We understand that for the majority of business owners, the thought of bookkeeping and ensuring your accounts are in order can sound very boring, complicated and all-in-all, something you want to put off doing. However, having excellent bookkeeping skills is something that every business owner should be striving for.
Here’s 7 of our top tips for having the best bookkeeping skills.
1 – Separate business finances
You should always keep your business finances separate from your personal finances to avoid any potential problems when you are trying to reconcile your accounts for end of year tax returns. When you are starting a business, open a business bank account and ensure you have a business credit card too. This not only keeps all business transactions separate, but also helps your business build its own credit rating.
2 – Use digital automation
Gone are the days of manually entering data into spreadsheets. You should be preparing for Making Tax Digital by using cloud-based bookkeeping software such as Xero or Kashflow, and doing your business banking online. You will be able to sync your bookkeeping software with your bank account, giving you accurate and up-to-date records. Automatic back-ups are another bonus!
3 – Perform regular financial checkups
One of your weekly tasks as a business owner, should be performing a financial checkup. Whenever you choose this, you should consider the following:
- Have you sent out all of your invoices?
- Do you have any outstanding invoices to chase?
- Have you paid all of your invoices and bills?
- Can you afford to pay yourself and your staff?
- Are you making any profit?
- Have you put money aside to pay your tax bill?
4 – Do a quarterly review
At the end of each quarter, book in some time to do an in-depth look at your bookkeeping and accounting records. Look for trends, such as growing or declining sales, year-over-year revenues, or an increase in late-paying customers. If you are planning to have future big expenses such as new equipment or moving to a bigger office, this is a great time to speak to your accountant.
5 – Keep records of all business expenses
You should keep on top of tracking all of your business expenses – it will save you hours of time when it comes to preparing your end-of-year accounts. Scan and digitise your receipts, meaning you don’t have to worry about losing the physical copy. You can simplify this process even more by keeping all business expenses to your business credit card. If you’re not sure what expenses you are eligible to claim, speak to your accountant for guidance.
6 – Use time tracking software
Cloud based time tracking software is a new must-have for any businesses that have employees – especially if you are working remotely. It automatically tracks the hours they have worked, any overtime and accrued holidays. Make sure you choose software that works with your digital bookkeeping software too, and payroll will also become a breeze.
7 – Keep on top of tax deadlines
Businesses need to be aware of any tax implications they have, and when these payments will be due. To avoid any fines, you must pay these on time. Plan ahead and save money each week or month, to make paying your tax bills easier.
If you’re not sure how to manage your bookkeeping to suit you and your business, please contact us to learn more.
Our powerful new app can help get your bookkeeping started, and be ready for Making Tax Digital. Find out more here.