Business Growing Pains: The Money Bin

Previously: Let me start off by saying; I do not know it all. I have not made it and don’t even for one second pretend that I’m the end product. But I do believe that the struggles I’ve dealt with are not inevitable and that if someone had been able to tell me these things when I first started out, I would have got to where I am at, a lot quicker.

I cannot believe how antiquated the business world is. We are living well into the second millennium and we are still running on a system built by people in the first one. I hope that these stories may help anyone that reaches the same stage I am now at. Warnings, really. What to expect. And how to avoid them. So, on then, with the Business growing pains (Read full prologue here).

Eight years and nearly eight successful self-assessment tax returns. I’ll admit, it was a bit of a learning curve to start with. The terminology alone used by the HMRC is a hurdle the size of Everest. The text may as well have been hieroglyphics to any self-respecting new self-employed individual. Gradually, with the help of Google and business friends, over time this got easier to understand. Eventually I had a system in place where each years’ tax return was a doddle. So-to-speak. Paying back the tax, not so much, but at least I knew where I stood with the strange terms coined by the HMRC.

Enter 2017. This year, things needed to change due to the nature, gradual growing success and time availability for my business. I needed to open a business bank account, I needed to register for VAT, go on as a Limited Company and I needed to move my websites to a dedicated server. Lots to do in a short space of time. As it happened, I concluded that all-at-once was impossible – so I staggered the processes to ensure successful implementation.

But these hurdles, and more, have brought some serious drags in my time and energy as a business owner. Things that should be easier and things that are complicated immensely by big-dog-companies (who should have a responsibility to make easier for younger businesses). Sadly, its the aforementioned big-dog-compamnies that maintain and add-to stresses and obstacles for the underdogs. But if I can share my experiences to help others that may suffer the same obstacles – then perhaps this is all a little more worthwhile. And I’m starting with the biggest dog of all. The bank.

> The Bank
Day one of business. Pencils sharpened and paper all neatly stacked. I was ready to go. It wasn’t long before work starting filling up my days and deskspace. I quickly realised that I needed to schedule time for admin work. Things like accounts and invoices. That kind of thing. Before long it became the day that I dreaded. I don’t know if everyone feels the same way, but the thought of sitting in front of an Excel spreadsheet mindlessly adding in figures and chasing up bills didn’t really scream ‘adventure’ like the self-employed lifestyle promised. I guess that’s why a lot of people get bookkeepers. All very well if you can afford one. I couldn’t. Not at the time.

So I approached the bank. Partly for advice and partly because I felt the urge to create a bank account in my trading name. And you may have any number of reasons for doing the same thing. Whether it be to start a business account, gain business advice or (and I would advise against this where possible) a startup loan. Either way, hopefully your experience would be better than mine.

Remember the original Ducktales? Not the 2017 reboot that Disney are planning, but the classic cartoon and comic that ruled kids TV on a Saturday? Remember Scrooge McDuck and his money bin the size of a sky-scraper. He’d just open that vault and swim around in his gold. Well imagine the person I met at the bank as a greasier, well suited twenty-something-year-old hybrid of Gollum and Scrooge McDuck after he’d just been for his morning swim in the bank vault. His eyeballs glowed with dollar signs and smarmy words oozed from his mouth.

After showing me to a seat in a back room, the discussion began. He asked a few questions but really, he may as well have just asked the one he wanted to know. “How much money are you going to make us?”. At least that’s what his body language and half-smirked lips read. As soon as he realised there would be no scope for the banks’ gain in me opening a business account, he basically went on to discredit me and my business. He may as well have patted me on the head and said “Good for you, giving it a go. Don’t bother the big boys though, we’re really busy polishing our gold and swimming in £50 notes”. So, I didn’t get a business account. Perhaps my first mistake. This is something I should have done a while ago. For the sake of my own accounting and for the sake of customers’ accounting.

Flash forward to quite a few years later. Time to open a business account. I’m well into my term as a business owner, and I’d held off as long as possible (for no apparent reason – perhaps added hassle of speaking to the bank again). Now that my automated website with its own business name shows up on customers’ bank accounts as my personal name (who they’ve never heard of) – it was time too jump to business accounting.

