Do you run your own business?
Maybe you’ve just started out or you’ve been doing it a while but, those small issues like accountancy still boggle your mind. Maybe you haven’t settled on a Bookkeeper or an Accountant and you’re not sure whether that’s the right step for you at the moment.
We thought we’d give you some small tips around accountancy that may help you and your business.
A great long-term investment is always to speak with a Bookkeeper or an Accountant to ensure you’re doing the right things for your business but in the meantime take a look at some of the advice we have here.
Open a business bank account or at least keep your personal and business finances separate, this helps you to easily define what is actually for your business alone.
Record all of your incomings and outgoings. Understanding your cashflow is highly important to ensure you know how well your business is doing financially.
Your expenditure and invoice payments can be recorded on a basic spreadsheet however using simple software can be much more efficient and also easier to see your results. Some most popular software tools are Xero, Freeagent, Sage and Quickbooks.
If you have a business bank account with Natwest you can use their Freeagent software free. It is a great one to download, you can record and reconcile your payments, send invoices and import bank statements. Even if you don’t bank with Natwest you can still use their software, prices start from as little as £9.50 a month and you can always take advantage of a free trial.
Xero has recently introduced a new app called Hubdoc which is free for all Xero customers.
Hubdoc converts all of your paperwork into usable data to enable you to be able to use it easily without storing receipts and invoices in a paper format, this is a great tool to save time and space.
Xero pricing starts at £10 a month however there is a limit to the volume of invoices you can send so do make sure you choose the correct package for your business.
Sage has been known to be an expensive and complicated system to use, however more recently it has become more suitable for small business owners, prices start from £12+VAT a month and also includes sending invoices, payroll can also be added for a small cost each month.
Quickbooks is another great finance software that can be used for small businesses to track incomings and outgoings as well as sending invoices. Quickbooks pricing also starts at £12 a month and includes everything a small business owner needs to record their finances.
Once you have chosen your software it’s important to ensure you use it regularly to record your transactions. The more often you use it the less time it will take you to complete your end of year tax return.
We’re not saying you need to fully understand absolutely everything but make sure you do know which taxes apply to you and your business. If you are making a profit you will need to pay taxes and you’ll need to understand how much, so you’re not surprised when you have to do your tax returns at the end of the year. Taxes may include Income Tax, National Insurance, Corporation Tax and Business Rates.
Take a look at HMRC’s website, here, it’s full of useful information.
Create a cashflow document, Microsoft have a simple template you can use which, once you’ve entered your figures, will help you to understand your cashflow and plan for the future.
There are also many other templates that can be found just by searching online.
It is important that you regularly update your cashflow as things may change. Make it a habit to complete your finances and cashflow once a month and it will save so much hassle when it comes to the end of the year.
Once you have your cashflow document completed and you’re updating it regularly you can now look to preparing for the future.
Being prepared for high expenditure is important, knowing where this comes from can, in some cases, be predicted. For example, maybe your computer equipment is aging, and this may need replacing, by understanding your cashflow you can work out when the most suitable time to do this will be.
Hire a Bookkeeper
The above information should give help you to work on your finances and understand them more comprehensively. Completing your own finances can be time consuming, especially if you have a high volume of transactions, if you are finding this is taking up too much of your time hiring a Bookkeeper can be a great option. There are so many independent Bookkeepers in the local area who can organise your finances for you.
Bookkeepers are a relatively cheap option, they can record your expenditure monthly (or weekly if need be), send your invoices, chase debt, complete payroll and organise it all in a suitable way to ensure your end of year taxes are ready to be completed.
Bookkeepers do not usually complete tax returns, but will compile data for these, this data can then either be used for your tax returns yourself or sent to an accountant to complete on your behalf.
By following these accounting tips, you’ll ensure that your company is financially healthy now and for many years to come.