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SOC.OS Cyber Security Acquired by Sophos - Learn More

Managing the lifeblood of your business

AUGUST 24, 2021

DAVE MAREELS

In my previous blog, I talked about the fundamentals of setting up a business, including Corporation Tax, registering for VAT, PAYE and Banking services. In this blog I’ll dive a little deeper in to the financial management of a new business, and the requirements therein.

Until you reach a certain size, you are probably going to have to wear the hat of Finance Director. This goes beyond just simple bookkeeping and management of cashflows, but also financial planning and forecasting for the business.

One of the first things you will need to decide is how much of the day to day accounting and book-keeping you do in house, and how much you want to outsource to a reputable accountant. This decision is almost entirely dependent on how comfortable you are with basic accounting practices. This will drive whether you need accounting software in house, or whether you’re governed by your accountant’s tool of choice. In the early days of SOC.OS, we managed the day to day bookkeeping and payroll in house, with our accountant supporting us with quarterly and annual filings. As your business grows you will likely find yourself relinquishing more of this, or bringing it entirely in house, with a dedicated finance professional.

Beyond the normal accounting practices, you will also need to get to grips with financial planning and forecasting for your business. This means formulating a plan for your business growth, understanding the associated costs and revenue, and tracking your actuals against this plan, adjusting your forecast as appropriate. This is especially important if your business is not profitable in the first instance, and you are relying on investment, which is often finite, to grow your business. At SOC.OS, we used a version of the Foresight SaaS Financial Model for forecasting, as it gave us the level of sophistication needed for our business, but you may find you can build one yourself to suit your requirements.

There are other avenues for bringing cash in to the business which are non-diluting, such as R&D Tax Relief and grants. If you think you would qualify for, and want to apply for, either of these, I would suggest engaging a professional to assess your business for eligibility, and to help with the application process. Most accountants or innovation funding experts will charge a fee which is tied to the amount of tax relief or funding achieved. It can be incredibly time consuming and difficult to navigate the process, first time round, so I would suggest engaging someone to help.

Finance Checklist

  • Engage an accountant to support with book-keeping, payroll and quarterly and annual filings (e.g. VAT return and Full Financial Statements).
  • Purchase (subscribe to) accounting and payroll software (if required).
  • Build a financial forecast for your business for financial planning and analysis.
  • Apply for R&D tax relief and/or government innovation grants (if applicable).

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