength of your business, you need to consider

Wendy Ross:

assets, i.e money due in and its liabilities money also out, you need

Wendy Ross:

to know how much cashflow you have.

Wendy Ross:

Have you got enough to pay?

Wendy Ross:

If you've got enough cash to pay your suppliers, your employees, your

Wendy Ross:

tax, or your back bills, once you've accounted for all of that liabilities.

Wendy Ross:

And if you're still in a profitable position, you can then consider

Wendy Ross:

things like paying yourself dividends during the year or undertaking

Wendy Ross:

investments in your business.

Wendy Ross:

To grow it, or even things like taking on additional team

Wendy Ross:

members to facilitate the growth.

Wendy Ross:

So it's really, really crucial to, um, you know, to know where you

Wendy Ross:

are financially, because it, it can absolutely help with your business.

Wendy Ross:

It's a business decision.

Laughton Ross:

Yeah, no, I'd agree with that.

Laughton Ross:

And I think, you know, if you looked at some examples of where people aren't

Laughton Ross:

aware of where they are financially and what can happen, um, take a simple one.

Laughton Ross:

You know, you don't know where you are.

Laughton Ross:

You're not sure where your, what your tax bill is going to be.

Laughton Ross:

Okay.

Laughton Ross:

You get some help with it.

Laughton Ross:

You, you ask an accountant and they say, right, well, this

Laughton Ross:

is how much you've got to pay.

Laughton Ross:

And it's due in a few weeks time, you haven't got the cash to pay it.

Laughton Ross:

If you don't know where you are and you haven't planned for that,

Laughton Ross:

it, so you can be, you can be faced with, uh, an obligation and not be

Laughton Ross:

in a position to deal with that.

Laughton Ross:

So I think it's vital that you know exactly where you are.

Laughton Ross:

Um, you know, not, not to worry over it, but just to be, to sort of have

Laughton Ross:

the ownership of that and that the confidence to know this is where I am.

Laughton Ross:

This is what I've got coming up.

Laughton Ross:

You know what you've got coming, what you've put going out.

Laughton Ross:

If you've got obligations, you want to make sure that you can

Laughton Ross:

meet those when they are due.

Laughton Ross:

Um, you have to plan around that

Wendy Ross:

Always think, if you're just starting your business, you

Wendy Ross:

can always, you know, use a safe method of putting some money

Wendy Ross:

aside, say 20% and put it aside.

Wendy Ross:

I think that would be like, you know, to cover the tax bill, for example, that

Wendy Ross:

I think that's your basic basic rule.

Wendy Ross:

Isn't it?

Laughton Ross:

Yeah it's always good to put money aside.

Laughton Ross:

If you are starting a new business, what's gonna really

Laughton Ross:

help with this is having a plan.

Laughton Ross:

So it doesn't have to be massively complex, but if you're, you know, if

Laughton Ross:

you're investing some of your own money in any business, and if your let's

Laughton Ross:

say you're buying assets to produce something, with just a simple example.

Laughton Ross:

You need to know how long you're expecting to recover those costs.

Laughton Ross:

You know, all new businesses are gonna, they're going to take up money to start

Laughton Ross:

with, as you invest in things that you need to know how many sales you're

Laughton Ross:

expecting over what periods so that, you know, when you can, uh, you know, recoup

Laughton Ross:

the money on these investments that you've made, I think that's really important.

Laughton Ross:

Don't just spend your money blindly, not knowing when or how you're

Laughton Ross:

going to get it back because you get into a mess very quickly.

Laughton Ross:

Um, have a plan.

Laughton Ross:

It won't things won't always go to plan, but if you've got a plan that

Laughton Ross:

you can, you can refer back to you.

Laughton Ross:

That's incredibly helpful.

Vicki Weinberg:

Yeah, that sounds really sensible.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

Um, I, I definitely think you're right.

Vicki Weinberg:

It's something I see occasionally is where people haven't maybe taken

Vicki Weinberg:

into consideration all the costs, for example, which then makes their margins

Vicki Weinberg:

much less than what they expected.

