Why did you start your small business? Was it because you had a dream that you wanted to make a reality? Do you provide a service that you know adds value to people? Perhaps you create products that are a game changer for your target audience. One thing is for sure, you didn’t start your small business to do your books! (Unless of course you have a small business that specialises in accounting… then that is exactly why you started it.)
The point is that being on top of your accounting is a part of the process of running a successful business. The UK is home to 5.5 million small businesses (fewer than 50 employees) and every one of these needs to properly manage their accounting to do their taxes every year. What does it look like for you to make sure that you have your accounting properly taken care of?
5 Tips to Keep Your Accounting in Order
- Do Not Wait to Start Your Accounting Work
Any type of task that seems mundane or tedious is easy to put off for another day. That is why it is critical to be organised and begin your accounting work from day one. No excuses. “I’ll do it tomorrow” can easily lead to weeks and months of delayed accounting, which makes the process much more difficult to do later. Have a system and stick to it, right from the beginning.
- Understand Your Legal Requirements for Submitting Your Taxes
Every business is different and its legal requirements may vary depending on the type of service or products it provides, its size and many other factors. As a business owner, it is your responsibility to understand what applies to you and what does not. HMRC (Her Majesties Revenue and Customs) can be a complex and convoluted system to navigate so take the time to understand what is required of you. Ask yourself these questions.
- What VAT (Value Added Tax), if any, are you required to register for?
- Am I legally classified as a small business?
- When does my fiscal year end and when am I due to file my reports?
- Keep Accurate Books In Regards to Your Expenses, Income, Taxes etc.
Accurate and organised books will make keeping your accounting in order much easier. What can this look like for you as a business owner?
- Create monthly reports in regards to all of the key performance indicators in your business.
- Record and track your expenses as soon as possible, ideally on the day they occur
- Record and track your income and sales daily
- Make regular bank deposits and ensure your digital payment software is up to date and that the records are easily accessible
- Know What Your Assets and Liabilities are as a Company
What do you own and what do you owe? It may seem like a simple question but you need to know what your company owes, to whom and when it is due. You also need to know what are considered assets and what they are worth. Have they depreciated or appreciated in value over the year? Clearly understanding this helps you keep your accounting in order.
- Choose Accounting Software That Matches Your Businesses Needs
The days of filing everything in a shoe box and dealing with it once a year is over (or at least it should be!). The right accounting software will be an indispensable tool to your small business and it will help you keep organised and on top of what is one of the most important administrative tasks of any small business.
Small Business Accounting
Use these tips to proactively make the accounting for your small business easier. As a business owner, making sure your accounting is done properly gives you the peace of mind to go and do what you do best… run your business. Visit AccountingPreneur for more information.