Maintaining accurate financial records is an essential part of running a business. It is important to establish a system that works for you and that can be managed with ease, to ensure you are always on top of your finances.
Here are some top tips that may be useful:
Start from the outset
Don’t let receipts build up, or make sales assuming you’ll remember to note them at a later date. It is much easier to log the relevant information as you go along, and it will mean you always have an accurate picture of your finances at any given time. You don’t need to have a complicated system – a simple excel spreadsheet will function perfectly well. If you’re using an accountant, then double-check that your system will integrate with the one they use. Set aside time to update your financial records and make a note of key dates in your diary, such as the deadline for self-assessment tax returns.
Attend a course
There are many organisations offering bookkeeping courses, and HMRC runs free online courses that cover a number of useful areas.
Use a business bank account
This is important to ensure personal finances do not become mixed up in the business and also helps you to see at a glance how the business is performing.
Make a note of all expenses
It is easy to overlook small purchases such as train tickets, stamps and stationery so make it a habit to keep all receipts. Tracking expenses will also help to ensure you don’t miss out on tax-deductible expenses you may be able to claim for including mileage, magazine subscriptions and a proportion of certain household expenses if you work from home.
Set aside money for paying taxes
Putting aside the money you will owe for tax from each payment received will ensure the money is there when the time comes to pay the tax bill.
Check the bank statement
This should be done once a month so you can see where the money is being spent. It also helps to guard against fraud or mistakes by the bank.
Bookkeeping doesn’t need to be hard work, especially when a business is small. If it does become too time-consuming, then seek the services of a certified bookkeeper.