Création d’entreprise

Opstart af virksomhed

Starting your business

Comptabilité 

Regnskab

Accounting

Facturation

Fakturering

Invoicing

Développer son entreprise

Vækst din virksomhed

Growing your business

Financer son entreprise

Finansiering af din virksomhed

Financing your business

The world is getting smaller and better technology means that looking outside the UK for business can be both good for your company and sometimes necessary. Expanding into other markets does not have to be a frightening proposition, but it is crucial you know what you are doing if your company is based in the UK.

There are certain things that need to be done and at Ageras we hear the same questions on a regular basis, such as:

*   Do I need to invoice in a different language?
*   How do I calculate the exchange rate?
*   Which country’s VAT rate should I use?
*   Can I be paid in euros with a UK bank account?
*   How do I invoice in a certain currency?
*   What about Brexit?

These are all excellent questions and show you are thinking along the right lines. We can give you the tools to succeed and the advice to keep you on the right track.

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## Should I invoice in another language?

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When dealing with a customer from another country that does not have English as an official language, there is always the issue of which language to send your invoice in. In the UK, we are not known for our language skills, so it is probably expected that we will send invoices in our mother tongue.

However, invoicing in your customer’s language shows:

*   a commitment to them
*   makes them feel wanted
*   helps to speed up payment
*   Gives you a chance to learn and work in a new language

Note: if you are going to invoice in a different language, it is always better to have it done by a certified translator. This will save you from any unnecessary errors and possible confusion. It also keeps you right if you have to deal with the authorities in either country or in case of an audit.

As for writing the perfect email to attach your invoice to – we’ve written a short guide. [How to send the perfect invoice email](https://www.zervant.com/en/blog/how-to-write-an-invoice-email/).

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## Should I invoice in another currency?

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First of all, you do not have to invoice in foreign currencies. However, much like the language question, your partner will surely prefer to pay in their local currency.

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### Charging in Sterling

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If you decide to invoice the amount in Sterling, obviously there is no need to worry about exchange rates (see below).

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### Invoicing in a foreign currency

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This will come with costs. Each individual bank charges its own fees for foreign currency transactions into Sterling, so make sure you know the rate beforehand.

If you want to avoid or minimize these charges, there are options available such as [PayPal](https://www.paypal.com/uk/home) and [Wise](https://www.wise.com/) (formerly Transferwise). As more business is conducted between different countries across borders, more solutions are being found that bypass traditional banks. But, make sure you investigate these companies fully before committing to them.

All of Zervant’s accounts – both free and premium – offer support in 5 languages, so we are on hand to help you. To see the benefits, visit our [Features page](https://www.zervant.com/en/features/).

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## Receiving payment into a UK account from abroad

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Firstly, you need to be aware of the exchange rate (see below) and any fees that you may have to pay before the money arrives in your bank. This is the ideal point to contact your bank and ask about this. Different banks have different fees and rates, so do look around to find the one best for you. They are always looking to attract clients, so you may well have the upper hand.

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### How long does it take?

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Again, it depends on the bank, but the average amount of time to receive money from abroad is three to seven working days.

If you want to receive the money faster, look into specialists that deal with international transfers such as the ones mentioned earlier. They are often far quicker and more efficient.

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### What do I need to include?

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If you do go with a bank, this is what you will need to include in your client invoice:

*   IBAN (international bank account number)
*   Your bank’s BIC (business identifier code) – this is a code exclusive to your UK bank
*   Foreign currency amount
*   Your full name and business address
*   The company’s account number and sort code

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## Exchange rates

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Exchange rates go up and down constantly – sometimes many times a day. For this reason, it can be difficult to know the right amount to charge in a different currency. Fortunately, the UK Government sets monthly exchange rates for businesses, all of which have a stipulated start and end date.

[The UK’s official and accepted period rate of exchange](https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2020-monthly).

The other options available to you are the [European Central Bank’s live exchange rate](https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/index.en.html). This is usually updated at 15.00 GMT daily.

As a courtesy to your customer, you can always inform them beforehand that this is what you will be using.

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## Exchange gain and exchange loss

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Gain and loss is when the amount marked on the invoice is different to what you receive from your client, due to a change in the rate of exchange.

<span style="box-sizing: inherit; font-style: inherit; font-weight: inherit; text-decoration-line: underline;">For example:</span>

If you decide to work with a French company, you have the Pound Sterling as your currency and the French company deals in Euros. Obviously, the two currencies do not stay the same against each other constantly and will fluctuate.

Therefore, if you send an invoice amount of GBP 500 on 31.05, the exchange rate of the Euro to the Pound could be EUR 1.12\. But, when the company goes to pay the invoice 10 days later, the exchange rate may have shifted to EUR 1.25\. This means that instead of receiving EUR 560 in payment, you will actually get EUR 650 – a big shift.

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### What can I do about it?

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If you are a small company who only deals in smaller amounts, it shouldn’t make too much difference to you or your customer. Although, you will have to pay more tax if you receive a larger amount of money than anticipated.

Talk to your customers as the relationship begins and mention this could be an issue, so that you are aware of their thoughts on the matter. Over time it may balance out, but no one wants to feel they are being cheated.

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## What about VAT?

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Firstly, you need to work out whether your company is eligible for VAT. You can find out more from the [UK Government’s website](https://www.gov.uk/vat-registration).

If your company is registered in the UK and your place of supply is the UK, then you must pay the British rate of VAT as normal. Here, the ‘place of supply’ is where you supply your good or services to. Always make sure you are aware of the amount of VAT you will have to pay for each invoice issued.

Before Brexit, the country’s rules on VAT automatically extended to the European Union. However, at the start of 2021, the rules changed. The British government has brought in a system known as ‘postponed accounting’, which includes all good imported from both EU and non-EU countries into the UK. This means that all VAT-registered UK firms can allocate VAT to their VAT return, rather than paying import tax on their VAT return as goods arrive into the country.

If your place of supply is outside the EU, then you do not pay EU VAT but the sale should be included in your VAT Return.

Note: If VAT is due in the UK, then everything must be converted into Pound Sterling for the benefit of HMRC.

For more info regarding VAT, have a look at the [UK government’s breakdown](https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services).

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## Invoicing in a post-Brexit world

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Please note that customs and duties rules on goods have now come into force and both must now be paid. For more info on the post-Brexit rules that have come in, have a look at [this article from ICAEW](https://www.icaew.com/brexit/uk-vat-after-the-transition-period).

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<span style="font-size: 1.25rem; color: rgb(37, 40, 41);">When you decide to start a business, the first important decision to be made is how you will register your business – will you be a sole trader or a private limited company; or maybe you’re looking to start an LLC or a charity? In this article we look at the different types of company form, their pros and cons and what each of these mean.</span>

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This is usually decided based on the service your business provides but what should also be considered is how much funding you have, the industry you are in, how many people are setting up together and your projected income.

Max Abramov, CEO at TaxScouts, sums up the difference as being all about the individual:

> _Small enterprises and self-employed tradespeople may prefer the simplicity and control over earnings offered by sole trading, while those with ambitions of starting a larger company with lots of employees might be tempted by the security that registering as a limited company offers._

Of course, you can always change what kind of company you run, but getting it right at the beginning will save time, money and a whole lot of stress. For more info on getting it right first time, have a look at our [‘how to write your first business plan article’](https://www.zervant.com/en/blog/how-to-write-your-first-business-plan/), which comes with a free Zervant template.

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## Freelancer

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This, as the name suggests, is the type of business that has the least strings. You can work as often as you like and you are not employed by a company and can work for whoever you like.

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### Pros of freelancing

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*   Freedom to work anywhere and for anyone
*   Very few overheads, such as rent
*   Lower taxation – up to a certain point
*   Set your own rates

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### Cons of freelancing

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*   Lack of guaranteed work
*   Companies will often have to pay your contributions
*   Overshadowed by bigger companies

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## Sole trader

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This is the simplest form of business and requires the least amount of external regulation. It essentially means you run the business by yourself and for yourself, with minimum external involvement, and is known as ‘unlimited liability’.

Gorillaccounting.com describes being a sole trader as:

> _More control for you. You run your business the way you want, without interference from anyone else, from daily tasks to strategic decision making…You can make decisions, act on them quickly and meet your clients’ needs without delays.._

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### Pros of being a sole trader

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*   Self-employed
*   Low running costs
*   Entitled to keep all profits
*   Tax and national insurance – Self Assessment Tax Return
*   No limit to what you can earn

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### Cons of being a sole trader

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*   Higher tax brackets can bring much higher taxation
*   Responsible for all personal assets
*   Hard to keep running – long hours, poor holidays
*   You don’t get paid for time off

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## Partnership

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As the name suggests, this is when you get together with one or more partners and set up a business between you. Here, you share all profits and losses equally and both (or more) of you sign up as self-employed but enter into a business agreement. There are 434,000 of these in the UK and you will often see them in action when you visit a doctor or dentist surgery.

However, please make sure you are going into business with the right person. Motivational speaker Shed Simove says:

> _Working relationships are PIVOTAL to the success of a business. Before you work with someone new, if at all possible, give them a small job or task to do first, to check if you and they have the same work ethic and way of operating._

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### Pros of partnership

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*   You don’t have to set up a corporate company, even though there may be a few people involved
*   Retain all the benefits of being self-employed
*   Reduced time pressure
*   Greater specialisation
*   Each partner pays their own tax on profit share

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### Cons of partnership

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*   You’re personally responsible for all debts and liabilities
*   You are liable for others’ negligence or misconduct
*   You have to share profits with others
*   Making decisions is harder

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## LLP

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A Limited Liability Partnership, or LLP, is similar to a partnership but has one major distinction. This is the newest type of business structure in the UK and, in this set-up, a partner’s liability is capped at the amount of money or capital they put into the business.

For this reason, this kind of business requires much more paperwork, registration and accounting – all of which is designed to keep you are your assets protected.

Before opening for business, you will need to register your company at Companies House – something that is not required as a sole trader or partnership.

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### Pros of LLP

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*   Retains many benefits of a partnership
*   Can be turned into an incorporated company with two or more members
*   An LLP agreement sets out responsibilities and profit share in advance
*   More freedom to earn more money without high tax brackets

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### Cons of LLP

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*   Requires additional set-up and costs
*   Members must submit a personal SATR, pay income tax and Nat Ins
*   Annual accounts need to be prepared and filled

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## Limited company

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This is often the type of business that people who have experience or money behind them will opt for straight off the bat. For example, if you are setting up a dog walking business or a one-man personal trainer business, there is almost nothing in this type of venture that will be of benefit to you. Maybe one day, though!

Here, the business is owned by shareholders and run by appointed directors. It is also a legal entity of its own and therefore had to have its own legal rights and obligations.

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### Pros of limited companies

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*   Finances are kept separate from the individual owner
*   Decisions made at business level rather than individually
*   Profits kept by the company after corporation tax is paid
*   Profits then distributed in dividends
*   Easier to borrow money in the long-term
*   You receive a set wage

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### Cons of limited companies

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*   Annual reporting & filing requirements with Companies House & HMRC
*   Takes complete control away from you as a business owner
*   Is expensive to set up and run
*   Relies on making large profits to survive
*   Criminal liability not on the individual

To set up your business, visit the [‘setting up a business’ section of the UK government’s website](https://www.gov.uk/set-up-business). Within the page, there are direct links to the correct registration pages.

No matter which form your business will take, we have a number of resources available to help you along the way. If you’re looking to hire employees, you can try out our [general employment contract template](https://www.zervant.com/blog/employment-contract-template-uk/) or [zero-hour contract template](https://www.zervant.com/en/blog/zero-hour-contract-template/).

Don’t forget to have a look at our [blog page](https://www.zervant.com/en/blog/) as well, which is packed full of helpful articles designed to make setting up your own business as smooth as possible. Good luck!

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Asking for money is never easy. It’s awkward, time-consuming, and you certainly don’t want to upset your clients. But overdue invoices are also dangerous – they risk affecting your cash flow and putting you out of business. Not to mention the fact that you have a right to be paid for the work you’ve done!

But how do you handle such a delicate situation? How do you ensure you get your overdue invoice paid <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">and</span> keep your clients coming back for more?

<span style="box-sizing: inherit; font-style: inherit;">Whilst there are no silver bullets, there are plenty of steps you can take to help minimise the problem. In this post we’ll look at </span>the best ways to ask clients for late payment<span style="box-sizing: inherit; font-style: inherit;">. We’ve also made some [email scripts ](https://www.zervant.com/en/blog/how-to-ask-clients-for-late-payment/#EmailScript)</span>and [template downloads](https://www.zervant.com/en/blog/late-payment-letter-templates/)<span style="box-sizing: inherit; font-style: inherit;"> ready for you to use, should you need them.</span>

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## Set the tone from the start

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<span style="box-sizing: inherit; font-style: inherit;">Being upfront with your clients about payment can save you hassle further down the line, so it’s best to state your invoicing terms from the off. [UK law](https://www.gov.uk/invoicing-and-taking-payment-from-customers/payment-obligations) says that payment must be received “within 30 days of getting your invoice, or the goods or service”, unless agreed otherwise.</span>

<span style="box-sizing: inherit; font-style: inherit;">But although the default is 30 days, the average payment time for invoices in the UK is currently [more than 38 days](https://ctmfile.com/story/late-payments-is-bad-for-business-yet-27-of-uk-invoices-paid-late). So you may well want to start with shorter terms, especially with your new clients. You could even try asking completely new clients to pay their first invoice in full, before doing the work. </span>

There is no right or wrong answer here, just make sure you’re clear about what you expect.

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## Be proactive

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A common mistake many smaller businesses make is to wait until the invoice is overdue before chasing it. That’s already too late! Ideally you should send the first reminder about a week before the due date. Don’t think of this as pushy – it’s more an effective way to get the ball rolling.

