You’ve finally decided to start up your own business or go it alone as a freelancer and that’s really exciting but the reality of having do the books can bring you back down to earth with a bump. Doing the accounts can be daunting for a new business owner and even boring if you’ve not got a head for numbers. We’ve got 5 tips to help you on your way.
Separate business and personal expenses
Be sure to keep things simple from the start by making sure you keep business and personal expenses separate. If you’re a limited company it’s a legal requirement to keep your business finances separate but it’s a good plan if you’re a sole trader to. Opening a separate bank account for business will save you trawling through bank statements identifying business expenses.
Save time with automation
Make the most of the accounting technology available to help save you time. Cloud accounting software packages such as Quickbooks and Xero offer many ways to ease the pain of doing your accounts. Live bank feeds will sync your business bank account and import the transactions directly into your accounting software making reconciling a breeze. You can also set up repeating templates for invoices and bills such as monthly rental invoices saving you time from having to enter them each month.
Keep track of receipts and records
You’ll need to keep records of all invoices you send to customers, receipts for business expenses and payroll records if you employ someone. These can be either paper copies or stored electronically but we’d recommend you file as you go along as there is nothing worse than hunting through piles of receipts at the end of the year looking for one. Quickbooks and Xero both offer expense tracking apps which allow you to photograph receipts and store them online, which is great if you’re on the go.
A sole trader must keep records for 5 years after the 31st January submission deadline for the relevant tax year.
Update your accounts regularly
You hate doing the books so you keep putting it off until you finally have to sit down and deal with a mountain of work which takes you ages. We recommend updating your accounts weekly if you can or at the very least monthly. This will give you a clear picture of how your business is performing and hopefully reduce the burden of having to do the accounts. Here are some things to check:
- Make sure you’re up to date with sending out customer invoices
- Reconcile your bank account and double check you’ve entered all the expenses into your accounting software and have receipts filed
- Review your accounts receivable (customers who owe you money) and accounts payable (supplier you owe money to.) Chase any overdue customer invoices and pay any overdue supplier invoices.
- Update your cash flow – if using online accounting software they have inbuilt cash flow forecasting available to use. It’s good to make sure you have enough income due in to cover your expenses and if not you need to know in enough time to make plans.
- Keep an eye on how much tax you’ll have to pay – Sole traders pay tax on all profits not just what they pay themselves which many people don’t realise until it’s too late. So plan ahead for that 31st January deadline and put some money aside to it’s not a complete shock when you file your tax return
Hire a Freelance Bookkeeper
Ok so you may have guessed we’d say that! Running your own business is really rewarding but it can also be really busy juggling many different roles and responsibilities so why not hire a freelance bookkeeper to take the pressure of doing your accounts.
Expertise - Bookkeepers are trained, knowledgeable and good at what they do. Bookkeeping is their bread and butter, they’re experienced in providing up to date accurate accounts for small businesses. They’ll also be able to give you lots of tips and tricks they’ve learnt along the way to help support you.
Flexibility – You can ask your bookkeeper to do as much or as little as you want at a frequency which suits you. You don’t have the same commitment with a freelance bookkeeper as you would if you employed someone to do the accounts. This will allow your business to save money and stay flexible while it grows.
Time – Having a bookkeeping take care of the accounts frees up your time you can focus on building and growing your business into something successful.
Get in touch with Bookkeeper Buddy if you need any help or advice to make your bookkeeping easier.