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Whether through choice or circumstance, the UK has seen a surge in start-up businesses since the COVID-19 pandemic began. According to Companies House, there were more than 770,000 new businesses launched in 2020 – more than double the number created between 2010 and 2017.
Given our reliance on the internet for shopping and other services during lockdowns, it's no surprise that many of these new ventures are e-commerce sites. In fact, online and mail-order businesses increased by 162% in 2020.
Women entrepreneurs have been particularly busy, especially the crafty ones. Etsy, the online marketplace for handmade goods, added 1.9 million new sellers to its platform in 2020, with 81% of all Etsy sellers identifying as women.
If your start-up business has suddenly taken off and you're struggling to keep up with essential paperwork and record-keeping, it's possible you might be feeling a little overwhelmed. Read on for must-know tips to help keep your company finances in good shape …
If your business operates online, chances are you'll be comfortable with the concept of the cloud. Essentially, your business information will be stored via a secure cloud accountancy service such as Xero. Xero or other cloud accountancy services can be tailored to your business, enabling you to effectively manage all kinds of bookkeeping tasks including inventory, invoicing, expenses and payroll.
Managing inventory is key for any e-commerce business. You'll need to keep a careful record not just of finished products ready to sell, but of items and parts needed throughout the supply chain. Even if you keep digitised records, for example via Xero, the essential data will need to be inputted before it can be number-crunched in the cloud.
So don't be tempted to leave products or supplies piling up unnoticed in your storeroom. When you lose track of inventory, your whole accounting process will be skewed. You may end up with too much unsold stock, or lacking the supplies you need to fulfil a big order.
Unlike an anonymous cash transaction in a bricks-and-mortar retail outlet, an online sale requires the customer to give out personal information such as bank card details, name, and shipping address.
To help protect consumers' privacy and give them more control over personal data, the General Data Protection Regulation (GDPR) came into force in May 2018. The regulations are complex, meaning that start-up businesses must be very careful how they process and use any data received.
However, it's not just customers whose privacy rights must be respected. If you employ staff, their data – for example, information needed for payroll purposes - must also be stored securely and deleted where it is no longer required. Here at AMR, we are able to advise businesses on their responsibilities under GDPR to ensure there is no risk of prosecution.
If the last eighteen months have taught us anything, it's that we need to expect the unexpected. In business, it can be tough at the best of times to predict future demand, but the COVID-19 crisis has forced us all to think creatively and learn how to adapt when circumstances change.
E-commerce businesses are clearly better adapted to the hardships that any future lockdowns could bring, especially in comparison to service industries like hospitality and travel. But it's vital to be realistic about the marketplace in which you operate, and attempt to draw up forecasts that take best- and worst-case scenarios into account.
It can pay to have professional support to help you plan for success, whatever is happening in the outside world. Our bookkeeping team has extensive experience in producing cash flows and forecasts, helping to produce carefully laid out plans; information that could prove invaluable when meeting with potential lenders or investors.
If your start up business is employing staff or has a taxable annual turnover of over £85,000, there are plenty more elements to consider, such as pensions auto-enrolment and VAT registration.
For further information or advice on these or any other topics, don't hesitate to get in touch. Please give us a call on 01892 559480 or contact our friendly team via our online enquiry form.