In the best case this first reminder may get your invoice paid early. But if not it will certainly help keep it in your customer’s mind, and it may help you to identify any problems with the invoice early on (which could affect payment time).
<a name="EmailScript" style="box-sizing: inherit; background-color: transparent; color: rgb(0, 180, 194); cursor: pointer;"></a>
<span style="box-sizing: inherit; font-style: inherit; font-weight: inherit; color: rgb(0, 0, 0);">Send another reminder on the day the invoice is due, and if nothing has happened within a week, send another one after that.</span>

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## Create an email script for your reminders

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<span style="box-sizing: inherit; font-style: inherit; font-weight: inherit; color: rgb(0, 0, 0);">As well as the financial aspect, one of the most annoying things about chasing late payment is the amount of time it takes. One way to save time is by having a set of email scripts for your reminders, ready to send out as and when you need them.</span>

<span style="box-sizing: inherit; font-style: inherit; font-weight: inherit; color: rgb(0, 0, 0);">Here’s a few suggestions.</span>

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### 1. A Week Before the Due Date

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Hi [FIRST NAME],

This is just a quick reminder to let you know that payment for invoice #123, which we sent you on June 26th, will be due in a week’s time, on 3rd of July.

Please take a moment to check the invoice, and do let me know if you have any questions.

Regards,
[YOUR NAME]
_

[Send this reminder as an email!](mailto:?subject=Invoice%20Payment%20Reminder&body=Hi%20[FIRST%20NAME],%20This%20is%20just%20a%20quick%20reminder%20to%20let%20you%20know%20that%20payment%20for%20invoice%20%23123,%20which%20we%20sent%20to%20you%20on%20June%2026th,%20will%20be%20due%20in%20a%20week%E2%80%99s%20time,%20on%203rd%20of%20July.%20Please%20take%20a%20moment%20to%20check%20the%20invoice,%20and%20do%20let%20me%20know%20if%20you%20have%20any%20questions.%20Regards,%20[YOUR%20NAME])

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### 2. On the Due Date

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Hi [FIRST NAME],

This is just a quick reminder to let you know that payment for invoice #123, which we sent you on June 26th, is due today. Please pay this as soon as possible.

Let me know if you have any questions, happy to help with whatever you need.

Regards,
[YOUR NAME]
_

[Send this reminder as an email!](mailto:?subject=Invoice%20Payment%20Reminder&body=Hi%20[FIRST%20NAME],%20This%20is%20just%20a%20quick%20reminder%20to%20let%20you%20know%20that%20payment%20for%20invoice%20%23123,%20which%20we%20sent%20you%20on%20June%2026th,%20is%20due%20today.%20Please%20pay%20this%20as%20soon%20as%20possible.%20Let%20me%20know%20if%20you%20have%20any%20questions,%20happy%20to%20help%20with%20whatever%20you%20need.%20Regards,%20[YOUR%20NAME])

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### 3. A Week After the Due Date

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Hi [FIRST NAME],

We have not yet received payment for invoice #123. A payment of £ [XXXX] is now overdue.

I’d really appreciate if you could pay this invoice as soon as possible, and please let me know when you have done so.

If you have any questions then let me know.

Regards,
[YOUR NAME]
_

[Send this reminder as an email!](mailto:?subject=Invoice%20Payment%20Reminder&body=Hi%20[FIRST%20NAME],%20We%20have%20not%20yet%20received%20payment%20for%20invoice%20%23123.%20A%20payment%20of%20%C2%A3%20[XXXX]%20is%20now%20overdue.%20I%E2%80%99d%20really%20appreciate%20if%20you%20could%20pay%20this%20invoice%20as%20soon%20as%20possible,%20and%20please%20let%20me%20know%20when%20you%20have%20done%20so.%20If%20you%20have%20any%20questions%20then%20let%20me%20know.%20Regards,%20[YOUR%20NAME])

If that still feels like a lot of work you can use Zervant to automate the whole process, and set up automatic [payment reminders](https://www.zervant.com/en/payment-reminders/).

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## Give your client a call

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If email reminders aren’t getting your invoice paid then you should also try just giving your client a call. Mistakes do happen – maybe the address was wrong, perhaps your emails ended up in a spam folder…

Sometimes all you need is a quick call to find out what is going on, and to get your invoice paid. Plus, if someone is just stringing you along, it’s easier to come up with excuses via email than on a direct phone call. If you’re still stuck then it’s time to consider [legal action](https://www.zervant.com/en/blog/late-payment-letter-templates/).

Hopefully these pointers help you get started, but be sure to check our [blog](https://www.zervant.com/en/blog/) for more advice on coping with late payment.

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<span style="font-size: 1.25rem; color: rgb(37, 40, 41);">A well formulated business operating model is like a bridge between strategy, the ‘why’, and operations, the ‘how’. It should allow you to focus on delivering the value proposed in</span><span style="font-size: 1.25rem; color: rgb(37, 40, 41);"> </span>[your business plan](https://www.zervant.com/blog/how-to-write-your-first-business-plan/)<span style="font-size: 1.25rem; color: rgb(37, 40, 41);">. In short, an operating model breaks down the delivery elements of your business model and helps managers convert strategy into operational decisions.</span>

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> An organization is a complex system for delivering value. An operating model breaks this system into components, showing how it works – [Operating model Wiki page](https://en.wikipedia.org/wiki/Operating_model)

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## What is a business operating model?

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While there is no common definition of what constitutes an operating model, it is often compared to the blueprints for a building. There are multiple sections which lay out in plain terms the functions by which they serve the overall business goals.

Typically created by a business architecture practitioner, along with other members of the strategy team, including strategic planners, business executives and business analysts, the business operating model is developed in such a way to create a visual representation that ensures change is managed in an orderly manner.

The conditions and strategies put in place in [your first year in business](https://www.zervant.com/en/blog/how-to-start-a-business-uk/) will be different to those required in the subsequent years – underlining the need for flexibility and adaptability in the model. Technological developments and [new ways of working](https://www.zervant.com/en/blog/free-timesheet-for-freelancers-and-contractors/) can be influential on the type of model you adopt.

The creation of value can be applied at several levels in a company, ranging from IT and Human Resources to Marketing and Production, which is why having your operating model aligned and delivering on the strategy is important.

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### 6 key elements in an operating model

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According to the [management consulting firm Bain & Company](https://www.bain.com/consulting-services/organization/organizational-design/), developing an operating model requires six key elements:

• A superstructure encompassing your primary business units and how the [profit and loss statement (P&L)](https://www.zervant.com/en/blog/bookkeeping-basics/) maps to them.

• Accountability principles for where and how decisions are made and executed.

• Governance forums and management cadence that enable priority cross-group processes and interfaces to support strategic and operational decisions.

• Talent requirements to make the operating model work.

• Key strategic metrics that align the top team and the broader organisation around clear strategic objectives and priorities.

• Behavioural expectations that establish how to work together, as well as acknowledging a company’s unique cultural heritage and what needs to change to make the team work more effectively in the future.

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## How to develop an operating model for your business

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Despite high hopes and optimistic expectations, many corporate strategies often fail in their effectiveness due to a lack of clarity. Business architects may describe this as a “disconnect” between the business strategy and the day-to-day operation. In short, people aren’t working towards a clear and common goal.

Other problems that can lead to faltering operating models include:

*   financial pressure reducing the ability to make [informed investment decisions](https://www.zervant.com/en/blog/what-is-profit-in-a-business/)
*   a loss in momentum after the initial wave of implementation
the redeployment of talent as other priorities arise

Linking strategy with an operating model requires you to translate your organisational rationale and goals into concrete objectives – these objectives are then prioritised in your operating model design. They must describe practical targets which people can use to develop the operations to meet business objectives.

To boil it down to a single decision – if you give someone management status, you do it because you have concrete objectives in mind – make sure that person understands your rationale and their function in attaining the key strategic metrics. Before all of this however, you must understand your chosen business model.

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### Famous examples of effective business models:

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[McDonald’s](https://www.investopedia.com/articles/markets/032015/how-mcdonalds-makes-its-money-mcd.asp#:~:text=33.8%20billion%20USD.-,Business%20Model,that%20are%20owned%20by%20McDonald's.) has developed a successful vertically integrated franchise business model through which all its restaurants are operated by the company or by franchisees, which includes foreign affiliate markets under license agreements.

[Nike](https://fourweekmba.com/nike-business-model/) operates a mass market business model which makes money by selling products wholesale to third-party distributors. They focus heavily on brand-building and generating awareness through product innovation and modern marketing.

[Tesla’s](https://www.investopedia.com/articles/active-trading/072115/what-makes-teslas-business-model-different.asp) business model uses direct sales to market its automobiles, unlike other car manufacturers who sell through franchised dealerships. The model also includes servicing and charging its electric vehicles.

[Twitter](https://www.feedough.com/how-does-twitter-make-money/#:~:text=Twitter%20business%20model%20is%20similar,unregistered%20can%20only%20read%20them.), like many social media firms, uses the advertisement business model and earns revenue through promoted posts and stories, while offering a free service to its user base. It also makes money through its data licensing.

[Uber’s](https://mobisoftinfotech.com/resources/blog/uber-business-model-explained/) platform business model connects drivers and customers through an interface with gamification elements. They earn revenue by collecting fees from the app’s gross bookings.

Knowing how these businesses deliver value and generate income makes it easier to suggest how an operating model may be constructed to support the business goals.

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## How to start designing an operating model

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When designing an operating model, business architects recommend starting with the creation of a ‘value-chain map’, which shows the separate, different delivery chains and how they should be linked together.

The next important step is developing an ‘organisation model’ that illustrates how you structure different value chains, as well as including support functions, such as IT, HR and Finance.

Once these core diagrams are in place, you will need to consider producing additional maps and charts that typically include:

*   a supplier matrix
*   people models
*   decision grids
*   an IT blueprint and location maps

There are several tools available that can help you design your business model, such as the popular [Operating Model Canvas](https://operatingmodelcanvas.com/), which employs Processes, Organisation, Location, Information, Supply Chain and Management System.

Other commonly used planning models are the Strategy & Operating Model Blueprint, the Bain Operating Model and the MIT CISR Operating Model Types.

If you’re at this point in the article and realise that all of this is basically impossible without first producing a solid business plan then good news – we’ve created a [business plan template and a business plan canvas which you can download for free.](https://www.zervant.com/en/blog/business-plan-template/)

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## The practical benefits

### long-term benefits of a business operating model

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Running a business offers no shortage of challenges, which is why a robust business operating model is vital.

The practical benefits include:

*   Delivering improved performance and reduced cost
*   [Getting work done more efficiently](https://www.zervant.com/blog/entrepreneurship-work-life-balance-infographic/)
*   Communicating a shared purpose to a wider audience
*   Increased capability to adapt and transform
*   Giving substance to an abstract strategy through systems, processes and structure
*   [Aiding investment choices](https://www.zervant.com/en/blog/how-to-finance-a-new-business/)
*   Presenting an overview of the state of the business
*   Offering a foundation for defining detailed work and process products

Taking the time to prepare a well-formulated business operating model can help with risk management, thereby avoiding or preparing for problems and navigating smoothly through those first few turbulent years as a start-up or early stages of a new in-house project.

Finally, a strong business model offers many long-term benefits, ranging from better integration, improved business performance, the ability to grow and scale more quickly, and increased understanding around organisational coordination and decision making.

Once you have put the effort into comprehensively finalising your business operating model, you can be confident that you are on the path to success. If you need further assistance in setting up your business, look no further than the [Zervant blog](https://www.zervant.com/en/blog/) – there you’ll find free resources for small business owners such our guide on [small business accounting](https://www.zervant.com/blog/small-business-accounting/), free [zero-hour contract template](https://www.zervant.com/en/blog/zero-hour-contract-template/) (or general [employment contract template](https://www.zervant.com/blog/employment-contract-template-uk/)) and our take on [getting better clients](https://www.zervant.com/en/blog/how-to-get-better-clients-in-2022/).

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How healthy is your business? How do you even begin to measure its health and how frequently should you undertake a full physical of your company?

Here at Zervant, we have the answers to these questions and many more that will help you to appreciate the benefits of undergoing a business health check and investing in private medical insurance for your company.

You might not always receive a clean bill of health, but medical insurance is certainly better than an autopsy at the hands of a business coroner. It’s also beneficial to your mental wellbeing.

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## What is a business health check?

##

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As the global business advisory firm [RBNC](https://www.rbnc.global/business-health-check) states, a business health check “is a review of your entire business operations and is designed to find areas for growth, cost savings, more productivity, and better profitability in your business.”

Regardless of the industry in which your company operates or its size, all firms should consider taking a business improvement health check every few years to diagnose any potential business problems and ensure the company is meeting its objectives.

![Business-health-check_Blogpost_UK_Visual.png](https://broad-malicious-back.media.strapiapp.com/Business_health_check_Blogpost_UK_Visual_23f0bd1e46.png)

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## What does a business health check cover?

##

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A business health check covers many areas, which can be overwhelming at first. However, several online business advisors and consultants are ready to offer help that suits your business.

Free online health checks, such as [this one](http://www.applebyconsulting.co.uk/business-health-check/) by the Newcastle-based firm Appleby Consulting & Coaching, take you through a series of questions covering:

*   Business strategy and planning
*   Sales and marketing
*   Customers
*   Financial management
*   Business happiness<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">
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### Business strategy and planning

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A business has a lot in common with the human brain, [suggests](https://www.forbes.com/sites/taraswart/2018/07/13/why-business-is-like-the-brain/?sh=e050b676c966) Forbes, who compare the complex interconnected networks that ensure the free flow of information, ideas and operations.

