Good accounting is an important part of running a business. When you’re just starting out, it’s possible to keep all of your own financial records to avoid the expense of hiring an accountant. But that doesn’t mean that it’s easy. So here are six steps small businesses and startups can follow to improve their accountancy.
1. Learn from HMRC
No, HM Revenue and Customs is not just there to take money from you. The government’s dreaded department does actually offer a range of helpful videos, guides and webinars allowing small business owners and entrepreneurs to learn more about doing their own self-assessments and accounting. Whether you need to learn more about how VAT works or you are looking for details on dealing with employing people for the first time, these government guides can be hugely valuable.
2. Record everything as soon as possible
This one is important – as soon as you start your business, make sure that you start recording everything in detail. This should include all of your costs as well as the information on any sales that you make. You should also keep track of any costs that you incur before you have actually started your business, as these still count and can be used to reduce your tax liability.
There is nothing worse than coming to the end of the month and realising that some of the information you have is incomplete or unclear. You’ll then have to painstakingly go back and fix the problem to ensure that the accounts and completed correctly.
3. Make use of free tools
There are a huge range of free tools out there that small businesses can take advantage of. You could use free accounting software such as Wave or GnuCash. You’ll also find a range of other valuable apps available including invoice generators and payroll processors. Generally these kinds of free applications will be absolutely fine while you are starting out – in fact, if you don’t have much experience with accounting it can be better to use these basic systems rather than expensive and complex accountancy software.
4. Plan for taxation
This can be one of the most unforgiving aspects of starting a business for the first time – you need to remember that even when you have made a sale, not all of that money is for you. You need to set aside a percentage of your income to ensure that you have enough to pay the tax. The last thing you want to do is to spend all of that money, assuming you’ll be able to make it up sometime in the future.
5. Claim for your expenses
If this is your first time with your own business, it’s important to remember that you can claim back on any cost that was incurred exclusively as a business expense. This means that even very small business purchases such as stationery can be offset against your tax bill. This mean that it is vital that you record any expenses and learn to keep receipts.
6. If it gets too hard – use a professional service
Now, this technically isn’t much a tip for doing your own business accounting, but it’s something that has to be said. When a business grows it can become impossible to keep track of your accounting – there is a reason that companies have professional accounts and accounting departments. Attempting to do too much is a waste of your time and you will inevitably end up making mistakes. Experienced firms like Numeric Accounting offer a range of plans to suit companies of all sizes, and small business can get accounting services from just £195+VAT per month.
There really is no value trying to struggle on alone, so make the most of a skilled local accountant in your area. The amount of time and money you will save will more than offset that actual cost of the accounting work.