In the Land of Tax – Bookkeeping is King!

In business (especially small business) balance sheets, long term planning and general financial record keeping can take a back seat to customer needs and the day to day running of your business. As someone who has first-hand experience of running a small business, that feeling of feast or famine when it comes to work load – is all too familiar.

It’s a problem shared by anybody who owns/runs/operates a small business, and results in many never having the time to really get a handle on their financials. This problem manifests itself in a number of potentially business destroying ways, from simply not keeping records to never checking the numbers in the first place. The importance of accurate, up to date and readable records can’t be overstated, setting aside matters of tax for a moment; your bookkeeping functions as a data set for the ongoing evaluation of your business. What’s working? What’s not working? Do I have any money sinks? It’s all there in your records as long as you maintain them effectively.

The elephant in the room however, remains tax. Strong financial records are required for any dealings with HMRC. As such, we have compiled a few of tips for staying on track with your bookkeeping so you can focus more on your clients!

  1. Organise your expenses and income

You’ll want to keep a careful record of all of your receipts – this includes travel expenses, receipts for office supplies, invoices from your web/email hosting company, mobile phone bills etc. As well as this you will also need to record your income receipts such as PayPal records and till rolls. You’ll need to enter this information somewhere to make sense of the numbers.

Bookkeeping software automates most of the work for you, and there are several to choose from. Finding the right system that works for you is important, sometimes simpler is better if it means you will use it on a regular basis.

  1. Review your numbers

Keeping consistent records and organising them isn’t just to avoid an investigation, you want to look at trends and numbers that can make or break your business. For example, are there seasonal trends? Are your products/services priced correctly? Are you losing money from a certain product or service that you are providing? Most financial software can help you to put these types of reports together.

  1. Get on top of your accounts receivables

Cash flow problems may not be due to poor sales but down to poor accounts receivables (Sales made but not paid-for by the customers). One way that you can help to avoid receivable problems is to make it easier for customers to pay you. For example, by accepting credit cards and electronic payments. However, it is up to you to invoice your customers as quickly as possible after a sale, and to stay on top of past due accounts.

It is important to have all of your financial information organised in order to submit your tax return! Look at it as a strategic asset to your business rather than something that has to be done.

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