Bookkeeping is one of the areas of business that many business owners struggle with, and unfortunately, some people find it all too daunting and end up getting into hot water with HMRC as a result. Getting yourself organised and staying on top of the paperwork doesn’t have to be such an onerous task, if you start with a good system and make sure you have all the right information in place.
Keep accurate financial records
It’s worth talking to an accountant to make sure that you’re keeping the records you need for your specific type of business, but in general, all businesses need to keep records of:.
- Sales Invoices – You need to keep a copy of every invoice you send, either in Word, using an online accounting tool or computer package. Each invoice must have a separate reference number and you’ll probably find it’s easiest to store them in chronological order
- Purchase orders/invoices – Keep notes of how and when all invoices are paid, and either print them off or keep them electronically in chronological order.
- Bank statements – See at a glance which payments have come into your account and keep an eye on what’s going out. If you update this regularly it soon becomes second nature, and you can also use it to help forecast peaks and troughs
Keep your receipts
Any business can be subjected to a VAT or tax investigation, and the better your paperwork (and accountant) the less you have to worry about.
If you buy something online, save or print the invoice, and keep your receipts for anything you buy in person.
Keep your accounts clean – and keep your business and personal expenses separate.
(Also remember that if you run a limited company, technically the business’s money is not your own, and even if you’re the only director you can only spend company money on legitimate business expenses.)
If you’re self-employed, it’s advisable to keep a separate bank account, and keep your personal finances separate. This doesn’t need to be a business account, a separate standard current account is sufficient.
Check your business bank statements regularly
Ideally, go over your business bank statement every month. It’s a great habit to get into, and not only do you spot any errors straight away, it also gives you an idea of the general cash flow, which helps if you need to give financial forecasts or apply for finance.
Do your bookkeeping regularly
Try and set aside a half day or few hours a week to sort out invoices, receipts and cash records. If you need to do this outside of your normal working hours, make it a regular day and get into a habit of doing it. Don’t just put it off…it only gets harder the longer you leave it!
Consider investing in bookkeeping software to make life easier – some online systems let you store invoices and receipts in the Cloud so you never have to worry about losing paperwork.
Think about hiring a bookkeeper or an accountant. A good accountant will save you time and money in the long run. An expert bookkeeper will be able to get to grips with your business finances in no time, and while they are sorting the numbers out for you, you can be earning money doing what you’re good at.
The Institute of Certified Bookkeepers has a list of qualified bookkeepers, or you can find someone suitable via word of mouth recommendation. When you’re looking for an accountant, look for someone who is registered with the ACCA.
All data and information provided in this advert is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Emma Stevens Accountancy Ltd makes no representations as to accuracy, completeness, correctness, suitability, or validity of any information in this ad and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.