For new business owners in particular, the creative drive to develop your brand will appeal more than the monotonous accountancy side of things. However, good-quality bookkeeping is the foundation of any successful company.
Having your accounts in order won’t only help you identify profit and loss margins but also to satisfy tax requirements. Remember, the HMRC will impose penalties for late or inaccurate returns so it pays to stay on top of things.
Here are a few basic bookkeeping tips to help you maintain your accounts and counteract possible cash flow problems in the future.
The most important aspect of bookkeeping is to keep records in real time and maintain them as accurately as possible. File each financial transaction in chronological order so it’s easier to backtrack at a later date, no matter how small.
Doing so will offer an enhanced overview of operating costs and which areas are leaking more than you’d like. After a few months of doing so, you’ll also be able to make more accurate forecasts and manage cash flow with more certainty.
Likewise, obtaining bank loans or other finance will also be easier with accurate bookkeeping figures to draw from.
It’s recommended to stay on top of your accounting every couple of days as opposed to a monthly bulk session. Sifting through mounds of complicated figures is tricky, especially if you can’t recall various bits of information from weeks ago.
Automated or Spreadsheet Accounts
As a way to avoid potential mistakes, automated accounting software provides an efficient and quicker way to store information. Pre-set algorithms and formulas do the hard work for you, reducing the workload of your staff.
Traditional spreadsheets are another option although many modern companies are reluctant to carry out manual data entry and calculate complex formulas. Either way, it’s advisable to hire a professional accountant to oversee your finances and avoid costly mistakes.
With the ‘Making Tax Digital’ makeover set to affect all businesses by 2020, it’ll become easier to oversee your tax requirements in one place. Although quarterly returns will be needed, there’s no paperwork to deal with as the HMRC will be automatically updated with your business data online.
To comply with the new regulations, you may need to upgrade your current bookkeeping system. Cloud-based software is becoming increasingly popular with businesses to comply with the digital overhaul. They provide real-time updates for all your bookkeeping, payroll and tax requirements by storing information off-site.
As a business owner, there’s plenty of tax responsibilities to consider, especially if you employ staff. As well as income, VAT and corporation tax, there’s also national insurance contributions to work out within the PAYE system.
With this in mind, ensuring all of your financial accounts are organised and updated is of paramount importance. Employing a professional accountant will reduce your workload and help you make more accurate financial decisions. You can also grant them access into your digital accounts if required.
If you need some help with preparing your business for the coming change in tax returns, get in touch today.
Still on the fence about choosing accounting software? Check out our 8 reasons to choose the accounting software over spreadsheets.