Running your own business, whether you are a sole trader or a Limited company, is no easy task. Maintaining correct and accurate financial records might seem daunting. It is however an essential part of running the business. HMRC can look at company records at any time so it is essential to keep on top of things. And, it’s important for you to know how your business is doing!
If you struggle with organising your bookkeeping you might find these 5 tips useful of how to get ahead with your financial record keeping. Once and for all!
#1 Get into the habit – set aside time every week or month to do your bookkeeping. Many small business owners can’t side aside regular time ‘off’ during the week so use time in the evenings or at weekends.
#2 Keep your paperwork safe – Get used to keeping a piece of paper for everything you buy. If you buy something online print off the invoice. It’s easier to collect paper as you go along, rather than try to find it years down the line. Have a box that every receipt goes into. If your receipts are all over the place, it will make your bookkeeping an even harder task!
#3 Keep business and personal bank accounts separate – If you run a limited company, the business’s money is not your own – even if you own it 100%. As a director you can’t spend the company’s money on your own purchases, unless they are a legitimate business expense. As a self-employed person you take drawings from your business, but you should still maintain a separate bank account. Keep your accounts clean by keeping your business and personal finances separate.
#4 Use online Accounting software – Using good, cloud based, software, which your accountant also has access to, will save you time and money. Packages allow you to create invoices, track payments and VAT and manage stock levels, so you and your accountant can keep track of your financial information in one place.
#5 Budget for tax – It is easier to budget for Tax as you go so you don’t get any great shocks at the end of the tax year. Open a deposit or business savings account and put money aside for your tax. Saving 25-30% of all income you receive is likely to mean you’ll easily be able to pay your tax bill.
It is worth remembering that you need to keep all paperwork including invoices and receipts for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax.
Being in control of your financial records gives your business the best chance of survival. It ensures you have control over your business rather than the other way round! Our friendly team are always happy to sit down and talk to you about good record keeping methods whether you are a new business start-up or an existing business.
Call us today on 01509 816150 for a FREE no obligation consultation. And start making the most of your time!