Vicki Weinberg:

Um, so I guess sort of, I guess the clearer picture you have uh, of the

Vicki Weinberg:

financial situation of your business so what you're spending money on, what it

Vicki Weinberg:

costs when you're likely to get it back, what you're charging maybe if you've got

Vicki Weinberg:

a business, whether it's product services, whatever, I guess all of that helps give

Vicki Weinberg:

you a clearer picture of where you are.

Wendy Ross:

Budget in a new businesses, your accounting costs.

Wendy Ross:

You definitely need to put that in, in, in, into.

Vicki Weinberg:

Yeah, absolutely.

Vicki Weinberg:

Yeah, it sounds like there's a lot of things that may be

Wendy Ross:

You can't go up until the year end and just go and realize you need

Wendy Ross:

an accountant and say, I haven't got the money, so you need to have built it in.

Vicki Weinberg:

So it sounds like at the outset is where thinking about all the

Vicki Weinberg:

things that you might have to spend money on in the next year, let's say, and kind

Vicki Weinberg:

of accounting for that, because also you touched on earlier sort of your tax bill.

Vicki Weinberg:

So however you set up your business, you are going to

Vicki Weinberg:

have to pay tax at some point.

Laughton Ross:

Yeah, a common, common mistake that new businesses

Laughton Ross:

often face is, um, you know, you have business owners that are very

Laughton Ross:

enthusiastic about their products.

Laughton Ross:

You know, it could be something that they're really into they've been doing it

Laughton Ross:

for a long time and they're developing it.

Laughton Ross:

They're really passionate about it.

Laughton Ross:

They focus on, you know, the sales and how much it's costing them to sell.

Laughton Ross:

And that's really important, but they forget about all those other costs.

Laughton Ross:

Like when you mentioned your legal fees and accounting fees, the cost of

Laughton Ross:

setting up a website, you know, if you've got a registered with the information

Laughton Ross:

commissioner, there's a fee for that as a bank fees to pay, as you go through

Laughton Ross:

and figure out all of these costs and make sure you factor those in, because

Laughton Ross:

there's no point making a profit on your sale and then, you know, spending

Laughton Ross:

all of that straight out the door and all these other things, you've got to

Laughton Ross:

make sure you cover all those costs.

Vicki Weinberg:

Yeah, that's really helpful.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

That's yeah.

Vicki Weinberg:

In reality, that was something I have seen a few times, particularly

Vicki Weinberg:

with products that people have worked out the cost of the product.

Vicki Weinberg:

But as you say, none of the other costs that sort of come after or

Vicki Weinberg:

before that, so yeah, like you say, website hosting and all these things.

Vicki Weinberg:

And then actually that does mean that something that looks profitable initially

Vicki Weinberg:

actually might not be in reality.

Laughton Ross:

Sorry Wendy, just to respond to that.

Laughton Ross:

Your plan might be that it's not profitable to start with.

Laughton Ross:

It's a new business.

Laughton Ross:

It might take a while to get those volumes to, to build things up.

Laughton Ross:

Um, so you, you know, you might end up being loss-making for a little while, but

Laughton Ross:

as long as you know, that you've planned for it, and you've actually got the cash

Laughton Ross:

to fund that that's the important bit.

Laughton Ross:

It's when you haven't planned for it and you don't know the

Laughton Ross:

position,you're in, Um, that's when it goes, you get into difficulty

Wendy Ross:

Just another tip for new businesses.

Wendy Ross:

So you have to have a very, very robust business plan to start with

Wendy Ross:

where, you know, and if you can put, you can put a lot of, um, challenging

Wendy Ross:

costs or factors in it, then at least it were, you know, try and make your

Wendy Ross:

business as future proof possible.

Vicki Weinberg:

Absolutely

Wendy Ross:

List up all the expenses you could think of in running a business.

Wendy Ross:

So when, you know, when you do need a software next time, and it's like 35

Wendy Ross:

pounds a month, you can't turn around and say, I can't afford it because you

Wendy Ross:

know, this are things which you have to just like website hosting or that SSL

Wendy Ross:

part and parcel of running a business.

Vicki Weinberg:

Yeah, that makes sense.

