1. Be consistent with setting time aside to do your accounts
If you can, set the same date every month to sit down and get your bookkeeping and accounts in order, for example choose the 6th working day to look at the last calendar month.
The bookkeeping process follows monthly, quarterly, and annual tasks and deadlines.
Consistently processing and checking balances every month will help keep your accounting records in order.
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2. Have an awesome filing system
All business owners need to keep receipts and paperwork for 7 years. HMRC accept electronic copies and you can keep and file any paperwork you have online or physically in files.
Get into a habit of putting all receipts into a folder – Ready to Process, and when processed into a file by month by financial year. This is the minimum you need to do.
Top Tip – Get an App for that. Most bookkeeping software can upload a photo of an invoice or receipt and you can process it into your accounting records from the scan. Both Xero and Quickbooks allow this on a basic level, you can upgrade your subscription to get a faster service. You will be filing the paperwork within the software, so be aware if you leave that provider.
You can subscribe to software like Receipt Bank to keep all your receipts in one place and to process more efficiently. This is a better filing system, and you can download and back up whenever you please.
3. Get Bookkeeping Software
Software is essential nowadays and you will be behind competitors without it.
Always choose what is right for you. There are basic cashbook only software like Xero Cashbook to software that covers all the ledgers to foreign currency transactions. The UK favourites are Xero, QuickBooks and Sage.
4. Don’t mix personal expenses with business.
Always have a separate business bank account.
Pay yourself a salary or take drawings to use for personal expenses rather than use the business to pay for personal costs.
If you do mix business and personal costs you will create more bookkeeping work for yourself or it will cost you more if you hire a bookkeeper. If you are VAT registered, you run the risk of making errors on VAT reclaims and HMRC do not look kindly on this.
For Personal Tax, Corporation Tax and VAT computations life will be much easier if personal costs are not mixed in with the business expenses.
5. Pay with a card or by DD from a business account
Keep an eye on business transactions by always using a business bank card or DD.
This will inevitably make bank reconciliation easier and helps keep business costs in the business accounts. Your bank statement will provide all the useful data like date, payee etc.
If you use accounting software, link up the bank feed to keep you on track.
6. Read your Financial Reports
Many business owners do not regularly look at standard accounting reports. If you use software, you will have reports built in. If you follow Top Tip number one the output reports will fit into your monthly bookkeeping process. Here are some examples of reports to check.
- The Aged Debtors Report – who owes you
- The Aged Creditors Report – who you owe
- The Profit and Loss Report – how profitable are you?
- The Balance Sheet – the accounts
- Paying attention to reports monthly will help avoid financial surprises, help you gain control over cash and taxes and understand what works.
7. Outsource your bookkeeping
If you are the owner, administrator, marketing manager and every other role available you will not have time to complete your bookkeeping regularly and it will be poor shape to hand to your accountant. Having the bookkeeping completed to Trial Balance with working papers that the accountant can use will reduce the cost of the annual accounts.
Outsourcing the regular work can be hugely beneficial to business owners, allowing you time to get on with growing your business.
An extra pair of professional eyes on your business is always helpful and simply being able to regularly discuss the financials in confidence will help you.