At this point I made my second mistake. Assuming all banks are the same. So, by logic, I just chose the one that I was personally banked with at the time. Problem: this particular bank suck and they certainly don’t care. I’m sure all banks are reflective of these character traits – but I doubt many (if any) are as bad as Lloyds. Solution: shop around for business banking. If anything, it’s less about cost, than customer service. Especially when you are unsure about how the process works.

To register a personal bank account is easy enough. Longwinded, sure, but click-click-verify-done. Banks love to sit on your money. But to register a business bank account, it’s a whole other ball game. Terms like ‘expected turn-over’, ‘pricing plans’ and ‘verification devices’ are thrown around in every other sentence. Which is fair enough consider the circumstances. But I am now a business customer. I now have to pay the bank to make interest on my money (!!). So surely I should receive a better service – or so you would think. Not true. Longer phone line waiting times. Unreal postal delivery times and customer services reps who literally know less than me about the accounts they sell. The same accounts that I’ve only had for two weeks.

Now, I know, this is very specific to the bank that you go with. I can’t vouch for other banks, which I truly hope service is better. And this isn’t a rant against a specific company, but just a few lessons to anyone following in similar business paths. So here’s what I’ve learned about The Money Bin. At least so far:

1. Don’t get intimidated. The bank may be a big dog, but when it comes to you and your business – it has little or no say in your eventual success. Just like every other voice out there, there’s a high percentage chance that they’re gonna look down on you. My mistake was to dig my head in the sand, knuckle down as a sole trader and not go with my gut when it came to setting up a business account. There weren’t huge consequences, but as a principle, if I’d listened to some of the other negative voices – I’d never had achieved anything. Take, for example, my media teacher. She told me I wasn’t cut out for Media and that I should consider other options. After just 6 months of teaching me. Not to get cocky, but I’m really glad that I didn’t listen to her.

2. Get a business account early. So much gets put in place over time as a business. Standing Orders, BACS payments, PayPal accounts and of course your own accounting system. It can be extremely time consuming to switch this over mid-workflow. Especially when you are a few years into things and the above ‘things’ are all going strong.

3. Shop around. I wish I had. It’s too much hassle for me to change now, but your business account isn’t like a personal account, it’s more like a product. And when you treat it that way, it’s easier to compare between banks and various account types. A lot of banks offer free accounts for the first year. And the CO-OP bank offer a free business bank account -peroid- (hindsight would dictate I should have gone with these guys. You can read up on them here). Don’t fall into the trap of thinking there will be any kind of advantage for signing up with the same bank as your personal banking – it will make no difference. So don’t do anything out of bank loyalty.

4. Get the right advice. Banks boast that they want to help new startup( businesses)s, but a lot of these statements are empty promises to get you into their system. They know how much hassle it is to change a business bank account once you start one up, so if they can get you on their books, they’re laughing. Startup business is a brave new world for any new adventurer, but getting alongside someone who has walked the path before you is massively beneficial. Reading up on new business. And always asking if the advice you are receiving is biased in any way.

5. Get your Accounts and Bookkeeping in order. Easy statement. Not easily implemented. There are two parts to accounting (three, if you include actually paying the taxes!). The first is Bookkeeping. This is the day-to-day records of your business’ transactions. The second is the annual accounts, which will be submitted to the HMRC as your tax return. And the third, if you like, is actually paying the tax that the HMRC will calculate for you. Getting a Bookkeeper or Accountant is obviously the easiest solution and, generally the best, but for many newly self-employed individuals it’s too costly. It’s worth hunting around or asking friends as they may have contacts with mates-rates or even specific tariffs catered to small businesses. But assuming you want to do it yourself, there are some pointers I would recommend adhering to and that’s where my next pain begins – The HMRC.

There are so many things covered here, and so many more things I could say. This post is in specific relation to money management with the bank, but I do intend on writing a separate post on Money as a stand alone post. In the meantime, I hope this all helps a little. A little more than the bank did for me back in the day!