The life of a small business isn’t easy, your day is packed with jobs and other activities that need to be done, but they may not always be how you would like to be spending your time – keeping on top of your accounting is generally one of the least favourable tasks! But there are some steps you can take right now that are both easy and can set your business up for plenty of success.
Here are some small business accounting tips so that your finances are always on track…
- It’s not personal, it’s business:
Always keep personal and business transactions separate. Instead of throwing everything into your personal account, take the simple step of opening a new bank account for all of your business stuff. You will be more organised, your personal finances can stay personal and your business transactions will be easier to find in your business account. No more wasting time shuffling through endless receipts.
- Keep it Tidy
Some people like a bit of clutter and others can’t work if their documents aren’t neat, tidy and organised. That might be great in your personal life but when it comes to your books, try and keep them in good shape so you’re not wasting time looking for them when they’re all over the place.
Neat and tidy records mean you waste less time searching and more time doing, well, whatever else you want to do. When those sneaky tax deadlines are getting closer, you’ll be glad that you took a little bit of time to make sure that you kept your records neat, tidy and a lot more organised.
- Remember and Stick to Tax Deadlines
Speaking of those sneaky tax deadlines, whatever will help you remember that the tax deadline is approaching, do it. Phone reminders, a countdown – anything. A looming tax deadline can be quite stressful, especially if you’re rushing because you forgot and any mistakes made can take longer to process.
It’s really quite a simple step. Set a reminder beforehand so you give yourself enough time to actually complete your tax returns without any mistakes and the rest is a breeze. HMRC won’t be on your case, your records will be accurate and you can forget about it until the next deadline.
- Keep All of Your Receipts
Keep any business-related purchase receipts so that you can claim for any business expenses. It all depends on the type of business yours is as if you’re working from home, then you can claim back some domestic bills, for example.
It can be anything from stamps to stationery. Keep hold of any business-related purchases or expenses and file them in those neat and tidy records we mentioned earlier.
- Go to a Free HMRC Workshop
Find out if there’s a workshop being held in your area and tag along or check out their e-learning tutorials so that you gain some more knowledge on aspects that actually matter to you.
It can be introductions to VAT, setting up a limited company, online filing and that’s just scratching the surface. You might just find something really useful to you which can be a massive help.
- Budget for Tax
Even though you might be rolling in the big bucks and made a profit, not all of the money is yours as you’ll need to hand some over to the taxman. A good rule to follow is that you budget for this as you go along so that you’re not massively shocked at the end of the year.
If you have a savings account or something similar, set a little bit of your income aside so that you can easily pay off your tax bill without any worries and enjoy the rest of your profit.
- Get to Grips With Tax Rules
When it comes to tax, it’s important you know exactly which ones apply to you and your business so you know which types of tax you’ll actually need to pay. Income tax, National Insurance, Corporation tax, VAT and business rates – do your research into all of them so you know what you need to pay.
- Create Profit and Loss Statements
A profit and loss (P&L) statement basically gives you a snapshot of the financial health of your business. It’ll summarise the expenses, costs and revenues of your business during a specific time to satisfy HMRC and their requirements.
It should include information such as your gross profit, net profit, operating profit and your profit before tax. This makes it a lot easier to show revenues, costs and how much profit your business has made, usually over the last 12 months.
- Use a Digital App
There’s an app for pretty much everything nowadays, so it comes as no surprise that there are bookkeeping and accounting apps you can download to keep your incomings, outgoings and taxes properly organised. This makes it a whole lot easier for you to manage your financial records.
With the Making Tax Digital deadline approaching, you’re going to need to take relevant steps towards using technology which makes it easier for you to get your tax right and keep on top of your affairs. This helps make your entire process more effective and efficient. The best part is that using the right software means you don’t even need to be the most tech-savvy business owner out there. Some are designed to stay simple and sleek so that only the features that matter to you are used and you won’t be overwhelmed when tax season approaches.
Overall, it’ll give you more peace of mind that everything is organised and ready to submit, leaving you more free time to focus on making more of a profit.
If you need to get back on track with your accounting, please do get in touch with us here at DNA Accountants we are always happy to talk business.