Simple money-saving tips for sole traders and small businesses
Everyone knows how to look for offers, benefit from voucher codes and sniff out a bargain on the high street. However, when you’re focused on running your small business, it’s not always easy to keep one eye on your finances as you work from day to day. Here are five simple ways to keep a few financial rewards coming your way as you work.
According to Xero, almost half of all invoices are paid late. While it may be tempting to delay the invoicing process, both to save yourself a bit of time at the end of the day and to avoid appearing too eager for payment, it can lead to all sorts of problems.
For instance, just because you do eventually invoice, this doesn’t mean that you’ll be paid straight away. If several invoices don’t get paid on time, you may end up borrowing a little extra cash to tide you over and paying unnecessary interest over time.
Pay taxes on time
Within this simple piece of advice comes the entire annual tax process. If you keep all of your records, including income and expenses up to date at all times, you’ll stand far less chance of submitting your tax return late or missing important details.
Therefore, you can help yourself to avoid having to pay for an unexpected bill as a result of missing several key figures over the year.
Consider your company’s legal status
Even if you do start out as a sole trader, this doesn’t mean that you have to trade as one forever. As your business grows, make sure you have the right status and continue to pay the right rates and taxes over the year.
For instance, incorporation can sometimes reduce the amount of income tax that sole traders pay on profits, as this status essentially makes you a separate legal entity from your business. Every time your legal status does change, make sure you get the right insurance – Tradesman Saver has insurance policies for a wide variety of tradespeople and sole traders.
Use free software wherever possible
Particularly when setting up your online persona, it can be tempting to jump straight into the deep end and build a fully functioning website for your business. However, this can prove to be expensive, whether you are building the site yourself or leaving others to do so, as well as time-consuming.
In the early days, avoid forking out for expensive software and digital marketing services until you’re sure you need them. Free project management tools, webpages and social media platforms may be enough for you in the meantime.
Make use of a company pension scheme
While you have no legal obligation to use a company pension scheme unless you employ other staff, this doesn’t mean that you can’t benefit from it yourself. You will still benefit from government tax relief (which, for basic-rate taxpayers, equates to £25 relief for every £100 invested), and save some much-needed cash for the future. This will also help you to get used to the process for taking on other staff in the future.