Here are three questions for your brain to consider:

*   Does the business strategy and [business plan](https://www.zervant.com/en/blog/business-plan-template/) still align with your vision?
*   Do you have enough time to realise your business plans?
*   Do you have a clear idea of where your business will be in 3-5 years?

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### Sales and marketing

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“Without air, the lungs can’t breathe, the heart and the brand stop and the brand dies. Therefore, no brand can sustain or develop in the long run without a strong sales force,” [says](https://www.linkedin.com/pulse/without-good-sales-force-company-can-breathe-michaela-merk-ph-d) Alain Dominique Perrin, former CEO of Cartier International.

To ensure your sales and marketing can breathe as deeply as possible, consider the following:

*   Have your sales revenue and profitability increased over the past three years?
*   Does your business have a unique selling proposition and is it understood by your team?
*   Does your marketing make you stand out from competitors?

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### Customers

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Customers can be the eyes and ears of your business. While feedback can be uncomfortable to hear, it can point your business in the right direction, [states](https://gaininggoodwill.com/guides/improving-the-eyes-and-ears-of-your-company/) business website Gaining Goodwill.

Here are some questions you should contemplate about your customer base:

*   Who are your ideal customers and are you able to understand their needs?
*   Which of your customers are the most profitable and drive the success of your business?
*   How do most new customers find your business?

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### Financial management

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Finance is the lifeblood of every business organisation. Without proper administration, no business enterprise can reach its full potential for growth and success, [writes](https://medium.com/@financekernel/finance-the-lifeblood-of-every-business-organization-543c4454abed) social publishing platform Medium.

With that in mind, ask yourself:

*   Does your [company stick to a clearly defined budget](https://www.zervant.com/en/blog/how-do-you-finance-a-new-business-uk/)?
*   Are there regular business cash flow problems?
*   Is your bookkeeping up to date and are all invoices paid promptly?

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### Business happiness

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Quality leadership, engagement and culture are the heart of the organisation, [believes](https://www.notjustnumbersltd.co.uk/blog/people-are-the-heart-of-your-business) UK accountancy firm Not Just Numbers. It is the people who go above-and-beyond to build your business or even hinder its progress.

Here are three questions to get you thinking about the climate of your company:

*   Does your business deliver personal satisfaction or business happiness?
*   Does your team have the environment, resources and training to realise their full potential?
*   Can every team member comfortably share business ideas and suggestions?

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## What is a healthy business?

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There are a number of ways to measure business health. However, it requires both accountability and a modicum of objectivity that are difficult for the ego to sometimes handle. Remember that there is no shame in seeking professional advice.

As to the key components for a healthy business, we like the seven [listed](https://alexander.co.uk/news/7-key-components-of-a-healthy-business/) by chartered accountants Alexander & Co:

1\. Concentrate on leading effectively
2\. Make a (flexible) plan
3\. Invest in the right employees
4\. Don’t fear failure
5\. Embrace the things you’re good at
6\. Be a master in effective communication
7\. The importance of learning and evolving

Here at Zervant, we know that if you are a sole-trader business, your health and wellbeing is important. A healthy business does more business, which means you will have more clients to invoice using our [free invoicing software](https://www.zervant.com/en/free-invoicing-software/).

We also believe that every business should undergo a regular physical and we hope that our guide has encouraged you to search for one of the many free online business health checks.

If you have any questions about Zervant or online invoicing, please get in touch and we can help you!

Looking for more tools to nurture a healthy business? Try Zervant’s [free invoice templates](https://www.zervant.com/en/blog/free-uk-invoice-templates/) or our [free invoice generator](https://www.zervant.com/en/invoice-generator/).

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Headlines over the past 2 years have given the impression that the pandemic was all doom and gloom for business.

While the 2020 lockdowns did decimate the high street, entrepreneurs still managed to set an all-time UK record by creating 770,000 new businesses throughout 2020, [reported](https://www.businessleader.co.uk/2020-named-year-of-the-start-up-as-a-record-770000-uk-businesses-created/118781) Business Leader Magazine.

To look at the [long-term impacts of Covid](https://www.zervant.com/en/blog/covid-19-economic-impact-survey/), as well as dive into the entrepreneurial and technological trends of the future, Zervant spoke to Aria Babu. She’s a senior researcher with [The Entrepreneurs Network](https://www.tenentrepreneurs.org/the-way-of-the-future), a London-based think tank for the ambitious owners of Britain’s fastest growing businesses and aspirational entrepreneurs.

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## React to problems on the horizon

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“Trends that were already changing pre-Covid were accelerated by the pandemic, such as e-commerce, healthcare, remote working and hiring employees from abroad. We saw elderly consumers suddenly figuring out how to do their grocery shopping online. They may never have started if it wasn’t for the lockdowns,” observes Babu.

While the “elderly population online-shopping” trend would have eventually happened, it has arrived decades ahead of time and is not going to stop now that lockdowns have ceased.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">One way you can prepare is by switching to an intuitive invoicing software:</span> [create a free Zervant account](https://secure.zervant.com/login/signup/en) today and join the invoicing revolution.

However, she warns that not all the trends brought about by Covid will remain: “There was a big uplift in the number of businesses making hand sanitizer, an increase in cleaning businesses and al fresco restaurants, but these won’t stick around.”

The pandemic also proved that many businesspeople should have been thinking about their risk and flexibility more than they already were, says Babu, who authored a report ([PDF](https://www.thewomensorganisation.org.uk/wp-content/uploads/2020/11/The-Female-Founders-Forum-Resilience-and-Recovery-report-October-2020.pdf)) on how the COVID-19 pandemic impacted female entrepreneurs.

“Findings from the 2008 global financial crisis and early evidence from the pandemic found that those who spotted problems on the horizon and responded quickly did quite well. Businesses don’t only need a very well-structured risk protocol but must also be flexible moving forward, and not just regarding coronavirus,” she states.

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## Ensure that your business innovates

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Babu suspects that green tech will be an area in which the UK government will continue to have a growing interest and believes that entrepreneurs who take advantage will probably end up [doing very well](https://www.zervant.com/en/blog/what-makes-a-healthy-business/). “The UK have also been doing lots of research into health tech and life sciences, which are also likely to keep growing.”

She adds: “Healthcare is going to get so much better over the next couple of decades to the point where we’re going to be healthy in ways that we can’t imagine. It’s something that has come on leaps and bounds during the pandemic because suddenly there was the extra pressure to get [mRNA tech better](https://time.com/5927342/mrna-covid-vaccine/). We’re going to need entrepreneurs and scientists to make this technology viable.”

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Fight for new horizons with the oldest acquisition tool in the book: </span>[quotes and estimates](https://www.zervant.com/en/quotes-and-estimates/) can win you new business.

AI and 5G are two other key sectors that she sees as continuing to become much bigger stories over the next decade.

“I’m a big advocate of both, since they increase the number of options for businesses. There are many smart people who are concerned about the AI risks, but I am personally optimistic that it will initially be used to make us richer and more innovative, plus we’ll get many helpful and practical applications as it improves,” Babu continues.

She goes on to say that 5G is going to be good for [entrepreneurs](https://www.zervant.com/en/blog/types-of-entrepreneurs/): “I can’t really imagine many reasons to be concerned unless your business doesn’t innovate and isn’t entrepreneurial. You must change to compete with other businesses. The application of 5G means no restrictions on internet speed or cloud computing capacity. You can have more start-ups doing AI- or data-rich tasks.”

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## Encouraging entrepreneurship

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The government’s Covid-19 restrictions devastated bricks-and-mortar stores across the UK in 2020 and with retail moving increasingly online, is there a future for the high street?

“I live in West London where we have many mini high streets and lots of people living in flats around them. You’re never more than a 5–10-minute walk from your nearest pint of milk or nearest pub,” describes Babu.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">See where you line up in our article</span>: [what type of entrepreneur are you](https://www.zervant.com/en/blog/types-of-entrepreneurs/)!

However, she states that shops not wanting or not needing space on the high street doesn’t mean that local governments should leave those properties empty and dilapidated: “It’s an opportunity to be flexible and create more housing units and office space, especially since the UK is one of the most expensive countries for both.”

‘Opportunity’ is also the word she uses when asked for policies to encourage more people to become entrepreneurs, especially women. Babu, who is also head of the [Female Founders Forum](https://www.tenentrepreneurs.org/aboutfff), says the government is genuinely interested in trying to understand why the UK has a lower rate of women starting businesses than Canada or Sweden, for example.

She also suggests making it easier for innovative and high-skilled people to immigrate to the UK because the tech sector is facing a skill shortage, especially in AI and computing.

Finally, she advocates making the government’s [New Enterprise Allowance](https://www.gov.uk/government/collections/new-enterprise-allowance-campaign) (NEA) scheme more generous with its financial support: “Its predecessor, the Enterprise Allowance Scheme, used to pay more than the Jobseekers’ Allowance, but now it is a lot less generous. If you want people to start more businesses, then you should make sure that they have the resources to do so.”

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“Do I need an accountant?” is a question commonly asked by most small business owners at some point in their entrepreneurship journey. To answer this requires evaluation of your business growth, your goals and your willingness to give up free time to develop a new skillset.

DirectLine states that:

> _If you have a low volume of transactions, you may choose to undertake your own bookkeeping as the related activity shouldn’t take up a lot of time._

There is no definitive answer to this question and every business is different, so let’s take a deep dive and see whether you need an accountant.

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## What do accountants do?

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Accountants are trained to help you reduce your tax liability, saving you money by knowing [which deductions you can claim](https://www.zervant.com/en/blog/top-5-tax-deductions-for-uk-self-employed/) for in relation to your business expenses – such as claiming a personal car as a company vehicle.

They’re also well-versed in business operations and will often be able to provide insight into various other financial aspects of your business.

An accountant can:

*   Keep you updated with the latest tax laws
*   File all legal documents
*   Prepare your annual tax statement
*   Maintain records
*   Handle payroll issues
*   Apply for business loans
*   Explain difficult legal jargon
*   Manage your finances as you grow
*   Assist with any tax audits or investigations

Accountants know the tax system – they essentially pay for themselves by helping your business save money. Sometimes your accountant’s understanding of UK tax law will seem like sorcery. Trust us, it is.

> “[An accountant] can spot things in the numbers that on their own might not be problematic, but which could suggest deeper issues with potentially far-reaching implications for your business.”

Remember that anyone can legally claim to be an accountant or tax adviser, even though they might not be accredited to one of UK’s three certified chartered accountant institutions (ICAS/ACCA/ICAEW) – so do your research.

When you sign an agreement with an accountant, you are agreeing to let them be your “tax agent”, which means that they act as a buffer between you and HMRC.

Even if you rely on an accountant to oversee your taxes, you are ultimately liable for their actions in the eyes of HMRC.

Before you hire one, consider these [15 Questions to Ask When Hiring an Accountant](https://www.zervant.com/en/blog/small-business-accounting/).

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## Why should you hire an accountant?

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Using an accountant will give you peace of mind and make your life easier – it’s that simple.

Navigating your way through the maze-like UK tax system can be confusing to newcomers, especially if numbers are not your strong suit.

Employing a professional will ensure that your business doesn’t take any wrong turns, thereby securing your finances from any accidental tax reporting errors and frees you to focus on the growth and development of your business.

Regardless of the cost, there are times during your business life that you should strongly consider hiring a professional accountant.

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## How much is an accountant?

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A well experienced and qualified accountant is going to cost you money at a time when you also know a tax bill is heading your way. However, employing a chartered accountant doesn’t mean that you must give them a full-time contract or have them on retainer.

It is often enough to hire them for one job and then ease your financial anxieties by estimating how many hours it would have taken you to do the same job and then multiply that by your own hourly rate. Don’t forget to add in your mistakes.

You can hire an accountant:

*   by the hour
*   by the job
*   on a monthly retainer

There’s also mix-and-match options that allow you to, for instance, pay for bespoke services by the hour and other services via a monthly fee.

According to [Unbiased.co.uk](https://www.unbiased.co.uk/life/small-business), a platform that connects of consumers to financial and legal advisers, <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">the monthly fee is approximately £60 to £250</span>. The rate will be higher for larger businesses and will depend on your turnover, depth of accounting service and where you are based.

Depending on the difficulty and scale of your finances, <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">accountants typically charge a one-off fee ranging from £150 to £250 for an annual self-assessment tax return.</span>

Note: these figures are only a guide and will differ depending on a number of factors including where you live and the complexity of your requirements.

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### Cloud invoicing can reduce your accountancy costs

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Since accountancy fees are calculated by the amount of work involved, you can reduce your outlay by undertaking some of the necessary tasks beforehand. Lighten the load for your accountant with technology.

Zervant allows you to send and manage your invoices and export financial data simply and accurately to your accountant in either Excel or PDF format.

Through cloud-based invoicing you will save time and money – plus, there is the added advantage of digital record-keeping which is essential to your company’s future development and means lower-impact, more efficient business processes.

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## Can you handle your own accounts?

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*   Are you proficient with handling numbers?
*   Do you have the time?
*   Do you have the confidence?
*   Is an accountant too expensive?

If you answered ‘yes’ then you can perform your own tax return in the form of self-assessment at the end of the financial year. But take note – an accountant will help you save money on your tax bill – maybe even more than they charge. If your tax situation is complicated, it’s best to consult a chartered accountant before making potentially costly mistakes.

On the flipside, full control of your finances means that you can quickly move forward without negotiating with a third party and you will enjoy an unparalleled insight into your business. As you learn more about the tax system, you can adapt and use it to further grow and develop your business.

Where do you start though? Find out more about [how the tax system works](https://www.zervant.com/en/blog/how-does-tax-work-in-the-uk-2021/).

