Stylist’s financial therapy series tackles real issues from women about their financial matters. Each week sees a new issue discussed with a financial expert to destigmatise the way we talk about money - this week it’s dealing with questions surrounding your finances when you own your own business. Lisa Conway-Hughes, chartered financial adviser and founder of misslolly.com tackles Pretty Wild founder, Ellen Kenney’s question about how to keep your business financially kosher…
“I worked in the advertising industry for seven years and was about to settle down. But instead, I moved to Berlin so I could figure out what I wanted to do with my life. It was there that I decided to become a florist.
After taking a floristry course and relocating to Bristol, I’ve now started my own business. I won contracts with several clients and kept getting busier. When I was offered the chance to open my own shop, I took it.
Because I’m so busy, I feel I’m letting the financial side of my business slip. I should get an accountant, but don’t know what to ask when trying to find one. I don’t want to relinquish control, but don’t feel informed enough to know where to start when it comes to getting my business finances in order.
I’m also exploring another small business venture, for which I’m looking to gain funding. I need some help!”
“It sounds like you’ve really done well and your business is going from strength to strength, but there are a few things that could help you…
1. Find an accountant who is on the same page
The first step is finding an accountant who understands you. Ask for some recommendations, use networking groups or the local chamber of commerce, and then perhaps meet up with three or four.
The right accountant will put you at ease, and will understand what they need to do to help you to continue growing your business.
2. Think of yourself as an employee
Once you have control of your cash flow and are able to pay yourself a steady income, you need to start thinking about yourself as an employee of the business, too.
I would keep your personal and business finances separate. It’s also important to make sure you’re in the habit of saving for tax as soon as the business receives it.
I’d also recommend that you start paying into a pension from the business*. I always suggest small business owners set up a monthly payment that they can afford and then, at the end of your company year, have a chat with your accountant to see if there is a surplus you can use to top up your pension.
This is great for the future you, and great for the business when it comes to tax.
3. Take out a protection policy
You also need to ask yourself, ‘How long could your business pay you if you weren’t able to work?’
If the answer is, ‘Not very long’, then you need to take out an income protection policy. This is a plan that will pay out a monthly benefit if you are not able to do your job due to illness or injury.
It will continue to pay you until you are able to work again. It’s a great safety net to have in place.
In terms of your new business goals, I’d avoid jeopardising the established business by merging the two finances – it’s best to seek accountancy advice about how you set up the new venture to ensure that you’re as protected as much as possible.”
NatWest’s business growth enabler Andy Light reveals ways to make your small business run smoothly:
“Running your own business can be overwhelming, so you’re not alone. Luckily, there are plenty of tools to help you feel more in control.
As well as finding a good accountant, there’s a wealth of great online accountancy packages to help manage your expenses and invoices in one place, and calculate how much tax you owe. FreeAgent is an accountancy software that helps to keep business finances on track. Even better, it’s currently free for NatWest Business Banking customers.
As a small business owner, it’s good to mix with other local small businesses so you can share tips. That’s why NatWest organises free events called Boost, taking place weekly across the country, covering a range of topics, from cashflow to marketing, technology to cybersecurity and more.
To find your local event, search NatWest Boost and you can contact your local business growth enabler for more details.”
For more support around financial issues, join A Woman’s Worth Collective - a space created by Stylist and NatWest for women to talk to each other and experts about what they can be doing to improve their financial wellbeing - with no judgments or biases.
NatWest is the bank that believes ‘we are what we do’. Whatever your financial needs, they’ll do all they can to help keep your relationship with money healthy.
*A pension is a long-term investment. the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Recommended by Emily Badiozzaman
QUIZ: How healthy is your relationship with your finances?In partnership with NatWest
The Financial Therapist: Dealing with the unexpected issues with inheritanceIn partnership with NatWest
The Financial Therapist: Looking at making ends meet on maternity leaveIn partnership with NatWest