How to prepare for your first year as a freelancer

The first year will most likely be the toughest year of being a freelancer, but it will also be a rewarding year if you do well. To help you get through the first year, we offer the following advice:

1. Put some money aside

You really need to put some money aside to help get your freelancing business off the ground and ensure that you have something to live on whilst building up a client base. Many freelancers will continue working in their normal job for a period of time before becoming a full time freelancer.

2.  Draw up a business plan

Freelancing is also a business. A business plan can help with many different aspects of the business and so avoid panic when the business gets into difficulty.

3. Build the perfect profile

It is important to build the perfect profile (such as a CV and a cover letter) with just enough information about who you are, what you do and why people should hire you. This will help your clients to feel they are well informed about you.

4. Keep track of your money

You will be accountable for all of your incomings and outgoings when you go freelance. Your first tax return may well be time-consuming and daunting if you have no prior experience with it. The best way is to find an expert to help you to do your accounts and keep track of your money, therefore avoiding getting into trouble with tax man.

5. Develop your own network

Networking is one of the biggest and best ways to build up a new client base within your first year.  Make sure you take along your marketing materials wherever you might meet people, such as your business cards, leaflets and so on.

Belsize Accountancy will be here to assist you and go through your business plan before you take the plunge into freelancing. We will also help you sort out and send your tax return to the HMRC, so you will be free to focus on your own business. For further information, please contact us on 0207 043 0052 or via email at info@belsizeaccountancy.co.uk.

Shoppers Suffer from Computer Failure at RBS Bank

RBS Bank continues to hit the headlines with a computer glitch that left 750,000 customers unable to make payments on their debit and credit cards on one of the busiest shopping days of the year. The computer failure occurred on 2 December 2013, also known as “Cyber Monday” and resulted in customers having their cards declined for over 4 hours.

RBS bank, 82% owned by the taxpayer, let its customers down again. Last month RBS was fined by the European Commission for manipulating interest rates.

Raising Finance & Managing Banking Relationships

Raising finance has become increasingly important to both large and small businesses under the current climate. We look to provide readers with some tips from our experts at Belsize Accountancy:

-Companies must look to optimise their cost of capital through a mix of debt and equity. Firstly a company must work out its current weighted average cost of capital (WACC) and must ensure that this is monitored and updated as circumstances change.

-A company must look to raise debt and equity in line with the income profile of the business. There must also be a match between the profile of assets and liabilities. Some of the larger utility companies have secured debt over 60 years, in line with the life of their asset base.

-Debt is often cheaper than equity but a company must ensure that it does not generate too much leverage in the business. Investors are becoming increasingly cautious in investing in highly geared companies.

-Control your covenants. Tight covenants often hinder the operating capacity of the business and it can be expensive to restructure your covenants if they are not set up adequately first time round. The banks are surprisingly lenient under the current climate as they do not want their clients to fold. Many businesses have found it easier to renegotiate covenants over the past 2 years than would normally be possible.

-It is important to establish a relationship bank. You should look for one that understands your industry and it is advisable to use a bank that has been around for a while and preferably with an A+ credit rating as banks have a higher than normal risk of failure given the issues in the Eurozone. Banks that are supported by their sovereign nation are recommended.

-We tend to look for various qualities in the bankers we use. These include: providing the right mix of services, experienced team, geographical reach, being prepared to lend money, and ability to provide objective advice.

-For our contractor base, we look for banks who can open a business account quickly, the online system is easy to use and have low charges.

It is also important to understand what the banks want, particularly if you are looking for a loan:
-Return on capital employed
-Regular income and cash flow
-Ability to service debt
-Strong and reliable management team
-Bank must be happy with the corporate risk profile of the business
-Quality of information. Banks do not like surprises and must be kept will informed

If you run a well managed business which is cash generative you will not have difficulty raising finance. In fact, strong businesses will be able to secure competitive rates. Growing businesses on the other hand will require adequate security in order to raise finance from the major banks.

We hope you have found this article useful. Belsize Accountancy have a strong relationship with several banks. Feel free to contact us if you require assistance with raising finance.