Running an IT company is exhilarating – but the pace never lets up. New releases, client feature requests and security patches land daily, while regulations and taxes keep shifting. Support for IT businesses is therefore not a luxury-add-on; it is the safety net that keeps the servers humming and the founders sleeping.
We are Evans & Partners, chartered accountants and Xero specialists. From our Bristol base we advise IT consultancies, SaaS start-ups and MSPs across the UK. This guide distils what we do every week for clients into practical actions you can take right now.
The scale-up squeeze: why IT finances get messy
Information and communication firms now number about 188,000 across the UK, 6.9% of the business population – and the count keeps edging up (source: ONS, 2024). Competition is fierce, margins are tight, and most founders juggle technical work with finance admin. Three pressure points appear again and again:
- Rapid hiring: Developers and product managers expect offers in days and equipment on day one; payroll must keep up.
- Long project cycles: Milestone invoices often lag behind sprint costs, stretching cashflow.
- Heavy capex: Servers, licences and security tools hit hard, months before revenue follows.
Recognising these stresses early lets you build guardrails rather than fire-fight later.
Cashflow first, profit second
According to the latest ONS business survival data, just 43% of UK tech start-ups make it to their fifth birthday. Cashflow is the usual culprit. Prioritise these habits:
- Rolling 13-week forecast: Update every Friday; share the graph with your leadership Slack channel.
- Prompt billing: Auto-create invoices when code ships in Git or tasks close in Jira.
- Tight credit control: Xero’s automated reminders cut average debtor days by up to 30%.
- Funding mix: Blend retained profit, R&D tax credits and (where sensible) a revolving credit facility so you never bet everything on one source.
Our cloud accounting service streamlines your workflow in Xero, giving you time back to focus on your product.
Support for IT businesses: Smart tax planning
Corporation tax is now 25% on profits above £250,000, with a 19% small-profits rate below £50,000 and tapered relief in between (see HMRC guidance). Meanwhile employer National Insurance rose to 15% on most salaries. Margins shrink fast if you leave these costs unchecked.
Action list:
- Annual investment allowance: Claim up to £1 million a year on eligible kit and servers.
- R&D relief: From April 2025 the merged scheme offers a 20% above-the-line credit – map each sprint’s qualifying expenditure now.
- Salary : dividend mix: Review once personal allowances (still frozen at £12,570) run out.
- Employment allowance: The £5,000 offset still applies; ensure claims are live from the first 2025/26 payroll run.
- VAT: IT businesses crossing the £90,000 turnover threshold must register and file through Making Tax Digital software.
We run quarterly Xero reviews to flag every saving.
Funding growth without derailing equity
Angel, VC and private-equity money are not your only levers. Consider:
- Revenue-based finance: Repay a fixed slice of monthly income – good for SaaS with steady MRR.
- Asset finance: Spread server costs over the useful life, keeping cash in the bank.
- Innovate UK grants: Non-dilutive cash for novel software or AI R&D.
- RLS loans: Government-backed term loans are still available through accredited lenders.
Blend sources to keep dilution and your interest costs balanced.
Building a finance tech stack that scales
A lean, connected tech stack means fewer keystrokes and fewer errors:
- Bookkeeping core: Xero with automated bank feeds and multi-currency if you bill overseas.
- Expense capture: Dext or Hubdoc snap receipts straight from mobiles.
- Payroll: Xero Payroll files RTI submissions to HMRC in real time.
- Payments: Stripe, PayPal or GoCardless collect cash instantly and reconcile automatically.
- Business intelligence: Fathom, Syft or Xero Analytics Plus turn raw ledgers into board-ready visuals.
We build and support these systems so founders can pull live KPIs with minimal fuss.
Real-time reporting: What to track and when
Weekly:
- Cash at bank
- Debtor days
- Sprint or project burn rate
Monthly:
- Gross margin by service line
- Recurring revenue growth
- Payroll-to-revenue ratio
Quarterly:
- Customer acquisition cost versus lifetime value
- Capex run rate
- Tax provisioning versus forecasts
Publish the live dashboard to your main leadership communication channel – pin it so no one can claim they missed the update – and make it policy that every head of department adds a short note within 24 hours outlining wins, concerns and next actions. Writing that quick summary sharpens their thinking, surfaces snags before they grow and turns “my numbers” into “our numbers”. When everyone can see the metrics in real time, excuses fade and performance picks up.
Governance and risk: Keeping HMRC and investors happy
- Cyber essentials certification: An increasing prerequisite for public-sector contracts. Costs are deductible.
- IR35: Hiring contractors? A single misclassification can trigger six-figure liabilities.
- VAT MTD: Digital linking rules now apply to every VAT-registered business, no matter turnover.
- Audit threshold: Once turnover tops £15 million, statutory audit kicks in. Plan for the additional cost and timetable early.
Good governance does not stifle innovation; it underwrites it.
When to bring in outside help
DIY bookkeeping works while revenue is small and transactions are few. Warning signs you have outgrown it:
- Month-end takes more than two days.
- You cannot explain gross versus net margin to potential investors.
- HMRC deadlines feel like cliff-edges rather than checkpoints.
- Your lead developer now spends Fridays on invoices.
Ready for reliable numbers?
Support for IT businesses includes more than simply filing tax returns. It means money in the bank when payroll hits, tax paid at the lowest legal rate and live dashboards you can open on your phone while the build pipeline runs. With our team in your corner you get a dedicated manager, a cloud stack tuned to your workflows and proactive alerts that flag hiccups before they turn into outages. Investors see board-ready numbers, developers see approved kit budgets and you see a calm bank feed instead of a red overdraft line.
We meet you every quarter – or more often if you like – to reset forecasts, review R&D claims and refine that salary-dividend split as rules evolve. This gives you freedom to code, hire and pitch without second-guessing the figures.
If that sounds like the foundation your next release needs, book your free consultation now and let us deliver support for IT businesses that turns insight into advantage.
