Bookkeeping is usually not the most exciting part of running a business, but it’s vital for those whose favourite part of business is making money.
If you’re not really a numbers person, then bookkeeping must look a bit tricky. However, we’ve put some simple tips to help you get started and organise your finances well.
Keep your personal and business expenses separate
This is easy to neglect in the beginning when it’s simpler to just keep everything in one account. However, things can very easily get mixed up and confusing. When you need to track expenses and transactions, you’ll need to wade through all your personal ones to pick out your business ones.
When it comes to recording all your expenses and working out how much tax you owe, having separate accounts makes things so much simpler.
Use bookkeeping software
Some people are more than happy to use spreadsheets or even pen and paper to do their bookkeeping. While it’s better than nothing, Making Tax Digital (MTD) will soon be upon us.
MTD is a government initiative to get everyone to submit their tax returns digitally on a quarterly basis. Businesses will be required to do this by 2020 so getting ready now would be our advice.
The best way to get ready is to use bookkeeping software, preferably cloud-based. Cloud bookkeeping software enables you to record transactions and expenses efficiently so submitting tax digitally becomes a breeze. Software like this allows you to automate a lot of processes that otherwise take up your time and energy too.
Put aside tax money
The last thing you need is a whopping tax bill surprising you at the end of the year. So many newbie entrepreneurs make this mistake and then scramble around to get the funds to pay what they owe. Instead of putting it off, put aside a percentage of everything you make and don’t touch it until you need to pay your bill.
Do regular check-ups
Try to review your books at least once a week to ensure everything is in order. Leaving your books until the end of the year or quarter often leaves businesses with unbalanced books with unpaid invoices and bounced cheques left forgotten.
Weekly check-ups are a good habit to get into so you can spot errors before they become bigger problems. However, another check-up is also important.
Many business owners do a quarterly check where they identify trends in revenue, compare performance to previous years and think of ways to improve next quarter. It’s best to sit down with an accountant to have a discussion like this if possible.
While it may be a stretch in the early days when you’re keeping costs down, hiring an accountant can help you save time and money.
With your accounts being managed by an expert, you can spend more time on your business and less time stressing over your finances. An accountant can also help you to become tax efficient and save money.