Vicki Weinberg:

And absolutely these things, you know, sometimes unexpected things do crop

Vicki Weinberg:

up, but I think knowing ahead of time makes sense, because as you said, it

Vicki Weinberg:

might be, well, let me to startup a business often you need some level

Vicki Weinberg:

of investment and it can take time before you start making the money back.

Vicki Weinberg:

But at least if you know, okay, the outset initially would be this or roughly this.

Vicki Weinberg:

And I plan to be making a profit in X amount of months, time, at least

Vicki Weinberg:

you're sort of planning for that, but you're right to go in blindly

Vicki Weinberg:

not knowing what you're spending and when you're likely to see it back.

Vicki Weinberg:

I think is a lot morescary, actually

Wendy Ross:

Have a robust plan, a business plan, you know, write it out

Wendy Ross:

and then get your friends to, you know, criticize it as much as they can because

Wendy Ross:

you know, that, that w that really helps give you a better, but a solid

Wendy Ross:

picture than just, you know, fluffy ones and just say, oh, you'll be fine.

Wendy Ross:

No, that's not gonna happen.

Laughton Ross:

You know, another big thing people forget is,

Laughton Ross:

um, you know, their own time.

Laughton Ross:

It's it, there's a, there's a cost to that.

Laughton Ross:

And you know, of course when people are starting a business, they're

Laughton Ross:

prepared to put in as much as it takes and they don't really mind, but,

Laughton Ross:

you know, as things progress you may want to actually think about, okay,

Laughton Ross:

well, if I'm a limited company, I might want to pay myself a salary.

Laughton Ross:

That's a cost that has to be factored in.

Laughton Ross:

So I build that into the business plan.

Laughton Ross:

If not straight away, it's at some point that needs to be considered as well.

Vicki Weinberg:

Yeah, absolutely.

Vicki Weinberg:

Cause I think I do know, like lots of people, as you say at the outset, maybe

Vicki Weinberg:

don't take a salary or take a very small salary, but there has to be a point, I

Vicki Weinberg:

guess if you're running it as a business, there has to be at some point where you

Vicki Weinberg:

are taking something from it yourself.

Vicki Weinberg:

Otherwise it's, I guess it's well, it can't, I'm not saying it can't be a

Vicki Weinberg:

business, but if you're doing it to make money, then you should be taking

Vicki Weinberg:

money for yourself at some point.

Laughton Ross:

Yeah.

Laughton Ross:

And you may have other reasons.

Laughton Ross:

I think that's, in fact, you've raised a really good point that

Laughton Ross:

there's various different reasons.

Laughton Ross:

People entrance.

Laughton Ross:

Set out your goals.

Laughton Ross:

When you start, you know, what, what you're doing, what you're trying to

Laughton Ross:

achieve, what are some of your goals?

Laughton Ross:

And, you know, discuss those with people who are supporting you.

Laughton Ross:

If, for example, discuss your goals with your accountant.

Laughton Ross:

If they know what you're trying to achieve, they can help you get

Laughton Ross:

there because people will want different things and if you don't

Laughton Ross:

know where you're heading, you know, you won't when you get there.

Wendy Ross:

We did a business plan where we set up the firm because you

Wendy Ross:

know, we're going to do ourselves.

Wendy Ross:

So that's fine.

Vicki Weinberg:

Yeah.

Vicki Weinberg:

And the first day is good.

Vicki Weinberg:

It's good that you're doing that.

Vicki Weinberg:

That, um, yeah, especially when you are encouraging that.

Vicki Weinberg:

So what are, is there anything else that, um, small businesses

Vicki Weinberg:

sometimes forget to factor in as a costs while we're on that subject?

Vicki Weinberg:

Is there anything that, yeah, people often, I guess accounting

Vicki Weinberg:

fees is probably one is there's anything else that, that you see

Vicki Weinberg:

that people just haven't factored in

Wendy Ross:

Time costs, their own time costs that's the biggest one is that

Laughton Ross:

Yeah, their time costs.

Laughton Ross:

I think sometimes as well, it's these little small expenses, but it's just

Laughton Ross:

a few pounds here, a few pounds there.

Laughton Ross:

They're down at the shops, they pick up something for the business, you

Laughton Ross:

know, they, they forget to record it because they're just doing it as

Laughton Ross:

part of their day to day activities.