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## How to handle your own accounts

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Doing your own books will demand staying up to date with all the latest tax rules and regulations. You will have to fully understand their application and relevance, so you don’t miss out on any helpful tax reliefs and incentives.

Don’t forget that the [HMRC website](https://www.gov.uk/guidance/help-and-support-for-self-assessment) offers a range of help and support products, including webinars, YouTube videos and online guides that cover topics like ‘How to complete your online tax return’ and ‘How do I pay my Self Assessment tax bill?’

In addition, you can give permission to a friend or family member (a ‘trusted helper’) to deal with HMRC on your behalf, plus you might be eligible for free accounting advice.

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### How to make handling your accounts easier

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As mentioned earlier, the rise of dynamic cloud accounting software not only makes life easier for accountants but can also pave the way for you to become completely independent. Online bookkeeping is becoming increasingly user-friendly and is refreshingly jargon-free.

Zervant are rolling out bank integration as of writing this article – when you send an invoice through Zervant, it will automatically be marked as paid when your client finally pays. Your financial records will remain up to date and the automation will save you time and labour.

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## Pros and cons of hiring an accountant

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To summarise, here are some of the advantages and disadvantages of hiring a professional accountant:

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#### Pros:

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*   Give you peace of mind and saves you time
*   Can protect your business from accounting errors
*   Can handle many different financial issues
*   Can save you money and reduce your tax liability

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#### Cons:

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*   Cost can be expensive for a new business
*   Might not be trustworthy/competent
*   You can lose touch with your finances
*   Cloud-based services can help manage your accounts

Accountants may appear expensive in the early days of your business, but they can save you time, money and stress. It’s in your entrepreneurial hands to decide whether you can afford that expense or not. Perhaps you want to hire an accountant as an employee? The our [employment contract template](https://www.zervant.com/blog/employment-contract-template-uk/) can help – it’s free to use and we also have a [zero-hour contract template](https://www.zervant.com/en/blog/zero-hour-contract-template/) if required.

Good luck and please get in touch if we can help you!

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An invoice is not only a request for payment, they often account for the majority of direct communication you have with your customers. That’s why it is worth making a good impression with them!

In this article we’ll cover some of the basics that you need to know when writing your first invoice.

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## 1. Use your logo – and be recognised

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You should always add a logo to your invoices, because a logo will guarantee direct recognition of your company. It also adds to making a good impression and helps you to be taken seriously as an entrepreneur. And it’s not only about the image: if you’re taken seriously as an entrepreneur, it’s also much more likely that your bills will get paid faster.

If you don’t have a logo yet, no need to worry. You do not have to be a graphic designer to get one. With simple online tools such as Canva, you can easily create a neat logo for free!

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## 2. Include your contact details – so customers can get in touch

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Of course, your invoices should always contain all legally required information. Beyond that, you should provide as complete and detailed information about your company as possible.

In addition to your bank details, this also applies to contact information such as:

*   Your company’s phone number,
*   email address,
*   and website.

The easier it is to get in touch with you, the more serious and professional your billing and thus your business will be considered.

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## 3. Clearly list your products – they are the heart of your invoice

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When creating an invoice, pay special attention to the products or services you’re invoicing. They are the very heart of your invoice, so it’s crucial to have them listed clearly with simple, but descriptive names. Here’s a few examples:

*   Instead of “Shoe” something like “Red Hi-Top Trainer, size 7.5” would be clearer.
*   Also “Work Hour – Wall Painting” is more descriptive than just “Work Hour”.

This way, your customer can immediately see what the invoice is about.

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## 4. Have your customers’ information in order – it’s good customer service

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When writing your invoice, it is crucial to have your customers’ contact information correctly on the invoice without any mistakes. Also mind any special characters, especially if you have international customers!

Some important customer information have written on your invoice is:

*   Name
*   Address
*   Customer number – ideally multi-digit customer IDs, they give the impression of a larger customer base and adds credibility.

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## 5. Payment terms – the really important part!

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When writing any invoice, you should always include your payment terms. This way your customer knows exactly when they have to pay.

Payment terms should include:

*   Date of the invoice
*   How many days after sending the invoice, the payment is due (typically 14, 30 or 60 days)
*   Due date of the invoice

Also, if applicable you can include:

*   Special conditions, such as discounts
*   Your terms and conditions, these can be included as an attachment

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## What if you want to make changes to the invoice?

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It’s never a good idea to just delete your invoices, since you need to keep a detailed record of all your approved invoices. In case you made a mistake on the invoice or your customer demands a refund for example, you should use a [credit note](https://www.zervant.com/en/blog/free-credit-note-template/). However the best way for staying legally compliant, as well as for creating credit notes for your invoices, is to use [invoice software.](https://www.zervant.com/en/free-invoicing-software/)

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## Checklist: How to write an invoice

1.  Use your company’s logo
2.  Include your contact information
3.  List your products or services clearly
4.  Have your customers’ details in order
5.  State your payment term

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Are you still writing your invoices in Word or Excel? You should change this ASAP! You might be happy with the look of your templates (and have been using them for years), spreadsheets are far from professional invoicing.

The crucial point here is the technology behind it. In order to be legally compliant, you should store all your invoices complete, comprehensible and inalterable. This can only be guaranteed with a [professional software](https://www.zervant.com/en/free-invoicing-software/). In addition to [making your billing easier to manage](https://www.zervant.com/en/blog/how-to-write-an-invoice/), invoicing software also offers a neat layout, reinforcing your overall professional image.

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E-invoicing is in our blood here at Zervant. Its speed, cost and accuracy are just three of the reasons why e-invoicing will become the new standard for invoicing and why you should get on board now.

As a provider of free invoicing software, it can only be a good thing for our users that the future of e-invoicing is now being championed by dozens of countries and organisations.

<span style="box-sizing: inherit; font-style: inherit;">EU members and the European Commission have been leading the way for the past decade, stating that its adoption is crucial for the highly competitive European social market economy in the 21st century, and will “help to reap the full economic and social benefits of a digital society.” </span>

<span style="box-sizing: inherit; font-style: inherit;">According to the 2019 Billentis Market Report for E-invoicing, 70% of all invoice processing globally is still paper based, so there is still a long way to go. However, in the business-to-business (B2B) field, e-invoicing in the EU has nearly doubled, from 4.8 billion electronic invoices sent in 2015 to 8 billion last year.</span>

<span style="box-sizing: inherit; font-style: inherit;">Further, the potential annual financial benefits of e-invoicing are predicted to be around EUR 40 billion across Europe in the B2B field alone, according to a report by French consultancy firm Capgemini.</span>

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## What is e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">E-invoicing is a type of invoicing where all the same information of a regular invoice is provided in a digital format, and paper is completely removed from the process, making it easier, cheaper and more efficient.</span>

<span style="box-sizing: inherit; font-style: inherit;">[Read more on GXS’s e-invoicing basics blog](https://www.einvoicingbasics.co.uk/what-is-e-invoicing/) </span>

<span style="box-sizing: inherit; font-style: inherit;">Your e-invoices are created, sent, received, processed and archived electronically, eliminating the traditional method of printing or scanning, posting or emailing, and then waiting for the recipient to handle them manually.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing allows you to forget about:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">Printing</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Sending</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Mailing</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Archiving</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Sending payment reminders</span>

<span style="box-sizing: inherit; font-style: inherit;">Note: Do not confuse an email invoice with an e-invoice. While both are sent online, the difference is their destination:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">Email invoices are sent to your customer’s inbox with the invoice attached.</span>
*   <span style="box-sizing: inherit; font-style: inherit;">E-invoices are sent to your customer’s invoice processing software.</span>



## Should I use e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">While 42% of large enterprises say they already receive or send e-invoices, the adoption rate among SMEs is at a much lower rate, with the total just over one in five (22%). To put that into perspective, 99% of all businesses in Europe are small businesses and exchanging e-invoices is described by the EU as “still being too complex and costly for SMEs.”</span>

<span style="box-sizing: inherit; font-style: inherit;">At present, statistics show that:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">over 75% of companies still send paper invoices</span>
*   <span style="box-sizing: inherit; font-style: inherit;">8% send invoices via email</span>
*   <span style="box-sizing: inherit; font-style: inherit;">9% still send invoices by fax</span>
*   <span style="box-sizing: inherit; font-style: inherit;">only [4.5% of small businesses in the UK have used e-invoicing](https://www.zervant.com/en/blog/all-about-e-invoicing/)</span>

<span style="box-sizing: inherit; font-style: inherit;">Despite the struggle these figures suggest, there is growth in the number of European e-invoices being processed. As we mentioned earlier, the total number of e-invoices sent nearly doubled from 2015 to 2019 and will only continue to grow due to increasing national legislation and changing invoicing standards.</span>

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## What are the benefits of e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">According to the EU website (https://ec.europa.eu/growth/single-market/public-procurement/digital/einvoicing_en), the main benefits include:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">faster retrieval of money from customers by reducing the time an invoice or payment is in the post</span>
*   <span style="box-sizing: inherit; font-style: inherit;">reduced printing and postage costs</span>
*   <span style="box-sizing: inherit; font-style: inherit;">quicker and cheaper processing as the information in electronic invoices can be fed directly into a company’s payment and accounting software, strengthening the supply chain</span>
*   <span style="box-sizing: inherit; font-style: inherit;">lower storage costs</span>
*   <span style="box-sizing: inherit; font-style: inherit;">reduced training and system development costs</span>

<span style="box-sizing: inherit; font-style: inherit;">Because the processing is fully automated, the pre-defined format of an e-invoice means it cannot be altered, thereby guaranteeing safety and authenticity, as well as reducing fraud and tax evasion.</span>

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">[How e-invoicing can lower your risk of fraud](https://www.opuscapita.com/blog/2019/how-e-invoicing-can-lower-your-risk-of-fraud)</span>

<span style="box-sizing: inherit; font-style: inherit;">Note: Do not confuse pre-defined format with PDFs, despite the similar names. PDFs, scanned invoices and email attachments are not considered to be e-invoicing.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing not only reduces the risk of errors but will save you both time and money. [A Billentis market report](https://www.billentis.com/e-invoicing-businesscase.pdf) estimates that e-invoicing can save you, as the issuer, almost 60% per invoice in costs and the recipient about 65%.</span>

<span style="box-sizing: inherit; font-style: inherit;">In fact, the EU believes that most of the economic benefits will not come from savings in printing and postage costs, but from “full process automation and integration from order to payment” between trading partners.</span>

<span style="box-sizing: inherit; font-style: inherit;">As you can see, the Billentis case study considered costs ranging from printing and payment reminders to cash flow management and archiving. However, we wonder if they also factored in the direct expense of buying paper and the wider energy costs for transportation.</span>

<span style="box-sizing: inherit; font-style: inherit;">The reduction of both could generate reductions in CO2 emissions of a million tonnes per annum for the EU and annually [save about 12 million trees](https://www.zervant.com/en/blog/invoice-online-in-2022/), which are cut down to create paper invoices.</span>

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## How does e-invoicing work?

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<span style="box-sizing: inherit; font-style: inherit;">While e-invoicing can seem confusing with its many different technical standards and acronyms, like EDIFACT, iDoc, UBL, TEAPPS and PEPPOL, you don’t need a background in finance, accounting or IT to use the service.</span>

<span style="box-sizing: inherit; font-style: inherit;">For entrepreneurs and small businesses, there are many invoicing software providers and ERP systems that allow users to create e-invoices easily and quickly. Of course, we would recommend checking out a firm called Zervant.</span>

<span style="box-sizing: inherit; font-style: inherit;">Using our service as an example, we employ a few simple steps when creating an e-invoice:</span>

1.  <span style="box-sizing: inherit; font-style: inherit;">After creating your invoice, add the e-invoicing address, which is a unique number sequence to identify a business—for example, a VAT number, Orgnr, GLN, DUNS, IBAN or SAP iDoc. You can [obtain this address from your customer](https://support.zervant.com/hc/en-gb/articles/360036369831-Understanding-e-invoicing-addresses).
</span>
2.  <span style="box-sizing: inherit; font-style: inherit;">After clicking send, your e-invoice arrives to our e-invoicing partner Basware, which transforms it into a machine-readable format.
</span>
3.  <span style="box-sizing: inherit; font-style: inherit;">From there, Basware forwards it to your customer’s e-invoicing operator. The operator does a final e-invoice format check, after which it transfers it to your customer’s invoice processing software.</span>
4.  <span style="box-sizing: inherit; font-style: inherit;">After it arrives to your customer’s invoice processing system, they can pay it with the click of a button, allowing you to receive payment faster.</span>

[Learn more about sending e-invoices.](https://support.zervant.com/hc/en-gb/articles/360036369891-Sending-e-invoices)

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## What different e-invoicing models are there?

