6 things you should check annually if you’re self-employed

Being self-employed doesn’t usually mean getting an easier ride. Days can be long and tiring, because you must take care of many tasks and shoulder all of the responsibility. Many self-employed people become so deeply entrenched in running their business that they rarely step back, take a breath and carefully consider some key factors.

Although you should probably do it more often, once a year you should take time to take stock. January can be ideal for this, after you’ve filed your Self Assessment tax return and had some time off to rest, relax and take a break from your normal day to day. So, what key factors should you consider, at least once a year, if you’re self-employed? 

1 Business performance

Sounds obvious, right? But, even when armed with figures from their bookkeeping software or Self Assessment tax return, many sole traders don’t take the opportunity to assess their business performance, which is risky. You should know how your sales, costs and profit compare with the previous years. Are they increasing or decreasing? What are the key reasons for any changes? Are things getting better or worse for your business? Assessing your business performance could enable you to learn valuable lessons and perform better in the next 12 months.

2 Accounting procedures

You can’t run and grow a successful business unless you keep a close eye on your sales, costs and cash flow. That’s only possible if you have a reliable financial record-keeping system, one that you regularly update with accurate figures that reveals, at the touch of a button, your business’s true financial health. Is your accounting system up to the job or is it time to update and upgrade? Do you need to up your game when it comes to keeping your financial records current? Could better technology make accounting easier for you?

3 Business systems

The same applies to your other key business systems, so, ask yourself whether they’re still fit for purpose or do you need to improve or upgrade them. All of your systems should function well, save you time, effort and money, while enabling you to take care of things that are critical to your success, such as managing customer relationships, communication, controlling your costs, generating new sales and organising your work and time. Again, could better technology be a game-changer for you going forward?   

4 Tax admin

Do you struggle when it comes to managing tax? Many people do. Does Self Assessment continue to cause you a major headache each January as you battle to file your Self Assessment tax return before the online-filing deadline? Technology can take away much of the pain of managing tax, while you can reach out for support. Crucially, you should ensure that your business is as tax-efficient as possible, of course, which means you’re claiming all of your available allowances and reliefs. The same applies to your own earnings, of course. Seeking tailored tax advice could save you a lot of money. 

5 Business banking

How much do you pay in bank charges every month/year? How could you reduce any interest payments and business banking fees/charges? Although changing to another bank is not as easy as it used to be, you might be able to get a cheaper deal from another bank. Once a year, at least, you should compare your current banking deal with others. You should also arrange to speak to someone at your bank (preferably at your local branch) to find out how you could save money and get more from your relationship. And if you’re still using your personal bank account, setting up a separate business bank account is advised.  

6 Business plan

Many people produce a business plan when starting up, but most fail to ever update it, which renders it useless. If your business plan is to continue to prove a useful tool that helps you to take your business forward, you must update it every year. Your business and its market may have changed massively as a result of the pandemic or other key factors. Take time to consider whether your business plan goals and strategy need updating or rethinking. Once updated, dig out your business plan, at least every six months, to remind yourself of what you’re aiming to achieve and how. It could help to keep you on the right path. Remember: planning without action is futile, while action without planning can be fatal.

And finally…

Also think about yourself. Does your work still stimulate and satisfy you? Are you happy with your take-home or should you be earning more? Would you like to learn new skills and make your working life more varied? What about your work-life balance – does that need improving? Also consider those close to you and the effect your work has on them. Sometimes small changes can make a big difference. 

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