OUR TOP 10 BOOKKEEPING TIPS FOR SMALL BUSINESSES
Your Tax Shop is aware that not many small business owners understand the importance of up-to-date bookkeeping and how this can benefit your business. We believe that no business is too small for a bit of bookkeeping! However, when you’re new to business and just starting out, it can be hard to know what you need to do, or even where to start… That’s where we come in to help you get to grips with new software and processes. With that in mind, here are our top ten tips for anyone who is new to bookkeeping or business in general.
- 1. Make sure you have a business bank account set up if you’re a limited company or a separate current account if you’re self-employed – It doesn’t matter if you only have a handful of expenses and one sales invoice per month… get into the habit of keeping things separate to your personal incomings and outgoings! It will help you understand your financial data better and will also help should HMRC ever make an enquiry into your tax affairs.
- 2. Ditch the cheque book – Have you ever wondered to yourself where the cheques went after you’d received them or forgotten to bank the cheques altogether? For audit trail purposes, they are also a nightmare. Is there anything worse than receiving a cheque and not being able to understand someone else’s handwriting?
- 3. Keep an eye on the cash – It’s extremely easy to get paid £100, put in your wallet and then before you know it, it vanishes! From a bookkeeping point of view, cash can easily go “off record”. This means it’s harder to know if a sale has been paid and to provide if this cash has in fact been spent on expenses. So, this can mean your figures are less reliable and could result in you paying more money to the taxman!
- 4. Talk to an accountant – You will more than likely end up paying more in tax by doing things yourself or procrastinate so much that you fall behind with legislation and deadlines.
- 5. Save for your tax bill – Get into the habit of putting a little money aside each month for your tax bill. Your Tax Shop would recommend for you to open a separate account for this. Also, try and get your accounts completed as soon as you can after the year end, so you have plenty of time to adjust your savings and have the money ready!
- 6. Don’t use your business bank account for any personal expenses – Every so often, we see a sneaky gym subscription appear… or maybe the odd trip on holiday. Keep your business account for business income and expenses only. Try to take only lump sums from your business account. It all helps to calculate and plan your cash flow.
- 7. Set some time aside to complete your bookkeeping – Gone are the days where a box of receipts will make your accountant happy, now that HMRC have their sights set on Making Tax Digital. Don’t however feel as though you should rush onto a cloud software package that doesn’t suit your business needs. Keep it in mind however a simple Excel spreadsheet is a great place to start.
- 8. Record your sales and keep an eye on turnover – Keep it simple. Your Tax Shop recommends that you keep a track of the customer’s details, date invoice was raised and then date paid. This will easily identify slow players, non-payers and fantastic payers! It’s also important to keep an eye on your level of sales as the VAT threshold is calculated on a rolling 12-month basis, therefore this isn’t as simple as looking into once a year when your accountant prepares your accounts.
- 9. Keep an eye on your profits – Are jobs taking longer than expected to complete? Are they costing you more than originally anticipated? If something is going wrong with your pricing, the quicker you can correct it the better!
- 10. Keep on top of bad customers – Monitor your debtors reports on a regular basis to iron out any cash flow problems due to late payers. A bookkeeping software is a handy tool to use for this!
Are you considering setting up your own business or taking the leap onto a bookkeeping package? Here at Your Tax Shop, we understand that bookkeeping software is not a ‘one size fits all’, which is why we offer a variation of packages to suit your business’s needs. If you’re ready to get started and make bookkeeping a breeze, call us today on 0161 339 5689 or book an appointment!
Your Tax Shop are here to make tax easy by simplifying technical terms and jargon into a much easier way to understand. We take great delight in offering an exceptional level of client care and are always on hand to help as your business flourishes and grows.