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<span style="box-sizing: inherit; font-style: inherit;">When reading about e-invoicing, it is likely that you will hear about 2-, 3- and 4-Corner models. While you don’t need to know the technical intricacies of each, it is useful to understand what they are.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing began with the 2-Corner Model, a P2P (peer to peer) process in which e-documents were directly shared between the systems of the supplier and buyer using Electronic Data Interchange</span>

<span style="box-sizing: inherit; font-style: inherit;">(EDI) or XML formats. </span>

<span style="box-sizing: inherit; font-style: inherit;">However, that was supplanted by the 3-Corner Model that saw the supplier/buyer share the same third-party service provider to process e-documents, which works well as long as you don’t have more than two recipients for your e-invoices.</span>

<span style="box-sizing: inherit; font-style: inherit;">Today, the development of PEPPOL and other global networks has seen the arrival of the 4-Corner Model, which involves the supplier/buyer using different service providers for their e-documents. Since most entrepreneurs need to send invoices to several different companies, it is easier to use service providers that are connected to another, like a mobile network.</span>

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## What is PEPPOL e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">In 2014, the European Union issued a Directive mandating business-to-government (B2G) e-invoicing that also included wording that encouraged its members to write laws requiring electronic invoicing for areas.</span>

<span style="box-sizing: inherit; font-style: inherit;">Since then, 23 EU members have deployed B2G e-invoicing solutions, as well as the UK. Despite deciding to leave the EU, Britain did implement the Directive on e-invoicing in public sector procurement as of May 2019 and it became compulsory for local government and utilities from April 2020, the EU’s deadline.</span>

<span style="box-sizing: inherit; font-style: inherit;">The National Health Service (NHS) became the first area of the UK’s public procurement to trial electronic formats and comply with the EU’s technical e-invoicing standard via the PEPPOL network.</span>

<span style="box-sizing: inherit; font-style: inherit;">With the existing rules governing e-invoicing differing across Europe, PEPPOL, a 4-Corner Model, was launched. It enables cross-border eProcurement, allowing international companies to handle their communication in the procurement process electronically.</span>

<span style="box-sizing: inherit; font-style: inherit;">While it is not an e-Procurement platform, PEPPOL does provide technical specifications that can be implemented in existing eProcurement solutions and eBusiness exchange services, explains the [project’s official website](https://peppol.eu/what-is-peppol/).</span>

<span style="box-sizing: inherit; font-style: inherit;">PEPPOL is in use across 28 countries in Europe plus Australia, Canada, New Zealand, Singapore and the USA, with more expected to follow. This year, India approved the introduction of voluntary e-invoicing for B2B reporting, while China is preparing to roll-out business to consumer (B2C) and B2B e-invoicing.</span>

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## What is the status of B2B e-invoicing in the EU?

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<span style="box-sizing: inherit; font-style: inherit;">While the world’s two most populous countries are rolling out B2B e-invoicing mandates, it is still not mandatory across the EU. Italy became the first European country to require B2B electronic invoicing at the beginning of 2019, but elsewhere it has remained a voluntary practice. </span>

<span style="box-sizing: inherit; font-style: inherit;">B2B e-invoicing mandates are planned in Serbia starting in 2022 and France after 2023, with Spain also signalling it is ready to follow. However, interest from countries across the EU is increasing due to the growing VAT Gap – the difference between Value-Added Tax owed and that which is collected.</span>

<span style="box-sizing: inherit; font-style: inherit;">Mandatory electronic tax invoicing has been credited with lowering tax compliance costs and raising the transparency of business transactions. In fact, the Mexican government implemented a new model that [dramatically increased tax collection, as well as reducing the shadow economy](https://www.coupa.com/blog/how-e-invoicing-will-close-the-vat-gap-and-change-the-world), according to Coupa.</span>

<span style="box-sizing: inherit; font-style: inherit;">In 2017, EU countries lost approximately EUR 137 billion in VAT revenues, according to a study released by the European Commission last year. While smaller than previous years, the amount remains remarkably high and highlights the ineffectiveness of the various members’ VAT enforcement and compliance measures, which could be solved with the application of e-invoicing.</span>

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## What are the obstacles for e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">Since e-invoicing is an emerging technology, it still faces technical obstacles, user difficulties and reluctance to change.</span>

<span style="box-sizing: inherit; font-style: inherit;">Here are some of the main issues:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">routing issues can occur between e-invoicing providers because there are a wide range of formats and different standards</span>
*   <span style="box-sizing: inherit; font-style: inherit;">variation in national rules governing the validity and acceptability of e-invoices in legal, financial and administrative terms, making their use in cross-border transactions within the EU difficult</span>
*   <span style="box-sizing: inherit; font-style: inherit;">many potential users still have concerns about the security of e-invoicing systems and the potential for misrepresentation in fraud</span>
*   <span style="box-sizing: inherit; font-style: inherit;">mistakes can occur when entering the e-invoicing address, such as typos, or the invoice can have incorrect information</span>

<span style="box-sizing: inherit; font-style: inherit;">While some of these may seem serious, they all have solutions. For example, some vendors will disappear over time and others will consolidate; the EU is working to improve cross-border transactions; and digital signatures and encrypted transmission procedures are constantly being improved.</span>

<span style="box-sizing: inherit; font-style: inherit;">Despite these hurdles, over half the companies in a survey on e-invoicing said that to be successful, it is essential to require e-invoicing in contracts.</span>

[The Institute of Finance and Management (IOFM) emphasized that](https://www.iofm.com/ap/process-improvement/automation/overcome-the-barriers-to-e-invoicing):

> “…it is important not to get discouraged about the low volume of electronic invoices received, or lose patience because of the long road to success.”

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## What is the future of e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">The long road to success is gradually being filled with forward-thinking companies driving toward the benefits that await them.</span>

<span style="box-sizing: inherit; font-style: inherit;">Christiaan van der Valk, VP of Strategy for the [tax software provider Sovos](https://news.bloombergtax.com/daily-tax-report-international/insight-vat-compliance-software-as-an-essential-tool-for-business), writes:</span>

> “<span style="box-sizing: inherit; font-style: inherit;">It is interesting to look in the rear mirror and observe what has created a huge distance between the leaders and the laggards in the European e-invoicing market to date.</span>“

<span style="box-sizing: inherit; font-style: inherit;">Firms who have chosen to make e-invoicing compliance an integral part of their mission have a “competitive advantage that cannot be underestimated going forward,” he notes, adding that “VAT compliance remains an ever stronger driver behind e-invoicing growth”.</span>

<span style="box-sizing: inherit; font-style: inherit;">In the UK, across the EU and globally, the market is moving towards making e-invoicing the new standard. It is the future, which is why you should get on board now. If you have any questions about e-invoicing or our invoicing service, please get in touch and we can help you!</span>

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Running a small business is hard enough – trust us, we’ve been there. You have taken perhaps the biggest step of your life and set up a business, but now there are costs coming from every angle. No matter how small your business is, the books (your [financial records](https://www.zervant.com/blog/small-business-accounting/)) must be kept in check.

Aside form making sure that you’re [getting paid properly and on time](https://www.zervant.com/blog/how-late-payments-hurt-small-business/), there’s also a great number of savings which can be made by learning how to do various administrative tasks on your own, learning what [tax deductions](https://www.zervant.com/en/blog/top-5-tax-deductions-for-uk-self-employed/) you are eligible for and generally being diligent when running your business.

Let’s dive in and have a look at what bookkeeping is and how to start doing it as a small business owner.

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## Bookkeeping basics

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Unfortunately, there is not a one-size-fits-all approach to bookkeeping. You need to decide whether to adopt the single-entry or double-entry system. But fear not, here is a brief description of both to help you choose.

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### Double-entry

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This is the slightly more complicated way of bookkeeping, but the upside is that it reduces mistakes and allows you to keep a detailed account of everything that happens. At the most basic level, double-entry bookkeeping makes two entries for every transaction.

Here’s a simple breakdown of the steps:

*   If you have an increase in assets, you need to write in the debit account
*   If you have a decrease in assets, mark the credit account
*   If you have an increase in liability or capital, you have to mark the credit account
*   A decrease in either of liability or credit means an entry into the debit account

Double-entry bookkeeping uses a double ledger account for every entry in a system – for every transaction, a debit will have a corresponding credit and vice versa.

It’s based on the fundamental accounting equation: <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">assets = equity + liabilities.</span>

In other words, every time something happens in your company, two of the three fields mentioned above will be affected – i.e. if capital goes up, assets may go up; if liabilities go up, assets may also go up.

In layman’s terms, this means that you need to make two entries in your bookkeeping book for every transaction that occurs meaning the total debits must equal the total credits.

This is easier to understand in practice so download our double-entry template to gain a better understanding. Just remember this: for double-entry bookkeeping you <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">debit the receiver </span>and <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">credit the giver.</span>

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### Single-entry

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This is a much simpler form of bookkeeping and is used by smaller firms to simply record what goes in and out. It involves a daily or monthly summary of the incoming and outgoings of a business without detailed information about equipment, capital and inventory – which are marked informally as notes.

You do not need a double ledger to track the whereabouts of every transaction.

However, this allows those who are not familiar with bookkeeping to keep abreast of their transactions while continuing to run their business.

A word of warning: single-entry bookkeeping can lead to errors and therefore bigger issues down the line if not done properly. We recommend you get acquainted with the double entry system by practicing in our template.

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## Glossary of Bookkeeping Terms

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In short, bookkeeping is making sure that you record all of your financial transactions so that you pay the correct amount of tax at the end of the year.

Here’s a glossary of common terms used in bookkeeping:

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Accounting period_ </span>– A period of time over which financial information is tracked. This is usually done monthly, quarterly and annually.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Accounts payable (payable __by __the business)_</span> – The account where all of a company’s outstanding bills are tracked.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Accounts receivable (payable to the business)_</span> – The account which tracks payments to be collected by the company. This might be credit the company has issued or outstanding invoices to be paid by clients.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Assets_</span> – All the things a company owns which are required to do business. Common examples are properties, tools, vehicles, and of course, cash.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Balance sheet_</span> – This is a financial statement which provides an overview of the financial position of a business at a moment in time. “Balance” refers to the equilibrium between assets (which the company owns) and liabilities and equity which make claims against these assets. These things must be in balance.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Capital_ </span>– The resources supplied by the business owners – e.g. money

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Costs of goods sold (COGS)_</span> – This is a straight-forward account of the costs involved in producing or buying the goods and services sold by a business.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Depreciation_ </span>– All held assets depreciate (go down) in value over time and this depreciation must be accounted for. In some instances, assets will appreciate (go up) in value.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Drawing Account_</span> – Will track the cash paid to owners in a small business whereas incorporated companies will pay dividends to shareholders.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Equity_ </span>– The money invested in a company by the owners. In small businesses, the owner’s equity tends to be shown in a “capital account”. In larger, incorporated businesses, owner’s equity is visible in shares of the stocks.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Expenses_</span> – The business running costs – not associated with the sale of goods or services.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_General Ledger_</span> – This is a summary of all accounts and should be considered the “master document” in bookkeeping.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Income statement_ </span>– Ultimately, this calculates net Profit or Loss – beginning with Revenue earned, then subtracting the Costs of Goods Sold (COGS) and Expenses.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Interest_ </span>– We’ve all heard of this one before. Interest is the cost of borrowing money, usually expressed as a percentage of the borrowed sum.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Inventory_ </span>– The account which tracks all of the products which businesses intend to sell.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Journals_ </span>– Bookkeepers keep their daily records in journals – categorized chronologically. The most active accounts have their own journals.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Ledger account_ </span>– Informally known as a “T-account” due to it’s appearance, having debits on the left and credits on the right of a “T” separating the columns. A ledger account is a ledger of debits and credits for _one specific account. _For example, asset accounts like cash and inventory will have their own ledgers accounts.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Liabilities_ </span>– All the debts a company is due to pay out – loans, mortgages, bills etc.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Payroll_</span> – How companies pay their employees. This is a cornerstone of the bookkeeper’s work. Payroll records will include information on pensions, taxes and such.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Retained Earnings_</span> – An important equity account, tracks all company profits that have been reinvested in the business.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Revenue_</span> – Simply put, revenue is all money collected by selling goods and services. There are other ways businesses collect revenue but these differ greatly case by case.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Source documents_</span> – Source documents are the original financial records which make up the paper trail of transactions to support your bookkeeping.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">_Trial balance_</span> – This is the test balancing of the books before making financial reports and closing the books for that accounting period.

There’s more to bookkeeping than just the terms and these only scratch the surface of the jargon used in accounting.

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# Business automation: the productivity enabler

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As a small business owner you should – and can – automate business processes to save time, increase [profits](https://www.zervant.com/en/blog/what-is-profit-in-a-business/) and [improve your work-life balance](https://www.zervant.com/blog/entrepreneurship-work-life-balance-infographic/). We discuss the benefits of business automation and share our pick of the best automation tools for entrepreneurs.

Automation in business is now a multi-billion-dollar market and it’s estimated that by 2021, digital process automation will generate USD 214 billion worldwide, [according to Statista](https://www.statista.com/statistics/257170/global-automation-market-revenue-by-end-market/#:~:text=Global%20automation%20market%20%2D%20revenue%20by%20segment%202019%20to%202021&text=In%202021%2C%20the%20automation%20industry,billion%20U.S.%20dollars%20by%202021.). Furthermore, Forrester predicts that BPA can cut operating costs by up to 90% – offsetting the cost of digital transformation in the first place.

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## What is business process automation?

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<span style="box-sizing: inherit; font-style: inherit;">According to </span>[Gartner:](https://www.gartner.com/en/information-technology/glossary/bpa-business-process-automation)

> “<span style="box-sizing: inherit; font-style: inherit;">Business Process Automation (BPA) is defined as the automation of complex business processes and functions beyond conventional data manipulation and record-keeping activities, usually through the use of advanced technologies.</span>

<span style="box-sizing: inherit; font-style: inherit;">In simple terms, it means finding an automated solution to problems which you normally tackle through manual labour. Replacing a time-consuming, manual task with automation software, like using software to send automatically recurring invoices for example, is a form of BPA.</span>

Business process automation can focus on all key business areas including marketing, sales and human resources. The traditional approach to any process can be mapped and evaluated before deciding whether to automate part or all of the process.

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## Why should you automate your business?

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Automation is the future – keep up or catch up. <span style="box-sizing: inherit; font-style: inherit;">Artificial intelligence will take over many of the manual tasks we take for granted today and, although the increasing presence of robotic process automation in our everyday life hasn’t gone unnoticed (looking at you, self-checkout robots), we’re only just seeing the tip of the iceberg.</span>

[A recent survey](https://www.thinkautomation.com/automation-advice/the-global-process-automation-market-statistics-you-need-to-know/)<span style="box-sizing: inherit; font-style: inherit;"> </span><span style="box-sizing: inherit; font-style: inherit;">by ThinkAutomation found that in the UK, 90% of employees report being burdened with boring and repetitive tasks that could be easily automated. However, only 38% of UK business practices are automated. While a quarter of UK businesses are still only in the early stages of automation, 74% of organisations say they are actively looking for new use cases for automation.

