If you’ve just taken the plunge and started your own business, congratulations! It takes uncommon passion and perseverance to get to where you are today. However, this may be the point where you’ve started to google all of the things you need to do as a business owner and are feeling a little overwhelmed. Don’t panic. We’ve got you.
This list of small business accounting and finance tips will give you the confidence to know you’ve covered your bases and aren’t leaving yourself (or your accountant) with boxes of receipts and a terrifying task ahead.
BOOKEEPING & ACCOUNTS BASICS
This is always going to be a necessary evil. But, if you make the best of it, there are a few notable benefits to tackling it yourself. Take a look at our TOP 4 TIPS below:
1: Open a bank account
After you’ve legally registered your business in the appropriate way, you’ll need somewhere to stash your business income. Having a separate bank account keeps records distinct and will make life easier when it comes to filing your accounts and preparing any tax documents.
It’s also worth noting that if you are trading as a Limited Company you are required to open and trade via a business bank account as a personal account just isn’t allowed.
Start by opening up a business current account, and then a savings accounts to help you organise funds and save for upcoming tax bills.
Shop around for business accounts and compare the service they offer and the fees they charge!
TOP TIP! Most banks offer fee-free banking for new and start-up companies, so look around and save yourself some cash!
2: Track your expenses & records
It’s incredibly important to track all of your business’ expenditure. If you get into good habits from the get-go, you’ll find the whole process much easier. Keeping these records may seem like a hassle but if used correctly will help you keep track of expenses, your business’ profitability and will even be used when preparing any accounts and tax returns.
Now might be a good time to consider investing in bookkeeping software such as QuickBooks, Xero or FreeAgent (other software options are available). All three of these options vary in price range but offer a great means of keeping your records up to date, digital (making it harder to lose) and accurate.
Any expense that’s used partly for personal life and partly for business must reflect the mixed use. For instance, if you have one mobile phone, you can deduct the percentage you use the device for business.
TOP TIP: The rule of thumb is; If it’s an expense you’ve incurred while running your business, you’ll need to keep the information to support it.
3: Find an accountant
While this may seem like a controversial piece of advice to those who like to do things themselves or prefer to keep costs as low as possible, we would always recommend finding an accountant, even if only for initial support and advice. Why?
- It’s worth considering the best business set up for you (self-employed, limited company, partnership etc.)
- If you’re new to accounting, it’s important you understand the basics to avoid finding yourself in hot water with HMRC further down the line
- Accountancy fees are a great investment in making sure that your company records are accurate and compliant. You’ll often find that the cost of engaging with an accountant is far cheaper than the fines HMRC will issue if you get things wrong.
4: Making sales
This is often the most exciting part of your new business venture. You’ve got happy customers who are ready to pay, so it’s time to raise an invoice.
It’s important to make sure your invoices display all the necessary information such as Company Name, Trading Name, Business Address, VAT Number (if you’re VAT registered). Be sure to keep a copy of all the sales (invoices) you raise and details of how your customers have paid.
TOP TIP! Your sales invoice can also be a great marketing tool too, consider including promotional information on your invoices such as a discount code when they make a return visit/purchase.
The right bookkeeping solution means you can invest more time in the business with bookkeeping no longer on your plate, and potentially save the business money. Win-win!
Starting a business can be an overwhelming process, but if you follow these steps, you’ll have your new businesses finances in order from the beginning. From opening the right type of bank account to determining how much tax is due each year, these tasks will all contribute to your business’s success, now and as it grows.
For more information, we’d love to hear from you.