Laughton Ross:

Um, it all adds up.

Laughton Ross:

I mean, it's, it's costs incurred by your business.

Laughton Ross:

Make sure you keep the receipts, make sure you write it all down.

Laughton Ross:

And you know, every little bit, every little bit it all adds up

Laughton Ross:

so definitely worth capturing.

Vicki Weinberg:

And so one final thing I've only just thought of actually, but

Vicki Weinberg:

I'll be talking about capturing things.

Vicki Weinberg:

Something that just occurred to me is we've lots of us running businesses

Vicki Weinberg:

from home now, is that something else we should be taken into account?

Vicki Weinberg:

So in terms of cost, incurred.

Vicki Weinberg:

Well, that's probably quite a big subject, but do you see what I mean?

Vicki Weinberg:

I'm thinking that most of us are working out of our homes,

Vicki Weinberg:

but not even considering that

Laughton Ross:

Absolutely that that has to be factored in, um, depending

Laughton Ross:

on what you do, how often you work.

Laughton Ross:

Um, you know, this can be something very simple.

Laughton Ross:

It can be something that's really, really complex um, you know, on the

Laughton Ross:

very simple end of the scale, the government make it easy for you.

Laughton Ross:

They did this thing, they give simplified rules.

Laughton Ross:

So it can just be based on the time spent.

Laughton Ross:

Um, you know, if you've got something that takes up a lot of, a lot of power, a lot

Laughton Ross:

of hear, light, energy, you know, let's.

Laughton Ross:

Thinking of an example, maybe you've set up a cake business and you've

Laughton Ross:

got your oven running all day.

Laughton Ross:

You know, your, your gas bill might be more because that

Laughton Ross:

you can factor all that in.

Laughton Ross:

Um, you need to sort of consider what's appropriate for your trade.

Laughton Ross:

Um, there's a really, really complex set of rules around it.

Laughton Ross:

It's definitely worth talking to somebody.

Laughton Ross:

I would say on that topic that there's so many different rules,

Laughton Ross:

different rules, different rules to companies versus sole trainers.

Laughton Ross:

So people often get mixed up between them.

Laughton Ross:

It's very different.

Laughton Ross:

So it's worth taking advice on that.

Wendy Ross:

And it's way it comes in where he, you know, keep reasons

Wendy Ross:

out with client, the apportionment, how much to take what we, you

Wendy Ross:

know, what are we claiming?

Wendy Ross:

Um, So, if you haven't gotten an accountant to speak with, then

Wendy Ross:

you're going to be following whatever interpretation that

Wendy Ross:

you think would be correct.

Wendy Ross:

So, Yeah,

Vicki Weinberg:

Well, perfect.

Vicki Weinberg:

No, thank you.

Vicki Weinberg:

I know that's a really big topic.

Vicki Weinberg:

The reason I wanted to bring it up is I think that there will be

Vicki Weinberg:

people who don't perhaps realize.

Vicki Weinberg:

I mean, I certainly didn't myself realize that you can claim for

Vicki Weinberg:

certain things if you're, you know, if you're working from home.

Vicki Weinberg:

So I think even if now everyone's aware of that, that's something they can go and

Vicki Weinberg:

get advice on, but I think it is something that perhaps can easily be overlooked.

Vicki Weinberg:

And I thought, while we're talking about costs, let's talk about the

Vicki Weinberg:

other side as well, because there may be some things you can claim.

Wendy Ross:

Yeah, lots of really good point.

Wendy Ross:

Like, you know, if you cake making, for example, then the cost will

Wendy Ross:

be quite different compared to you know, for example, like we were just

Wendy Ross:

using, if we work from home with a computer that's quite different, right.

Vicki Weinberg:

Yeah, absolutely.

Vicki Weinberg:

And I guess, I guess it does depend what you're doing.

Vicki Weinberg:

You know, maybe you do someone that has heat lamps or something, and that's using

Vicki Weinberg:

a lot of electricity or whatever it is.

Vicki Weinberg:

Yeah.

Vicki Weinberg:

I see what you mean, but I guess it's just worth, I guess the main reason I

Vicki Weinberg:

wanted to bring it up here, say that everyone's aware that you can claim there

Vicki Weinberg:

are things you can claim back as well as things that you have to pay out for.