The advantages of automation in business are numerous – let’s look at few:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">Increase efficiency</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Boost productivity</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Allow your business to get more done in less time with less resources</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Reduces the risk of manual errors</span>

<span style="box-sizing: inherit; font-style: inherit;">By automating processes you can free up valuable time and resources to work on the more meaningful aspects of business management.</span>

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## How to automate tasks in a small business

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<span style="box-sizing: inherit; font-style: inherit;">Business automation tools are transforming the way brands operate, allowing them to ditch manual processes altogether and scale in new ways.</span>

Automation isn’t reserved purely for big business – and the selection of tools designed for smaller enterprises is ever increasing. Smaller brands can gain an advantage when it comes to automation, as they are often able to react to new trends faster than larger businesses and with [fewer costs](https://www.zervant.com/en/blog/top-5-tax-deductions-for-uk-self-employed/).

The process has been mentioned briefly – identify an aspect of your business which could be automated and work out the input effort/time/cost vs the profitable outcome. You’ll quickly realise that the time you spend doing many manual tasks is wasted and, especially as a small business owner, you know better than anyone that time is money.

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### Our top 5 picks for tasks you need to automate and the tools you can try out

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Note: none of the tools we discuss below are paying us for being mentioned in this article – these are just tools we genuinely use and think everyone could benefit from trying out. Some have a free trial, others are just free to use – if you try one out and find it useful then let them know that you seen it recommended here!

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#### 1. Send less emails

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<span style="box-sizing: inherit; font-style: inherit;">Cut out the back-and-forth emails when arranging meetings, appointments and [office phone calls](https://callhippo.com/office-phone-system) with </span>[Doodle](https://doodle.com/en/)<span style="box-sizing: inherit; font-style: inherit;"> or </span>[Calendly.](https://calendly.com/pages/features)

<span style="box-sizing: inherit; font-style: inherit;">You simply set your availability preferences in the [calendar management](https://bordio.com/online-calendar-planner/) system for your next meeting and embed a link in your email invitation. The recipient then chooses the times which suits them best and the event is automatically added to your calendar.</span>

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#### 2. Connect your apps together

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<span style="box-sizing: inherit; font-style: inherit;">Create automated actions between essential apps and automate your workflows with </span>[Zapier ](https://zapier.com/how-it-works)<span style="box-sizing: inherit; font-style: inherit;">or </span>[Integromat](https://www.integromat.com/en/)<span style="box-sizing: inherit; font-style: inherit;">. These app-linking tools are great for a number of things.</span>

<span style="box-sizing: inherit; font-style: inherit;">Do you want to automatically save attachments in Gmail to Google Drive? Or how about sharing all of your blog posts to LinkedIn as soon as you hit the publish button? Or perhaps you want to save all new Microsoft Docs files to OneDrive and then back them up to your cloud?</span>

<span style="box-sizing: inherit; font-style: inherit;">You can set up thousands of automations, cutting out repetitive manual tasks and freeing up your time for more profitable actions. Check them out – you’ll be kicking yourself for not knowing that such a thing existed.</span>

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#### 3. Increase lead generation

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<span style="box-sizing: inherit; font-style: inherit;">As an entrepreneur, you need to automate your sales process so you can handle a higher volume of leads and turn more of them into sales – but without a sales team.</span>

<span style="box-sizing: inherit; font-style: inherit;">The answer here is combining a marketing automation platform such as </span>[ActiveCampaign](https://www.activecampaign.com/why-ac)<span style="box-sizing: inherit; font-style: inherit;"> or </span>[Mailchimp](https://mailchimp.com/resources/mailchimp-101/)<span style="box-sizing: inherit; font-style: inherit;"> with </span><span style="box-sizing: inherit; font-style: inherit;">a lead generation form generator such as </span>[Leadformly](https://leadformly.com/integrations/)<span style="box-sizing: inherit; font-style: inherit;"> or </span>[LeadGen](https://leadgenapp.io/features/)<span style="box-sizing: inherit; font-style: inherit;"> to systemise your </span><span style="box-sizing: inherit; font-style: inherit;">sales process.</span>

<span style="box-sizing: inherit; font-style: inherit;">These tools can help you increase your form conversion rates, as well as segment your leads, and keep track of all your customers’ actions in the CRM platform of your choice. </span>

<span style="box-sizing: inherit; font-style: inherit;">You can also automate your responses using the segmented email lists and automation features offered by ActiveCampaign or Mailchimp. This streamlines the majority of the early sales process and lets you focus on dealing with potential clients who are closer to making their final purchases.</span>

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#### 4. Chatbots improve customer service

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<span style="box-sizing: inherit; font-style: inherit;">Maintaining a 24/7 response system is often outside the means of a small business owner. However, a chatbot such as </span>[Botsify](https://botsify.com/white-label-chatbot)<span style="box-sizing: inherit; font-style: inherit;"> or </span>[Chatfuel](https://chatfuel.com/pricing/)<span style="box-sizing: inherit; font-style: inherit;"> can offer instant, consistent and recorded answers to your customers’ queries on a 24/7 basis.</span>

<span style="box-sizing: inherit; font-style: inherit;">Studies show that engaging with your customers on social media can lead to improved customer satisfaction and </span><span style="box-sizing: inherit; font-style: inherit;">increased customer spend of between 20% and 40%.</span>

<span style="box-sizing: inherit; font-style: inherit;">You can set up your chatbot with a list of questions and answers relevant to your business. This allows your customers to have real-time conversations with your bot and get answers to most of their questions right away.</span>

<span style="box-sizing: inherit; font-style: inherit;">While chatbots haven’t yet replaced live chat, they are certainly getting close. Check out this BBC article on [how AI is running M&S call centres](https://www.bbc.co.uk/news/business-45272835).</span>

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#### 5. Automate your invoicing with Zervant

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<span style="box-sizing: inherit; font-style: inherit;">Zervant’s invoicing software is part of a new wave of tools designed to automate one of the more boring and repetitive tasks in business. Free up valuable hours and spend more time working on your products and services.</span>


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If the UK tax system looks confusing then you are in the right place with our beginner’s guide to income tax, corporate tax and more. Before we go any further, do not forget that it is against the law to:

*   evade tax payments of any amount
*   not register as self-employed with HM Revenue and Customs (HMRC)
*   not register your limited company or limited liability partnership with Companies House

Committing any of these offences could land you with fines, imprisonment or both.

The UK has a progressive tax system, which means that the tax rate progresses from low to high and takes significantly more money from the rich than the poor. The system aims to alleviate income inequality by reducing the impact on lower income families and increasing the tax burden of higher income families.

For businesses, there are several different tax obligations: income tax, National Insurance contributions, value added tax, corporation tax and business rates. The tax revenue generated funds the UK’s health, welfare and social services, transport systems, schools and universities, defence services, as well as financially supporting industry, sport, heritage and culture.

## Company and employment types

The UK has four main types of business structures:

*   Sole trader (self-employed)
*   Partnership
*   Limited liability partnership
*   Limited company

Each of these has its own various tax obligations.

![how-does-tax-work-in-the-uk-_blog-illustration_uk.png](https://broad-malicious-back.media.strapiapp.com/how_does_tax_work_in_the_uk_blog_illustration_uk_38f55eab97.png)

### Employment contract types and tax codes

If you are an employer, there will be additional tax responsibilities that depend on your employee’s contract or their employment status. Contract types include:

*   full-time and part-time contracts
*   fixed-term contracts
*   agency staff
*   freelancers, consultants, contractors
*   zero-hours contracts

There are also special rules if you employ family members, young people or volunteers.

As the employer, you are typically responsible for deducting and paying tax on behalf of your employees before they are paid.

To calculate how much income tax to withhold from their salary, a tax code is worked out by HMRC and it is then used by you or your accountant.

Tax codes usually start with a number and end with a letter. The most common tax code is 1250L and it means that they have a standard Personal Allowance.

Don’t forget that you must set up PAYE (pay-as-you-earn) with HMRC before the first payday so you can deduct the relevant tax and national insurance from salaries.

## National Insurance

National Insurance acts as a form of social security in the UK and the amount paid depends upon your earnings during the 2020/2021 tax year. It affects both individuals and businesses.

If your profits are between £6,365 and £8,631.99 a year, then you will in Class 2\. Contributions are a fixed weekly payment of £3.00 a week and are collected as part of the self-assessment process. There are exemptions available if you are a low earner.

If your profits are between £8,632 and £49,999, you will be categorised in the Lower Profits Limit (LPL) of Class 4\. The amount due is calculated based on figures supplied during self-assessment and is 9% of your profit. If you go over £50,000, then you enter the Upper Profits Limit (UPL) and profits are taxed at 2%. 

## How to pay income tax if you are self-employed or in a partnership

Income tax is what you will pay according to your business’s profits.

If you are self-employed and without any other sources of income, then you are exempt from paying any income tax until your profit goes over your Personal Allowance. For the 2019/20 tax year, the standard tax-free allowance is £12,500.

This also applies if you are in a partnership or limited liability partnership.

With the progressive tax system in use across England, Wales and Northern Ireland, you will move through different income bands the more profit you make:

*   £12,501 to £50,000 – basic rate of 20%
*   £50,001 to £150,000 – higher rate of 40%
*   over £150,000 – additional rate of 45%

Note: Scotland’s income tax bands are different.

It is your responsibility to calculate how much tax to pay on self-employed income, as well as pay your National Insurance liabilities. This means annually completing and submitting a Self Assessment tax return to HMRC, who provide a self-employed income [tax calculator](https://www.gov.uk/estimate-income-tax).

You will be automatically sent a Self Assessment notice at the end of each tax year, which runs annually from April 6 to April 5\. The deadline for submitting a paper tax return is October 31, while January 31 is the deadline for submitting a return online and paying any tax owed.

Watch out for ‘payments on account’, which are advance payments for tax you might owe for the current tax year and could result in a larger tax bill than expected. You can make those payments in two instalments (January 31 and July 31).

### How can you get tax relief?

If you are a sole trader or in a partnership, tax relief allows you to make deductions for work expenses, namely what you spend to run your business.

Some types of tax relief are applied automatically, but some you must apply for, such as office and travel costs, clothing expenses, advertising or marketing, and training courses.

Remember to save every receipt for anything you plan to [deduct from your taxes](https://www.zervant.com/en/blog/top-5-tax-deductions-for-uk-self-employed/).

### What is trading allowance?

A tax emption of up to £1,000 is available to self-employed businesses in the form of a trading allowance. 

If you expect your annual gross income to be less than the threshold, then you do not need to tell HMRC, unless you cannot use the allowance or need to register for Self Assessment.

You will need to register if your gross trading income exceeds the £1,000 threshold.

## What tax does a limited company pay?

Owned by its shareholders and run by its directors, a limited company is a separate legal entity with its own legal rights and obligations. Your company is responsible for everything it does, and its finances are separate from your personal affairs and the other owners.

After your limited company has paid corporation tax (currently 19%) on net earnings, the profits are then distributed to the members or shareholders in the form of dividends. Recipients must claim their distributions on a Self Assessment form.

Note: You will also pay income tax on your personal income.

Corporation tax is paid once your company begins to make a profit. In addition, payment must be made nine months and a day after the end of your accounting year.

## What other taxes does a business have to pay?

### Value Added Tax (VAT)

The VAT registration threshold is £85,000, so register when your annual turnover exceeds that limit. This applies to self-employed, partnerships and limited companies.

### Business rates

Business rates are like a commercial council tax and are one of the largest overheads for businesses, typically equating to approximately 50% of annual rent. 

Generally, if you work from home, you won’t have to pay business rates and council tax.

## Top tax tips

Here are some tips to help you avoid those tax pitfalls:

*   Put tax money immediately into a separate bank account
*   Create a tax liability plan so you fully understand your obligations
*   Remember that all income, including foreign income, is subject to tax
*   Stay organised and keep track of your finances
*   Keep all receipts, bank statements, invoices and paperwork for at least three years

We hope this beginner’s guide has helped to demystify the UK tax system and instil more confidence as you begin to run your own business. Good luck and please get in touch if we can help you with any other taxing issues!

What do you do when a client ignores your requests for payment? What does the law say? Can you charge interest (and if so, how much)? If you run your own business these are key legal questions you need to know the answer to!

To help out we’ve put together a quick intro guide on the topic.

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## What Does the Law Say About Late Payment?

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*   All businesses have a right to charge other business customers and public sector organisations interest on late payments (but not to consumers).
*   Unless agreed otherwise, [the law states](https://www.gov.uk/invoicing-and-taking-payment-from-customers/payment-obligations) that payment <span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">must </span>be received “within 30 days of getting your invoice, or the goods or service” (whichever is later).
*   Some firms, especially larger ones, will demand longer payment terms. If they are longer than 60 days then [they must be fair to both businesses](https://www.gov.uk/late-commercial-payments-interest-debt-recovery).
*   Payment terms can include discounts for early payment.

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## What Happens When a Payment is Late?

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If an invoice is not paid within the agreed payment terms it becomes a late payment. This means:

*   You have a legal right to claim interest (although you don’t have to).
*   The interest that you charge is called ‘statutory interest’.
*   The amount of statutory interest that you can charge is 8% of the invoice total, plus the Bank of England’s base rate for business to business transactions.
*   The base rate is 0.5% as of writing ([check the current base rate](http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp)). So you are able to charge 8.5% interest on late payments.

