Accounting Tips UK Franchises

Simple accounting tips for UK franchisees

Unless you’re a qualified accountant or experienced bookkeeper the accounts function of your startup business is sure to be worrying. Indeed, accounts assistance and simplification is one of the main reasons many franchisees take on trending franchises. This is because all the heavy accounting tasks have already been completed in franchised businesses.

When you buy into a franchise, you will take over an existing brand, very often with the day-to-day administration activities scheduled and in place. Despite the fact that admin tasks are listed and scheduled within your franchise operations manual, you will still need to produce accounts, and also self-assessment tax returns, and the simple tips noted below will prove valuable. ts don’t fall on the shoulders of individual franchisees.

Accounting tips for franchisees

One of the most important accounting tips for all new business owners is to stay on top of record-keeping by setting a specified amount of time aside for finances each week. It will surprise you just how quickly your accounts become messy if you don’t do this.

If your franchisor did not provide accounts training and a basic accounts software package, then opting for a cloud accounting package like XERO will simplify your finances over the long term. In fact, moving into accounting via the cloud could be the perfect business solution for most franchisees anyway. This is because you can access your accounts from any internet-enabled device in any place, and it’s a simple matter to share files with professionals, such as accountants.

How do I account for my franchising fees and royalties in my accounts?

When you are acquiring the licence to operate your franchise you probably needed to pay an upfront fee. This tends to be the largest investment that franchisees make in their businesses. From an accounting perspective, you won’t be able to claim back the entire fee within the first year of trading. This is a capital investment, and, therefore, you can claim a large percentage of the costs against first year profits and will then need to amortise the remainder of the fee over several years. Your franchisor will be able to help with basic accounting details, or you can access the information needed direct from the HMRC website.

Many franchisees pay regular royalties to franchise owners, these could be monthly, weekly, or quarterly for example. The royalties relate to ongoing use of the brand’s trademark and all other materials. Your regular royalty payments can be entered into current year accounting at times invoices are received, with the total entirely claimable in the period.

Check out the entire range of franchises for sale and resale at Franchise UK today to discover the variety of business options available in your locality.

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