Laughton Ross:

Absolutely.

Laughton Ross:

I think it's really important that you take advantage of all of those things.

Laughton Ross:

Now the tax laws are complex, but you need to make sure you're claiming

Laughton Ross:

everything you're entitled to.

Laughton Ross:

Um, and that, that is just one very good example, but yeah, if you, you

Laughton Ross:

know, if you're working from home, there's cost associated with that,

Laughton Ross:

you can claim some of those costs.

Laughton Ross:

Um, you know, the money's better off in your pocket, you know, paying things to

Laughton Ross:

the government that you don't need to.

Laughton Ross:

Um, so it definitely claim everything that you're entitled to.

Laughton Ross:

And if you're not sure, speak to someone because yeah.

Wendy Ross:

Yeah.

Wendy Ross:

And that's why this is where we come in, spotting the gaps on, you know, is

Wendy Ross:

there anything else that we can do to make, to do, to reduce the tax liability?

Wendy Ross:

Is there an, you know, is there anything that you've forgotten

Wendy Ross:

to claim and things like this?

Laughton Ross:

Yeah.

Laughton Ross:

If you're delivering products.

Laughton Ross:

Um, you may be incurred some mileage, write it all down, keep records for that.

Laughton Ross:

But that's, if you're, if you're delivering products

Laughton Ross:

the business has produced.

Laughton Ross:

That's a business expense.

Laughton Ross:

You can have credit for that.

Laughton Ross:

And people forget to know they keep, they don't keep the

Laughton Ross:

records, they forget get to claim

Wendy Ross:

The record keeping is really so important.

Laughton Ross:

You forget what you've done, you know, people

Laughton Ross:

think, oh, I'll come back.

Laughton Ross:

I'll do that later.

Laughton Ross:

You know, if you come back two or three months later, trying to remember

Laughton Ross:

where you were on this day, delivering what to whom and how far away it was.

Laughton Ross:

You never remember that.

Wendy Ross:

Um, I struggle to remember my child's activity schedule in school.

Laughton Ross:

Log it all, it's all valid business expense.

Laughton Ross:

You should record it all claim credit for that work.

Vicki Weinberg:

Yeah, no, you're right.

Vicki Weinberg:

And I mean, I know myself that sometimes I'll see something come up on my business

Vicki Weinberg:

bank account and I think, what was that?

Vicki Weinberg:

What did I pay you?

Vicki Weinberg:

What, you know, and you know, it's, I know it's legitimate, but you

Vicki Weinberg:

know, then you have to go searching through for receipts or whatever

Wendy Ross:

that is with your business bank account imagine you

Wendy Ross:

just use a joint bank account.

Wendy Ross:

Yeah.

Wendy Ross:

And all these apple pay tapping in and out.

Wendy Ross:

It'll be thousands of transactions where you, yeah.

Wendy Ross:

You don't want your accountants to go through them.

Wendy Ross:

Oh

Vicki Weinberg:

Yeah.

Vicki Weinberg:

So the main thing I'm taking away from this is that it's very

Vicki Weinberg:

important to keep records and to log.

Vicki Weinberg:

Everything that's sort of the my, my key takeaway from this.

Vicki Weinberg:

Cause I think we've sort of touched on that so many times in terms of having a

Vicki Weinberg:

clear picture of who you are, what is, this is the final question I promise.

Vicki Weinberg:

What is the key thing that you would both like people listening to take away?

Laughton Ross:

That's a very good question.

Laughton Ross:

Okay.

Laughton Ross:

I think there's a couple of key things.

Wendy Ross:

If we said, you know, keep your records.

Wendy Ross:

So we can't use that.

Vicki Weinberg:

You can say something you said before, honestly, don't

Vicki Weinberg:

worry if it's something that you said before and just want to reiterate it

Vicki Weinberg:

because I'll edit this out, but you know how it is when people listen to

Vicki Weinberg:

podcasts, sometimes in the middle, they lose their way a little bit.

Vicki Weinberg:

And then when they feel it's wrapping up their attention shifts back.