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## How Do You Calculate Interest?

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This interest is simple interest, not compound. So to work out how much you can charge you need to calculate what the amount of interest would be for a whole year, then work out the daily rate from that.

As an example, if you have a late payment worth £10,000:

*   The annual amount of interest would be £850 (8.5% of £10,000).
*   The daily amount of interest would be £2.33 (£850 divided by the 365 days in a year).
*   After 10 days the amount of interest would be £23.30 (£2.33 x 10), after 30 days it would be £69.90 (£2.33 x 30), and so on.

If numbers are not your thing you might want to use a tool to work this out for you. A quick Google will give you plenty of options. We quite like this calculator by [_Don’t Pay Late_](https://dontpaylate.uk/).

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## To Charge or Not To Charge?

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There are certain pros and cons you need to weigh up when deciding if you want to charge interest on late payments:

*   In certain contexts 8.5% can be a high amount of interest (think, for example, of a savings account). But when it comes to statutory interest, this figure is hardly astronomical. In the example above it only means an extra £2.33 a day.
*   Charging interest is your legal right. And sometimes it’s important to stand your ground, especially when larger firms try to use bullying tactics.
*   But in the long run will it do more harm than good? Will it sour relations with what was a potentially lucrative customer?
*   What do other businesses in your industry do? Is it a common problem or is this an isolated incident you can deal with as a one off? You can ask around on places like [UK Business Forums](https://www.ukbusinessforums.co.uk/) if you’d like advice from people in a similar situation.

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## What if I Want to Charge Interest _And_ I Want to Get Paid?

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Bearing in mind you want your invoice paid and you probably want to keep your customer, this is a delicate matter. How do you manage the two simultaneously?

*   Be practical! Interest will go on increasing every day that the invoice goes unpaid. If you want to get paid it might be best to strike a deal with your customer. For example, if both businesses agree that the invoice will be paid within 7 days then no further interest will be charged.

*   Remember to confirm any revised agreements in writing. Verbal contracts are difficult to prove later on.
*   If you’ve tried this and it doesn’t work you can always opt for for more extreme methods. These include [factoring](https://www.gov.uk/business-finance-explained/invoice-financing) or [winding up a company](https://www.gov.uk/wind-up-a-company-that-owes-you-money/overview). But even if the extra time and money mean the invoice gets paid, it could well be damaging for customer relations.

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## Is There An Official Route?

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The [Prompt Payment Code](http://www.promptpaymentcode.org.uk/) (PPC) is an industry-led, government backed initiative designed to promote a prompt payment culture in business.

*   It encourages fair and reasonable payment terms (an absolute maximum of 60 days, with 30 days as the norm).
*   Almost 2,000 companies have signed the PPC, including more than 100 ‘big’ firms with revenues of over £500 million.
*   However, the scheme is still voluntary. And other than naming and shaming offenders there are not yet any tangible sanctions.

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VAT, or Value Added Tax, can be complicated to understand and an area of concern for small and medium-sized businesses. If you are reading this then it is safe to assume that you are looking for some clear answers.
In our beginner’s guide to VAT, we will gently guide you through the essentials and simply explain common terms you will encounter when running your business.

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## What is VAT?

### A brief history of VAT

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Introduced to the UK on April 1, 1973, VAT is a tax added to most non-essential products and services by the companies that provide them. It replaced a consumption tax called Purchase Tax, which was levied at different rates depending on goods’ luxuriousness.

The adoption of VAT was a consequence of the UK joining the European Economic Community at the start of 1973\. The Conservative Chancellor Lord Barber, at the time, set a single VAT rate (10%) on most goods and services.

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### How much revenue does VAT generate?

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The Office for Budget Responsibility forecast VAT payments to raise £136.6 billion in 2019-20, which averages out at around £4,800 per household a year. It is the third-highest [source of tax](https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/vat/) for HM Revenue and Customs (HMRC), just behind income tax and National Insurance contributions, although it is close to overtaking the latter.

VAT is not a cost to businesses themselves since the customer pays it. Your business, if VAT registered, will collect and pay it on behalf of the government, effectively making you an unpaid tax collector.

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### How does VAT work?

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VAT can only be charged by a Taxable Person who is VAT registered with HMRC—this includes any individual, partnership, company, club, association or charity.

It is charged on any goods or services sold or hired out, any commission earned, and applies to business goods used for personal reasons. It is also charged on various non-sale activities like bartering, part-exchanges and gifts. These are collectively referred to as a ‘[Taxable Supply](https://www.pricebailey.co.uk/blog/vat-taxable-supply-basic-definition/)’.

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## Should you register your business for VAT?

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You must register your business within 30 days for VAT if during a rolling 12-month period:

– Your taxable turnover exceeds the VAT threshold of more than £85,000

– You receive goods from the EU to the UK worth more than £85,000

Taxable turnover is the total value of everything a Taxable Person sells within over 12 months that isn’t exempt. It does not include capital assets, such as buildings or vehicles—a full 2021 list can be found on the [HMRC website](https://www.gov.uk/guidance/vat-exemption-and-partial-exemption).

Even if your company is not VAT registered, it doesn’t automatically mean that your sales are exempt from VAT.

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## Reasons for VAT registration, even if you don’t need to?

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Registering early can offer some advantages, such as giving the outward impression that your sales are over the threshold, but it will also immediately make your product or service more expensive with VAT added to the price. In addition, some businesses only deal with VAT-registered suppliers.

Talk with your accountant to calculate your profit margins as a VAT-registered entity to understand if it is worth going the voluntary route and how it will affect your bottom line. You don’t want to suddenly lose your profitability.

It can be [financially beneficial to register early](https://www.yourcompanyformations.co.uk/blog/should-i-voluntarily-register-for-vat/) if you are selling to businesses that are VAT registered because your sales would be no more expensive than if you weren’t VAT registered.

Your business expenses will become cheaper because you can reclaim any VAT paid on business-related goods or services, such as computer equipment, office supplies and even accountant bills.

Note: You can even reclaim the VAT on certain purchases bought up to four years prior to registering, which another reason to register for VAT and save every business-related receipt.

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## What are the different VAT rates?

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The UK has three different rates of VAT and you must ensure that you charge the right amount.

Here is an overview of the current UK VAT rate:

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<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;"><span style="box-sizing: inherit; font-weight: bolder;">% of VAT</span></td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;"><span style="box-sizing: inherit; font-weight: bolder;">What the rate applies to</span></td>

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<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Standard rate</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">20%</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Most goods and services</td>

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<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Reduced rate</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">5%</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Some goods and services, e.g. children’s car seats and home energy</td>

</tr>

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<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Zero rate</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">0%</td>

<td style="box-sizing: inherit; vertical-align: top; border: 1px solid; text-align: inherit;">Zero-rated goods and services, e.g. most food and children’s clothes</td>

</tr>

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_Source: https://www.gov.uk/vat-rates_

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### Standard rate

##

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Since January 2011, the UK’s standard rate of VAT has been 20%.

It applies to most goods and services, ranging from chocolate and alcoholic drinks to shoes and taxi fares.

In response to the coronavirus pandemic, the government has introduced a [temporary 5% reduced rate](https://www.rjp.co.uk/how-to-apply-the-temporary-5-vat-rate-update-for-the-hospitality-sector) of VAT for certain suppliers of hospitality and tourism. It will be in effect until March 31, 2021.

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### Reduced rate

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A reduced rate of 5% applies to purchases of home energy, as well as goods like children’s car seats, maternity pads and mobility aids for people over 60.

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### Zero rate

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Zero rate is used for food, books, newspapers and children’s clothing, for example.

Zero-rated means that the goods and services are still subject to VAT but are charged at 0%. This means that you must record them in your VAT accounts and report them on your VAT Return.

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## How does VAT apply to EU exports?

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The zero rate is applicable to most goods you export to EU and non-EU countries.

You must be VAT registered if you export goods to the EU and you will also need the customer’s VAT ID on all paperwork. The invoice should be marked 0%, plus mention ‘reverse charge’.

Reverse VAT means that the buyer is responsible for the sale’s VAT declaration and then deducts the amount when self-assessing in their VAT Return.

It is also the way VAT is collected in the [building and construction industry](https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services).

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### VAT exempt

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Items exempt from VAT include postal services, membership subscriptions, insurance and medical treatment.

Sellers of exempt goods and services are not entitled to reclaim VAT on business purchases.

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## How to file a VAT Return

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If you’re a VAT-registered business, you must report to HMRC the amount of VAT you’ve charged and the amount of VAT you’ve paid. This is done through your [VAT Return](https://www.gov.uk/vat-returns), which is due every three months from the date your company was registered.

Note: With the Annual Accounting Scheme, a business can submit one VAT Return a year.

Virtually all VAT-registered businesses are required by law to submit their returns online and pay VAT online electronically.

Thankfully, most VAT commercial software is compatible with the HMRC site.

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## How to calculate your 2021 VAT Return

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HMRC states that you must account for VAT on the full value of what you sell, even if you:

*   receive goods or services instead of money
*   haven’t charged any VAT to the customer

Here’s an example of how to calculate your VAT:

During a three-month period, you collect £1,000 worth VAT from sales and pay £100 worth of VAT on goods you buy. The £1,000 you collected is referred to as Output VAT, and the £100 of VAT you paid is known as Input VAT.

As a VAT-registered business, you only pay HMRC the Output VAT minus the Input VAT. In this example it’s £900 (the £1,000 minus the £900), so you can keep the £100 difference.

However, if you receive more VAT from sales than you pay on purchases, then you’ll need to pay HMRC the VAT Due.

Note: You must keep all records of your income and expenditure for at least six years.

Calculating your VAT return can be complicated, but here is an [online VAT Calculator](http://www.vatcalculator.co.uk/) to help you.

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## What is the Flat Rate Scheme?

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The [Flat Rate Scheme](https://www.sage.com/en-gb/blog/vat-flat-rate-scheme) allows you to pay a fixed rate of VAT to HMRC. However, you cannot reclaim the VAT on your purchases – except for certain capital assets over £2,000.

To be eligible, your VAT turnover must be £150,000 or less (excluding VAT).

The flat rates are set by HMRC and vary depending on the industry sector, from 4% to 14.5%.

Do not use this if you usually receive VAT repayments, have an income that is not VATable, or you are involved in exports or EU imports.

[How to Choose the Right VAT Scheme for Your Business](https://www.zervant.com/en/blog/introduction-to-vat-sole-trader/)

We hope that our beginner’s guide has simplified some of the complex aspects of VAT and you are feeling a little more confident. If you have any further questions, please get in touch and we can help you!

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Are you thinking of starting a business in the UK but don’t know where to begin? You are not alone, as more than 200,000 people set up companies each year. Let’s take a look at how to get started and make the most of your business idea.

## Is it Difficult to Start a Business?
At the start of 2019, the UK had 5.9 million different businesses registered on its shores, with 76% of them being sole traders. These include a vast range of different sectors, from jewelry, fashion, catering and food service companies to property, consulting and car rental firms.

Add to that the 1.1 million companies that employ less than 10 people and it becomes obvious that these [small firms are the lifeblood of the British economy](https://www.zervant.com/en/blog/covid-19-economic-impact-survey/). What this also means is that **there is a lot of support out there** for people who want to start their own business.

Each and every business is different, but some common factors affect everyone – regardless of whether you are starting something as small as a dog walking business or planning to start a multi-national corporation. **It takes time, research and a whole lot of bravery** (not to mention [start-up funding](https://www.zervant.com/en/blog/how-to-finance-a-new-business/)).

Therefore, you need to be passionate about what you do, otherwise, there is little chance of success. Dr Nik Kotecha started his medical supply company with a desk and a fax machine in his garage back in 1991.

Today, Morningside Pharmaceuticals is worth more than £65 million. His advice is simple:

"Find your passion and you will find your purpose. Once you have found your purpose, only then can you begin, develop and grow your business.”

## Is There Market Demand for Your Business?
Market research is a huge topic and new businesses often struggle to find the information they need to start off developing a market research plan.

### A well written market research plan will aim to answer the following 3 questions:
1. Is the business viable, both technically and financially?
2. What are the primary risks involved in bringing this business to market and what info do you need to minimize these risks?
3. How likely is it your strategy and business model will be successful?
 
Take these questions and **apply them to your business idea**. For a dog walking business, these questions could look like:

1. Can I logistically provide this service and [what are the costs involved in setting up](https://www.zervant.com/en/blog/how-to-finance-a-new-business/)? Do I need a vehicle?
2. Is it risky to take temporary care of people’s pets? How do other businesses mitigate this risk and what insurances do I need to provide this service. Are there enough customers to achieve my business goals?
3. Do I have the right approach to spreading awareness of my business and [how successful could my business be](https://www.zervant.com/en/blog/what-is-profit-in-a-business/)?
Steps in proper market research - determine target market, analyze competitors and learn buyer habits and trends.

![how-to-start-a-business-uk_blog-illutration2_en.jpg](https://broad-malicious-back.media.strapiapp.com/how_to_start_a_business_uk_blog_illutration2_en_a7158e4b0d.jpg)

#### Where do you find market information?
Do you want to know more about the current state of your chosen industry in general? Check out polls, forums, news articles and the [Office for National Statistics](https://www.ons.gov.uk/) for this type of general information.

Most importantly, you must know who you are selling to. The group you want to sell to is known as **your target market**.

For more specific information, consult the oracle (Google). Bricks & mortar stores are easy to find if they’re on [Google maps](https://www.google.com/maps) – you can even just type in the service you’re looking for rather than a specific business name.

Now, who are these competitors and what type of person do they serve? Are they a budget option, a premium option, a niche option? It’s important that you learn this information about your competitors in order to identify any gaps in the market you might want to explore.

