By keeping detailed records and opening a bank account just for business transactions, you’ll find that your bookkeeping is easy and straightforward. Follow these tips and the others in this blog and you’ll find you can spend less time worrying about the books and more time focusing on what’s important.
8 Tips to Make Bookkeeping for Business Owners Nice and Easy
1. Make Sure You Understand What Bookkeeping Is...
You probably already have a general idea of what you need to do when it comes to bookkeeping. However, if you don’t have a complete understanding, then it could lead to you making mistakes.
There are usually some misconceptions when it comes to bookkeeping, so you need to make sure you’re clued up. It’s all about recording and organising your financial records. You might be discouraged when you hear bookkeeping terms like accounts receivable, but don’t be, it’s actually easy to get your head around it.
This allows you to keep track of income, expenses and invoices. Accountants then take this data to create financial reports that are ready for HMRC.
2. ...And Why It’s Important
It’s crucial you understand just how important it is for you to take bookkeeping seriously. Having a clear idea of the books and how your business is performing allows you to budget more effectively, ensuring you don’t run out of money.
It also prepares you for when you need to file your tax returns. You’ll find that whole process a lot easier if you have detailed and organised records. Plus, the data you collate can help you to analyse your business on a broader level and make improvements that will boost your revenue.
3. Keep Detailed Records
No matter how big or small your business is, if you’re not keeping detailed records, then you’re going to have problems making informed decisions and filing accurate tax reports. Every receipt, bill and invoice need to be correctly organised and recorded.
We know that many businesses are still relying on paper records but we can’t stress enough how difficult this can be when doing the books. The more time you spend looking through endless amounts of paper, the less time you can dedicate to your most important business tasks.
4. Put Money Aside for Future Tax Bills and Know When They’re Approaching
The last thing you want as a small business owner is frantically having to find funds for a tax bill that you’d forgotten. If you haven’t already, create a fully updated calendar that has all of the vital financial dates marked on it so you’re never caught out.
Once you know exactly when these dates are for your bills, start to put money aside to make sure you’re ready. You’re probably already doing this but you’d be surprised at how many businesses aren’t or forget to. Without the funds to pay these bills, your small business will soon start to encounter problems and business growth will take a lot longer than you planned.
5. If You Haven’t Already, Open a Business-Only Bank Account
If you already keep your business and personal accounts completely separate, then you can skip to tip number six. However, if you haven’t...
When you first started your business, you might have been operating its finances out of your regular personal account. At the time this might have been more convenient, but since then you’ve not got around to opening a business account.
We recommend changing that immediately and making sure that your personal and business finances are kept separate. When you’re searching for a specific receipt or invoice, you don’t want to have to scroll through pages of personal bills. Open a business account now and make your life a whole lot easier.
6. Keep an Eye on Your Books All Year Round
It’s easy to fall into the habit of only really paying attention to your business finances when important tax dates come around. This is bad practice and means often have to react to problems, rather than proactively ensuring they don’t arise in the first place.
Set aside a little time each week to review the books and keep a note of any possible issues that could cause problems further down the line. It’s better to deal with them now than days before a crucial bill is due.
7. A Little Extra Knowledge Goes a Long Way
By reading this blog, you’re taking the time to understand your company finances better. This will allow you to make better business decisions and avoid any possible penalties in the future.
There’s always more research you can do to make sure you’re prepared. There are plenty of blogs and videos online that will go into more detail on the different aspects of bookkeeping. HMRC also run workshops that’ll give you useful information to apply to your small business.
8. Go Digital
Bookkeeping is easiest when you have the right tools and resources available. We’ve already said that keeping paper records is bad practice and it’s now time to go digital.
Making Tax Digital (MTD) requires small business owners to submit returns online, so to cope with the switch, we’d recommend downloading an app that can help.
For more information on MTD and what it means for your small business, head over to this blog.
Now that you have some useful starting points on bookkeeping, it’s time to take it up a level and start doing the books easier than ever.
Bookkeeping doesn’t have to be stressful. When you think of business finances, you might think it’s just a job for accountants quietly sat behind an office desk. The truth is, bookkeeping can be effortless and we’re here to make sure everything is as easy and straightforward as possible.
Make Bookkeeping Easy With Our Checklist
To make things as simple as possible, we’ve put together a handy bookkeeping checklist that you can use to stop anything from slipping through the cracks. It covers how to stay organised and the tools you can use to make things even easier. Download your free copy of the Bookkeeping Checklist for Small Businesses now using the link below.