When you first
start your craft business, you may not have thought in any real
detail about how you are going to organise your finances. This
is often because it is a hobby or an interest, that you are
testing the water with. Perhaps creating enough stock for one
craft fair to see how things work out. If things go well, you
will want to do more.
Accepting Card Payments Online?
One way to accept card payments online, is to sign up
for a PayPal business account. You can start accepting credit
and debit card payments instantly. You will also have a range
of merchant banking tools to use. As there are no setup fees,
it can be a good way to get started.
Accepting cheques
If you are accepting a cheque at a fair, make sure that it is
secured. Here is one of the good reasons for having a business
account. People can write a cheque in your business name rather
than a cheque directly to you.
Where to start?
The basic thing to remember with any business is to spend less
than you make. So, keep track of what you are spending and what
you have earned. If you don't the numbers will start to
blur. Else, where you thought there was profit, may actually
be a loss. This is one place where the business account can
really help. If you only use the one business account for all
your earning and expenditure, you will automatically have an
easy to analyse list.
Having a simple list will help you look back a review your
spending. This could really help you increase your profits in
the future.
Investing in yourself
If you want to get started how much money do you need? Money
for your business can only come from two sources either you
or someone else. If you are financing yourself, you can be a
little over generous, make sure you are going to be able to
give yourself the money back. If you a borrowing from some else,
hopefully they will ask you enough questions to make you think
about how you are going to pay them back with interest.
There is an art to borrowing money. You need to keep your borrowing
at the correct level. Too much and all your profits will be
eaten up by interest payments. Too little and you may not be
able to function effectively.
Do you need a credit card?
You can use a Visa debit card for example and
therefore not need to have a separate credit card.
You could have an overdraft or take out the credit
card if you need a form of credit. Always remember
that every time you use credit you loose some of
your profit. However, some credit can be good and
make sure that you can honour your commitments.
Tax account
If you are running a very small business and do
not have another income you may not need to pay any
tax. However, you will need to show that you are not
earning enough. Alternatively, you may want to start
something bigger or are running a local fair or a
craft club or even setting up as a craft supplier.
If you expect you will need to be paying a sizeable
tax or other bill it can be a good idea to have an
reserve account set up, that pays you a little
interest. It also keeps the money you need to cover potentially large payouts, on one side. This will help you to avoid a cash flow crisis.
Many people just start, taking a hobby and using it to earn
a few pounds at a local fair. Others may have a business plan
and a full time business in mind. Which ever end of the spectrum
you are, it is vital to be organised and to know your goals.
Your goal could be to make a profit, earning enough to go on
holiday or to earn a full time wage to support your family.
Business Bank Account
We believe that having a business bank account is part of the
getting organised process. You may be using a trading as name
and having the business bank account will mean you can receive
payment both in your name or in the name of the business. Both
your incomings and your outgoings will be from the same bank
account. You do not have to have a business bank account but
it really does help. You may choose to use your personal account
but quite quickly the accounts will be difficult to manage.
Where you are going to store all that money you make from
selling your products or service. Also, how you are going
to pay for material, table fees, craft insurance
and travel etc.
Business bank accounts are more expensive to run
than a personal account. You should be able to get
free banking for the first couple of years. However,
when that runs out you will have to pay. It is worth
thing about your product and where the back fees.
With craft businesses being easy to start and
easy to move between hobby and business, you could
be fooled into the
You may want to bank online to save yourself time and effort
but may also need a branch to go into.
Where to bank
Choosing the right bank for you is important and it is a personal
choice. We had a choice of two major banks that had branches
near to where we lived and had online banking facilities. We
chose to have a business account with the same bank we had our
personal account. It made transfers very quick and easy and
meant we only needed to deal with one bank.
You can shop around for good deals, i.e. longer free period,
more interest etc. However, remember that these offers change
all the time and what is a good deal today may not be a good
deal tomorrow.