![how-to-start-a-business-uk-_-business-types-funding-_-more_blog-header_en_blog-illustrations_en_dog-walker-372x248.png](https://broad-malicious-back.media.strapiapp.com/how_to_start_a_business_uk_business_types_funding_more_blog_header_en_blog_illustrations_en_dog_walker_372x248_450d5aa271.png)

## Account for Costs
This is absolutely crucial. Many small businesses get unwelcome surprises because they haven’t fully researched what goes into starting and running a business.

What insurances do you have to pay? How about permits, licences, certification? And have you accounted for the [taxes you need to pay](https://www.zervant.com/en/blog/how-does-tax-work-in-the-uk-2021/)? What about pension contributions and national insurance contributions? Do you need transport? Do you need to hire employees? (On that note, we have both a [zero-hour contract template](https://www.zervant.com/en/blog/zero-hour-contract-template/) and [general employment contract template](https://www.zervant.com/blog/employment-contract-template-uk/) for you). All these and more need to be taken into account.

Caroline, who owns a small company that provides cleaning services in Aberdeen, Scotland, set up a business on her own in 2014. Looking back, she says that costing is crucial.

“I had no idea about the overheads involved and there were a few surprise costs. If I could give myself from six years ago some advice, it would be to make sure you look into every possible cost in advance. It doesn’t pay to be naïve.”

## Write a Business Plan
By doing this, you will give yourself a clear idea of your business structure, as well as what you are going to do and how to achieve it. Not only will this help you to decide who you are trying to reach and how to succeed, it will also allow you to discover any flaws or unexpected costs early-on before they become serious.

## Taking your first concrete steps
At the end of the day, the government wants your business to succeed, as it will bring revenue through taxation and give you more disposable income. Therefore, they offer a great deal of help and advice, as well as financial incentives to help you get on your feet.

![how-to-start-a-business-uk-_-business-types-funding-_-more_blog-header_en_blog-illustrations_en_cleaner.png](https://broad-malicious-back.media.strapiapp.com/how_to_start_a_business_uk_business_types_funding_more_blog_header_en_blog_illustrations_en_cleaner_28a634a12b.png)

## Government websites
Your first port of call should be the [finance support](https://www.gov.uk/business-finance-support) section of the Westminster government’s official website to see if your business fits into one of their funding schemes. Different schemes are available through the UK’s devolved parliaments in [Scotland](https://www.bgateway.com/?via=http://www.business.scotland.gov.uk/bdotg/action/layer), [Wales](https://businesswales.gov.wales/) and [Northern Ireland](https://www.investni.com/support-for-business).

The UK government’s Business Support website has a huge array of [case studies](https://webarchive.nationalarchives.gov.uk/20200511152129/https://www.businesssupport.gov.uk/case-studies/) that will let you see businesses similar to your venture and what they did to get started.

![how-to-start-a-business-uk_blog-illutration4_en-744x373.jpg](https://broad-malicious-back.media.strapiapp.com/how_to_start_a_business_uk_blog_illutration4_en_744x373_ca6bd74031.jpg)

## How do you get start-up funding?
One of the most common questions people ask when they want to start a business is: ‘how do I get funding?’ Starting a company is not cheap, but don’t let not having enough (or any!) money stop you from pursuing your dream.

Most people who start a business from scratch in the UK do so with little or no cash, so you will need to look for a way to raise capital. 
No matter the type of business you are looking to open, there are funding options available to you and the good news is that you can do it in a few ways.

- **Grants**
Government grants are available in different forms. A direct grant is a lump sum of money given to a business to help it get started. However, other alternatives that save you money are possible, such as lower business rates, free equipment and lower costs.

- **Soft loans**
Rather than going to a bank and convincing a bank manager to lend you money at his or her desired rate, you can get a soft loan from the Start Up Loans scheme, which is backed by the government. They offer lending of up to £25,000 with an interest rate of 6% – this also includes free business support and mentoring. 

- **Equity finance**
This is more unusual for smaller businesses, as it involves essentially selling a share of your business in return for government finance. It can result in reductions in income tax but also has some strict stipulations as to the size and age of the firm.

**Good luck!**

![how-to-start-a-business-uk-_-business-types-funding-_-more_blog-header_en_blog-illustrations_en_baker.png](https://broad-malicious-back.media.strapiapp.com/how_to_start_a_business_uk_business_types_funding_more_blog_header_en_blog_illustrations_en_baker_7da35875a8.png)

As you can see, setting up by yourself is an achievable goal, as long as you are prepared and willing to work hard. The tools are in place for success, so now all that is left for you to do is take the plunge. Good luck and let us know if we can help you build your dream into reality. 

Finding funding for your new start-up business can be hard. Here, we walk you through some popular options and how to find them.

They say there are two things in life you can be sure of: death and taxes. We would argue there is actually a third: [starting a business is difficult](https://www.zervant.com/en/blog/how-to-start-a-business-uk/). Getting a business off the ground needs capital, whether that be financial or sweat capital.

However necessary it may seem, being successful isn’t impossible without a hefty startup fund. Let’s begin with a couple of feel-good stories of companies that made it big with the smallest amount of capital behind them.

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## First, a little inspiration

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Just one year before the start of the Second World War, a business was formed in a garage in the small Californian city of Palo Alto. Set up by Bill Hewlett and David Packard, the company that bears their surname had an initial capital of USD 538 ( $10,000 in today’s money).

After merging with Compaq in 2001, the company sold its 51-percent controlling majority share to Tsinghua Unigroup for at least  $2.4 billion in 2015\. At this time, the company was registering net income of over  $5 billion and owned assets of  $103 billion.

Another global success that started from the very bottom is Pete’s Super Submarines, although you may know it better by the name it changed to in 1968: Subway. Three years earlier, Fred DeLuca had borrowed USD 1000 from a friend to start up his own business (around $8,000 in today’s money).

Fred had originally wanted just enough money to afford his medical school tuition – instead, he created a global behemoth. Today, Subway has more than 42,000 locations across 111 countries and can claim to be both the world’s largest single-brand restaurant and largest restaurant operator on the planet.

<figcaption style="box-sizing: inherit; color: rgb(49, 53, 52); font-style: italic; margin-bottom: 1rem; margin-top: 0.25rem;">Financing a new business can be a grind. We’ve rounded up the basic funding routes available.</figcaption>

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## What is business funding?

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Here, “funding” means “cash” – it’s really that simple. A business needs cash to begin trading, in one form or another.

You may think “my business is an online service business, I don’t need cash to start up – I just need my computer!” – but where will you plug your computer in? How do you pay for your internet connection? How did you buy that computer in the first place?

Whatever your business requires becomes a financial liability of your company and needs funding (cash) to run. You can learn more about corporate finances in our [“what is bookkeeping?” article](https://www.zervant.com/en/blog/bookkeeping-basics/).

Funding can be secured in a number of different ways, but it is important to select the right funding for your business. Some are fortunate enough to have money behind them, so are able to fund the business themselves, while others look to family or friends.

More “official” forms of funding can be found in government funds, grants, bank loans or specific companies that choose to invest in small companies they see potential in. It can be a bit of a minefield, which is why we are here to help.

Let’s take a look at the options.

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## Government funding

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Government funding is the first port of call for many start-ups. This is still a very useful avenue and offers a number of more ‘official’ incentives, such as tax credits, 6% start-up loans, regional growth funds and even competitions.

For more info, go to the [government’s official site](https://www.gov.uk/browse/business).

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>There are numerous opportunities with government funding which means finding the specific kind of funding needed for your business is more likely. There are various loans, often with low-interest repayments, and grants which you will not need to pay back.

Tax ‘discounts’ help in that they improve your cash-flow to allow for business growth. Rather than giving you cash, they work by saving you money. Overall, it is in the government’s best interests for your business to succeed – more revenue means more tax!

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>The greatest barrier to pursuing start-up funding from the government is that it can be a laborious task involving numerous meeting, forms and hassle. Further, there could be many strings attached and numerous hoops to jump through for a considerable period of time.

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## Small business grants

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Although government-funded, this is worth a few words on its own.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>There are literally hundreds of different start-up grants available, depending on your industry, location and size of your start-up. Obviously, they are very popular as, unlike a loan, you do not have to pay any of it back.

This means your business does not immediately plunge into the red before you’ve even started.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>There are literally hundreds available!

Some people can be put off by the huge number and it can be tricky finding which grant suits your type of business.

Funnel down your options and [apply for the right loan for your business here](https://www.gov.uk/business-finance-support).

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## Angel Round investment

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An angel investor is one who puts money into your company and takes a chunk of ownership equity in return. In small start-ups, this is often a family member or friend who sees potential in your idea and wants to help out.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>Angel investors typically have cash ready and can therefore get money to a small business very quickly. Further, you don’t have to put up any private assets as a guarantee on the money and there are no interest-laden repayments.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>While this is certainly an option worth looking into, remember the strain on relationships this type of business arrangement can cause if you are to borrow from people you know.

When it comes to companies, be aware that you will lose complete control of your company and may have to move it in a direction you are not entirely comfortable with.

For more information on this type of funding, visit the [angel investment network](https://www.angelinvestmentnetwork.co.uk/) or   or the [UK Business Angels Association](https://www.ukbaa.org.uk/services-for-entrepreneurs/support-and-advice/angel-investment-right-business/).

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## Venture Capital Round

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Now, we are talking serious investment – not just the kind to get a small business off the ground. Venture capital involves private equity firms investing in your company through a series of stages or “rounds”.

In 2019, venture capital investment grew by 44% year-on-year, with more money invested in the UK than in Germany and France combined.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>This kind of investment can bring a huge amount of money in from the very beginning, meaning you can concentrate solely on developing your business. The type of money raised in VC rounds would not be available from the previous methods mentioned.

These firms can also offer valuable relationships, professional advice and a network for your company as it grows.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>VC round funding should definitely not be viewed as a sure thing, as you will need to have many factors in place beforehand, such as networks, a detailed business plan and a mentor to coach you through the process.

It can also get complicated, meaning there is a very good chance of you having to pay for legal help in order to complete deals. VCs can also take a long time to make their decisions and there is always the possibility your company could be undervalued if you choose the wrong investor.

However, if you wish to explore this option then [Startups](https://startups.co.uk/how-does-venture-funding-work/) is a good place to start.

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## Incubators

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Usually located in one place, this is an organisation that helps with workspace rentals, equipment, seeding rounds, training, legal help and advice. Here, you can mix with others in the same boat and share tips, ideas and advice.

There are currently around 200 incubators active in the UK.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>On an everyday level, it means that you have some company and are not stuck in the corner of your bedroom all day. Financially, you could save up to 50% of your start-up costs – such as office space, electricity, printers, etc. – by choosing to set up in an incubator.

You are also more likely to be spotted by an investor, as they tend to keep a close eye on new companies – especially as there are multiple gathered in one place.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>Of course, they are often restricted to large cities, so many not suit everyone. Also, make sure there are no hidden costs when you sign up or that the incubator is due a slice of any future profit. One further disadvantage is that you are reliant on the skills and knowledge of the incubator team that is in place at the time and they may not be up to standard.

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## Debt funding

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This is essentially the opposite of equity financing and involves selling debt instruments to money lenders. Much in the same way that when you want to buy a house, you have to get into debt to buy it and, once that loan is paid off, you own the house.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>Debt-financing means that you do not give up any stake in your company and can remain in complete control. Barclays, Natwest and HSBC all have favourable debt-funding options, while newer alternatives, such as Mettle and MetroBank, are also now competing for business. [Medium.com’s excellent article on which one to choose](https://medium.com/unifimoney/27-things-to-consider-when-choosing-a-new-bank-f88eb07778f7) is worth reading.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>In all honesty, it is unlikely you will be able to walk into a bank and convince them to invest in your start-up business – no matter how good your idea. The simple fact is that start-ups are risky investments and have little or no collateral behind them if things go badly.

The debt also has to be paid back in full, regardless of how the business is faring. As your company is not fool-proof, the interest level on your loan is likely to be high, meaning you end up paying back a lot more money than you borrowed. The typical interest rate is around 8%, so for every £1000 you borrow, you will pay back £1080 before you are debt-free.

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## Crowdfunding

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This is a decent option for companies who want to produce a good rather than a service.

Crowdfunding, as the name suggests, invites people to invest money through a website in return for shares in your company. Websites such as Seedrs and Crowdcube as accessible, easy-to-use and safe, while Kickstarter was an early trendsetter and has even been used as a synonym for crowdfunding in some areas.

Crowdfunding can also be used for specific products. In this case, people invest a certain amount of money towards a set target. Once this has been reached, each investor gets one of the products in question and you keep the rest.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>This allows companies to get their first product off the ground, raises awareness and gains you free word-of-mouth advertising.

If the target isn’t met, those who committed funds do not have to pay up. It also doesn’t cost you anything but can result in excellent marketing and feedback – your investors become your best market. Last year, the average funding per campaign in the UK reached £11,796, with the sector estimated to be worth over £50 million by 2024.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>Crowdfunding is not a guaranteed source of income, on which you can rely. If you don’t meet your target amount, it is very unlikely you will get any cash whatsoever. We would highly recommend against this course of action as your sole source of income.

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## No funding

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<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Pros: </span>Yep, you read that correctly. Some people don’t need any funding for a business, particularly if they provide a service. By saving a little cash, companies can get everything they need in place through having a home office, using public transport, using older equipment they already have and not employing anyone to begin with. You also know exactly how much money is there and maybe more careful if it is yours.

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">Cons: </span>Very few people have the large amount of money needed to start a business lying around or in savings. Further, if your company does not succeed, all of your hard-earned cash will be lost. This is not for everyone, so please have a think before deciding whether you need business growth funding.

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