In the property removal industry, generally there are two types of entities (companies) operating – sole traders and the rest. Usually, the sole trader company status is used by small moving businesses, running one or two vehicles tops, whereas bigger entities running larger fleets usually go for a limited company status. Having said that, successful moving businesses grow and expand in terms of staff, fleet and services so many of them are looking to make the switch from a sole trader to a real business. The pace and complexity at which the transition from one type of entity to another is done varies depending on the company itself i.e. management, financial resources, reserves, structure etc.
The switch – basic considerations
By default, proper finance management is crucial for the success of any removal business. Managing finance though is easier said than done. However there are a few basics which every owner/manager should be aware of, regardless of whether changing company status or not.
- Be on the good side of HMRC – taxation is a pain in the neck, its complex and strict regulations apply to all companies, including those in the removal industry. Make sure your tax returns are in order and up to date. If necessary utilise the services of a proper tax accountant – this will make a big difference in your business stance.
- Outgoing/due payments – a business generates incoming and outgoing payments on a daily basis. These have to be kept in order at all times – delayed payments don’t speak well of company and management. If your company needs to delay a due payment to suppliers, employees or customers make sure they are notified timely and provided with a valid explanation and a new deadline to receive their money.
- A good in-house accountant – everyday financial management is crucial, especially when making a transition from sole trader to limited company. Keeping the books and accounting for all expenses and cash inflows must be done properly day in and day out – a qualified and experienced company accountant can do this for you properly. If there are discrepancies in your finance flows, and the in-house accountant cannot pinpoint the problem perhaps you need to consider using an external financial expert to do a clean sweep.
Keep your old records
Yes indeed, keeping old records can be a real nuisance but it needs to be done, especially when switching from one entity type to another. Maintain tax and finance records for at least five years back. Referring to old records will help manage the transition and run your new entity much more effectively (avoiding the same mistakes twice for instance).
Keep your staff paid and happy
A good manager/owner always pays his staff first – remember that. Keep staff payments timely and precise – if there are expected delays or the company will not pay full sums due to workers (for some reason) inform your people of the situation, if necessary use personal funds to cover some of the money owed to your staff until matters are rectified.