Separate Your Business Accounts

I don’t think it’s any secret, in this online world, that just about everyone is trying to make a little bit of money with a website.  After all, it’s not terribly difficult.  It’s not necessarily easy, but it is far from hard.  Throw up a website, put some work into it, and start bringing in money.  I do it with this site and others.  There’s work involved, but you can make money.

If you’re going to do it, you’ve got to treat it like a business from the start.  I don’t mean that you have to create a company, license it with your state and the IRS, and create a board of directors.  What I do mean, is that you need to have the business assets and accounting separate from your personal assets and accounting.  Using your own personal checking account, savings account, and trying to keep them separate come tax time (and you’ll want to) can be very difficult.  So difficult that you almost have to be a CPA in order to keep it all straight.

Keep your business accounts separateWhen I first began making money with blogs and websites, I didn’t separate anything.  The money to buy the domains came directly from my personal checking account.  The money to pay for the hosting of the websites came directly from my personal checking account.  And then tax season came around.  While I hadn’t made much money from the sites, I did make some.  I wanted to be able to use the expenses of the sites to reduce the income from the sites, so I needed to figure all of that out and get totals for my taxes.  Instead of just going into my accounting software, pulling up the business accounts, and running a profit loss statement, I had to go through each months’ statement of my checking account, and single out the transactions that were related to the sites.  After I’d pulled them all out, I had to compile them into a spreadsheet and create a profit loss statement from them.  It easily took twice as long as it should have.  And that was when things were simple and I only had a couple of sites with a couple of transactions every other month or so.  It would be much more difficult now.

How should you separate your business accounts?

I’m still a fan of keeping things as simple as you can.  I don’t think you need to go through the whole filing process to create a company.   That’s something that can wait until you’re making a decent amount of money.  Ask your CPA if you want a more accurate number.  You can keep it simple.  What you really need is separate accounts and separate bookkeeping.

Start with setting up separate accounts for the business funds to flow into.  You’ll need your own business savings account. Add a checking too if you think you’ll have need of a debit card or actual checks to write out.  I’ve got a checking account and several savings accounts set up that are used solely for the business funds.  If you’re not going to use the business account debit card for online purchases (it’s probably safer not to), you’ll also want a credit card that is used only for business transactions.  Again, it doesn’t have to be in the business’ name, it just has to only be used for business use.  I use one that has a 1-5% cash back feature to save a little extra on expenses.

When it comes to keeping your books, you probably don’t need anything too fancy for your personal accounts.  Just enough to create your budget, and keep track of accounts.  For business, you really need something a little bit more.  I prefer a full on business accounting software.  There’s a couple out there, and you can probably pick one up cheap off of eBay.  They’re a little more complex than the software created for personal accounts, but I like the detail the complexity gives me.  Maybe you can get by with a robust spreadsheet.  But, something that you can use to give your CPA (even if that’s you) a full detail of the profit/loss of the company including all sources of income and expenses.

It may sound a little difficult, but it’s not any more difficult that it would be if you didn’t separate them first and then tried to separate them after you need to.  You’ll thank yourself later.

Protect Your Business with Hiscox Insurance UK

With set insurance packages dominating the financial world, it is refreshing to find a company who will tailor your protection to suit the needs of your business. Hiscox insurance UK works hand in hand with small and medium enterprises (SMEs) to ensure they sign up for an insurance package that fits their requirements.

Making the decision to go self-employed is a huge professional and financial step. In many cases setting up your own business is very much taking a leap into the unknown, and ensuring you are adequately insured to cover all eventualities is a savvy business move.

There are many aspects of your business which may require cover. Hiscox insurance UK offers a suite of varying insurance policies to protect you and your business should any unfortunate event occur.

You may have a solid business plan in place but whether you are dealing in business to business (B2B) services, product design or retail, it is inevitable that you will deal with the general public, clients or consumers at some point in your working week.

Public liability insurance from Hiscox insurance UK is an optional insurance package that protects you from any liability claims that are made against your business. Whether you caused a small, but costly accident when visiting a client’s workplace or a product you advocated and sold has caused illness or injury, public liability insurance ensures your costs are covered.

The current ‘claim climate’ within the UK means that more individuals are likely to initiate and progress a claim if they feel they have been slightly hurt or disadvantaged. The slogan ‘where there’s blame, there’s a claim’ has stormed the country and Claim Management Companies (CMCs) are exploiting the nation’s belief that they have a right to sue for the smallest misfortunes.

Whatever incident occurs, if a claim is made against your company, public liability insurance will cover any legal fees and compensation that is payable should you be found liable. According to the Compensation Recovery Unit of the Department of Work and Pensions (DWP), the compensation pay outs recorded for 2010/11 was over an astonishing £10.6 million. This only confirms the importance of investing in adequate cover.

Hiscox insurance UK offers SMEs the opportunity to take out employee liability insurance with public liability insurance. Businesses which employee any number of staff are legally required to take out this policy, with a minimum of £5 million in cover.

Regardless of whether you employ staff on permanent contracts or ad-hoc, or you simply have volunteers helping out during busy periods, anyone who has worked for your business to carry out any task can make a claim against your company.