Vicki Weinberg:

So that's why I usually ask this question because sometimes people can miss points.

Laughton Ross:

I'll start Wendy um, it's a few things for me.

Laughton Ross:

I think firstly, get, keep records for everything, writes it all down, you know,

Laughton Ross:

what do it, as you go along, it's so much easier than trying to spend days or weeks

Laughton Ross:

later on recreating things, you know, it might be a little bit time consuming.

Laughton Ross:

But the, the value in that you'll appreciate it later on do it you go along.

Laughton Ross:

Um, I think the other thing yet take advice, you know, uh, businesses are

Laughton Ross:

complicated, there's so many different things as a business owner, you have

Laughton Ross:

to do, you know, as great as you are, you can't do everything don't

Laughton Ross:

be frightened of asking for help.

Laughton Ross:

Um, whether it's with your website your accounts, you know, it could be

Laughton Ross:

anything, but just took me to talk to someone who knows what they're doing.

Laughton Ross:

Um, if it's your accountant, just trust them as well.

Laughton Ross:

They want what's best for you.

Laughton Ross:

You know, they don't want you to have a big tax bill.

Laughton Ross:

They, you know, they, they want to do the right thing for you.

Laughton Ross:

So trust them, share your information with them.

Laughton Ross:

They'll you know, if they're a good accountant, they'll do a good job

Laughton Ross:

for you and they'll make sure you're claiming everything you should be.

Laughton Ross:

And, um,

Vicki Weinberg:

Did you want to add anything, Wendy?

Wendy Ross:

No, no, no.

Wendy Ross:

I think that's all, that's all very valid and you know, and, um, I think, sorry.

Wendy Ross:

Um, I think one, the, the one the general feedback from our client is,

Wendy Ross:

you know, is that peace of mind that they have working with us because

Wendy Ross:

they just don't want to worry about.

Wendy Ross:

I have, you know, did I pay HMRC the right bill?

Wendy Ross:

You know, or if I, you know, have I have I thought 50 quid,

Wendy Ross:

a hundred quid legitly or not?

Wendy Ross:

It's just that you just want to know most, most client just like, I just want to know

Wendy Ross:

the amount to pay and you've done it.

Wendy Ross:

I have no worries.

Wendy Ross:

Just like us.

Wendy Ross:

When we get a plumber to do a bathroom, we know that it's all done correctly.

Wendy Ross:

We don't have to worry about it.

Vicki Weinberg:

Yeah, absolutely.

Vicki Weinberg:

I know that the biggest thing for me is just knowing that I'm compliant and

Vicki Weinberg:

as long as I pay what I need to pay and I keep the records that I need to

Vicki Weinberg:

keep, I'm not going to get in trouble and doing everything above board.

Vicki Weinberg:

And I think the peace of mind that gives you is not to be underestimated.

Wendy Ross:

Yeah.

Wendy Ross:

And, you know, stick to what you're good at and get another expert to do stuff

Wendy Ross:

that you know, you're not so good at it.

Wendy Ross:

It's, it's absolutely.

Wendy Ross:

It's, it's a fair deal.

Wendy Ross:

We do it all the time.

Vicki Weinberg:

Yeah, that's great.

Vicki Weinberg:

Thank you.

Vicki Weinberg:

Well, thank you so much, both of you for everything that you've shared.

Wendy Ross:

No worries.

Wendy Ross:

Thank you for having us.

Vicki Weinberg:

Thank you so much for listening all the way

Vicki Weinberg:

to the end of this episode.

Vicki Weinberg:

If you enjoyed it, please do leave me a review that really helps

Vicki Weinberg:

other people to find this podcast.

Vicki Weinberg:

Make sure you subscribe so you don't miss any future episodes and

Vicki Weinberg:

do tell your friends about it too.

Vicki Weinberg:

If you think that they also might enjoy it, you can find me at

Vicki Weinberg:

vickiweinberg.com there you'll find links to all of my social channels.

Vicki Weinberg:

You'll find lots more information.

Vicki Weinberg:

All of the past podcasts, episodes and lots of free resources too.

Vicki Weinberg:

So again, that's Vicki weinberg.com.

Vicki Weinberg:

Take care, have a good week and see you next time.