Growth is something that the majority of business owners are aiming for. Most entrepreneurially-minded individuals will admit that they won't be happy unless their profits grow each year - something that comes from expansion.
However, growing a business takes a lot of planning and preparation - particularly when it comes to financial management. In fact, the best methods of managing a business' earnings can change quite significantly once more money starts to come in.
Business bank accounts
A start-up business might only require a basic business bank account. An account that offers easy access to funds, a healthy overdraft and no monthly charges is ideal. In fact, many small businesses can profit from choosing an account which has no fixed fees, but charges for every transaction made.
Yet as a business starts to grow, owners may feel the need to begin investigating the perks of higher-level accounts. It's also worth considering an investment in an account that offers more attractive interest rates or a larger overdraft, helping businesses make their growing profits work harder.
If business owners do decide to approach their bank for an upgraded bank account, it is often necessary to provide a full, detailed history of the company finances - meaning preparation is key.
Of course, with increased profits comes increased amounts of tax - but the key to paying the right amount of tax is to immediately notify HM Revenues and Customs (HMRC) of any changes made to a business.
As companies grow, often their statuses change; perhaps becoming a limited company, sole trader or partnership. As the government charges different rates of tax for each, it is vital HMRC is made aware when a business' structure changes.
Additionally, if entrepreneurs decide they need to boost their workforce - perhaps by taking on a second body or many more - their business needs to be registered as an official company. This will involve sending the relevant documents to Companies House, including the annual return AR01 form.
It's worth nothing that when registered as a 'company', a business will have to pay corporation tax; however if its annual profits don't exceed a certain amount (currently £300,000), only the 'small profits' rate will be applied. In 2012-13, the small profits rate was 20 per cent, whilst the full rate was 24 per cent.
Changing from one legal entity to another could also mean that business owners have to pay capital gains tax or stamp duty on any assets. However, don't forget that most 'essential' new purchases made as part of business growth could be tax-deductible.
Hiring an accountant
Inevitably, changing the structure of a business or claiming on tax-deductible purchases can become complicated. Once a business grows to the point where these things should be considered, it might be useful to hire an accountant.
Accountants are skilled and experienced in all matters financial, so can offer entrepreneurs the advice they need to navigate growth successfully. Admittedly their services don't always come cheap, but it's an investment that really is worthwhile and if business owners plan to continue their expansion, this support may prove invaluable.
Taking a small-scale business into the medium-scale realm can be daunting, but with the right preparation, planning and guidance, business owners should be able to reap the full benefits expansion brings - without any financial surprises.