However hardworking and dedicated your team may be, choosing not to take out the cover will mean that you are subject to a fine. Key annual figures from the Health and Safety Executive (HSE) for 2010/11 confirm that there is a definite need for employee liability insurance. The statistics report that work related illness and injury are rife. With another year of dire demographics, risking your liability is a foolish business move.

Regarding the year 2010/11, the HSE could report that 171 individuals were killed at work and over 200,000 reportable injuries occurred which entailed a minimum of a three day absence. In addition, an astonishing 26.4 million working days were lost due work-induced accidents or ill health.

Professional indemnity insurance is highly beneficial for businesses who deliver services or products to other companies or the general public. Hiscox insurance UK offers indemnity insurance for an array of industries, tailored to suit the differing specialist tasks and roles of professions, varying from accountancy and marketing to engineers and IT consultants.

Professional indemnity insurance covers the little potholes which can be sometimes skimmed by public liability insurance. Taking out this cover will protect you against more complex claims involving negligence, unintentional infringement of copyright, loss or damage to important documents and data, theft and defamation.

Not only does Hiscox insurance UK provide cover tailored to your industry, your will pay for protection which is made to fit the size of your business in conjunction to the ‘worst case scenario claim’ which could be made against you.

Becoming self-employed and launching a new business in the current climate is, by nature, a challenging endeavor. Take precautions and protect yourself and your company with insurance to cover all potential troubles.

10 Easy Ways to Cut Basic Business Costs

The current economic climate is taking its toll on many businesses nationwide. Surviving the recession doesn’t have to mean big sacrifices. Prepare to outlive the downturn by cutting basic business costs.

  1. Search, Switch and Save on Energy Costs

It isn’t always wise to assume that staying with your existing energy supplier is the most economical option.Cheap business gas and electricity rates are ideal, but be sure that they come enhanced with fixed rate, fixed term contracts to avoid any fluctuation in this infamously erratic market.

In addition, choosing a supplier which offers free expert advice on energy efficiency will provide tailored tips on how your business can reduce environmental impacts and costs.

  1. Be Water Wise

Business Link claims that ‘a dripping tap can cost your business up to £400 per year’, an expensive price to pay on a wasted resource. Although the outlay to repair plumbing problems may border on the criminal, fixing them now can save you more long term.

Many businesses fall into the trap of paying for water dependent on the size of your company’s building. Check that your meter is accurate and that your bills are reflective of your actual usage. Making this change will enable you to reduce costs by decreasing water use.

  1. Maintain Machinery and Equipment

Ensure that all of your machinery and equipment is well maintained to guarantee that it is running as well as possible. Though this is definitely a convenience, maintaining your equipment will save you money both long and short term; items will perform efficiently and require less technical repairs.

  1. Stop Wasting Office Supplies

Printing off emails unnecessarily eats ink, paper and electricity and is one of the most costly depletions in business today. Curtail costs in this area by restricting the printing of hard copy literature to vital documents.

Rather than simply throwing away waste paper, double recycle it. Use it initially to create a jotter pad, and then provide appropriate waste facilities near to all workspaces to encourage recycling.

  1. Control Your Consumption

When looking for deals on cheap business gas and electricity, you should consider how your consumption will affect all quotes. Getting to grips with your usage can reduce your bills and your environmental impacts.

Energy suppliers now offer billing options based on your confirmed consumption which can greatly cut your costs if you are energy efficient. Services which allow further insight into your usage can highlight areas for improvement, with British Gas findings reporting that up to 46% of billed business energy is consumed after-hours.

  1. Shut Down Systems

Closing computers down after-hours can save businesses £35 per annum, per processor. Don’t be tempted to simply switch off the monitor or leave your screen saver running, in large offices and IT environments this measure could save your business hundreds every year.

  1. Regulate Heating Economically

Rather than reaching for the air conditioning system or central heating, opt for cost efficient ways to regulate heating within the workplace.

Economically and ecologically, opening and closing doors to restrict airflow or capture warmth in small areas is an exceptional way of maintaining a pleasant office temperature.

Switch off the central heating during summer months, and set it a degree lower than you typically would this winter. A minor change such as this can save up to eight per cent off your existing electricity bill.

  1. Involve Your Employees

Instigating economical and conservational policies and pathways can only be implemented effectively if you have the workforce on board. Spend time planning training or briefing sessions surrounding new routine procedures to ensure that all staff members are able to contribute to this positive organisational innovation.

  1. Let There Be Light

Lighting is one of the biggest culprits for eating energy and causing excessive expenditure. Decrease the damage by changing all of your lights to energy efficient bulbs and opening any blinds to encourage natural light into rooms.

Cleaning light fittings and windows will ensure minimal consumption, at a benefit to both your books and the environment.

  1. Introduce Cost Effective Marketing Strategies

Don’t be tempted to cut promotional activity out of your budget during a downturn. Instead employ free marketing strategies. Use quiet periods to build up a strong online presence and increase your social capital.

Email subscriptions and social media platforms (such as Linkedin, Twitter and Facebook) are all excellent cost efficient tools.

Before implementing policies and briefing staff, secure the most cost effective fundamentals such as cheap business gas and electric.