Chris Worden sits down with Beth from Two Sisters Accounting to discuss the realities of running a business, managing finances, and dealing with HMRC. This candid conversation covers common mistakes, practical advice, and the importance of understanding your numbers.
- Many business owners misunderstand tax and finance basics
- Accurate bookkeeping and management info are essential
- Early clients can be the most challenging
- HMRC is approachable—communication is key
- Marketing and numbers are both vital for growth
- Free resources and calculators can help you plan
Building a Business from Scratch
Beth shares how she and her sister started Two Sisters Accounting out of frustration with their previous jobs. Their complementary skills and willingness to learn on the job helped them grow the firm over nearly eight years.
Common Challenges for New Business Owners
- Balancing a new business with other work commitments
- Taking on difficult clients for early cash flow
- Learning to say no to red-flag clients
- Understanding the difference between profit and cash flow
Dealing with Bad Tax Advice
Both Chris and Beth note that business owners often receive poor tax advice from unreliable sources, including friends, family, or online tools like ChatGPT. Always verify with a qualified accountant.
Financial Literacy for Directors
Many directors lack basic financial understanding, running their businesses without clear profit or cash flow data. Beth recommends regular management accounts and using software or a bookkeeper to stay on top of finances.
Cash Flow vs Profit
Profit is not the same as cash in the bank. Directors must track invoices, expenses, and outstanding payments to avoid running out of cash—even if the business appears profitable on paper.
Handling HMRC and Tax Arrears
Chris Worden shares his own experience with HMRC, emphasising that communication is crucial. Beth advises honesty and persistence when negotiating time-to-pay arrangements, and not to be afraid to call back if you get an unhelpful agent.
Marketing and Numbers: The Pillars of Growth
Beth highlights that marketing and understanding your numbers go hand in hand. Consistent marketing, even when it feels uncomfortable, is necessary for growth. Chris agrees, sharing his journey with video content and social media.
Key Takeaways
- Don’t rely on hearsay for tax or financial advice—consult professionals
- Track your numbers monthly, not just at year-end
- Cash flow management is as important as profit
- Communicate proactively with HMRC if you have arrears
- Marketing is essential, even for accountants
- Free calculators and resources can help you plan and grow
FAQs
- What’s the difference between profit and cash flow?
- Profit is your income minus expenses, but cash flow tracks actual money in and out of your bank account. You can be profitable but still run out of cash.
- How should I deal with HMRC if I can’t pay my tax bill?
- Contact HMRC as soon as possible, be honest about your situation, and ask about time-to-pay arrangements. Persistence helps if you get an unhelpful agent.
- Why is regular bookkeeping important?
- Accurate, up-to-date bookkeeping helps you understand your business’s financial health, plan for tax, and make informed decisions.
- Is it normal to work another job while starting a business?
- Yes, many business owners work part-time or full-time jobs while building their business to maintain income and reduce risk.
- How can I improve my business’s cash flow?
- Invoice promptly, chase late payments, monitor expenses, and use cash flow forecasts to plan ahead.
For more tailored advice or to access free business calculators and resources, contact us.
