Accounting is an essential part of running a small business. It helps you to keep track of your finances and to prepare for tax time. In this post we will explore some of the tips I wish I had known before I started my business.
Keep your business banking separate
When you run a small business it is really important to keep track of your income and expenditure on a regular basis. Keeping track of these within your regular current account can be quite difficult when it comes to reconciling your spending – and that's before you need to submit your bank statements for an audit.
Even with a separate account for your small business, be careful to only use it for your business' transactions. It can be easy to slip the odd personal purchase in when you have your business bank card to hand, but again this can be quite difficult to untangle later on.
This can save you hours of work later when it comes to reconciling your spending.
Utilise the right software
There are so many accounting software options out there such as sage cloud accounting for small businesses. Finding the right software for you is really important.
Your accounting software should be able to connect with your bank account(s) and Paypal so that you can see your income and expenses.
As well as that, it should allow you to invoice customers easily, and even give you the option to automatically chase unpaid or overdue invoices.
If you are using accounting software to track payments, then it will be easier for you to get paid. You can set up your invoices and have the accounting software track them so when payment comes in, the system automatically processes it for you.
Set an accounting schedule
When you run your own small business there is always so much to get done, so it is easy to put accounting to the bottom of your to do list, and keep rolling it over.
It really helps to have a set time that you work on your accounting tasks.
It could be daily, weekly or monthly, or you might choose to do it every Tuesday and Friday, or the 10th and 25th of every month.
Whatever schedule works for you, make sure that you make the time to get your accounting tasks completed.
Consider hiring an accountant
If you are a sole-trader then you don't need to use an accountant, but you might find that it is still beneficial to hire an accountant to help you to submit you your tax return and help you with tax-related questions.
Many accountants now allow you to pay per month instead of paying upfront for the entire year.
Keep note of cash spending
When you spend money in your business using Paypal or your bank card you will often have a trail to follow to help you rememer what the purchase was for.
When spending cash this isn't always the case.
Although many places now prefer contactless payments you might still be making cash payments, for example:
- Car boot sale entry
- Car boot sale buys
- Parking
- Small spending under £5
