Here are 5 top tips for doing your own bookkeeping, doing your own bookwork can seem a daunting task when you are starting a business. However, good bookkeeping is crucial to the day-to-day running of a business. Here are five top tips to help get you started.
Start your bookkeeping from day one
Start keeping financial records as soon as you start your business. You will need to keep track of all income (sales or work is done) and all expenses. You should record all of your start-up costs even if they are from before you started trading.
Choose a system which works for you
There are many options for bookkeeping systems. Deciding which one is the best for you can seem overwhelming so the key point to consider is whether you would prefer to use a spreadsheet, cloud-based accountancy package or to simply record entries in a book. If you are going to to be doing your own bookkeeping it is vital that you have a system that suits you. Software packages such as Quickbooks are great and can come with handy apps but if you know that you prefer a simple spreadsheet then they aren’t for you.
Once you have decided on which method you are going to use then you can look at the format. If you are going to use an accountant they should be able to provide you with spreadsheet templates, discounted bookkeeping software and advice on what records to keep to reduce your end of year bill.
Make sure you claim ALL expenses
The general rule is that if an expense is ‘wholly and exclusively’ for business then it can be claimed and used to offset your tax liability. Do not forget to keep all of your invoices and receipts no matter how large or small. It is often easier to have a separate business bank account so that you are able to keep track of all expenses and are less likely to miss any out.
Examples of business expenses are; the cost of sales (materials used), travel and subsistence, post and stationery, telephone, insurance, advertising and office costs. This is by no means an exhaustive list.
Budget for tax
Keeping on top of your bookkeeping allows you to prepare for your tax liabilities. By putting 25 – 30% of your income aside ensures that you will be able to pay your tax and national insurance liabilities at the end of the year. Don’t forget that if your tax due is over £1000 you will be required to pay the tax due for the year plus fifty per cent on account for the following year.
Get advice as it can save you time and money
Getting advice when you start can save you time and money in the long run. There are many ways of getting free advice so there are no excuses! HMRC provide some really helpful webinars and tutorials, did you know they have their own YouTube channel? Your accountant, if you have one, should also be able to offer help and support. We offer a free consultation to help get people started to look out for friendly accountants who do the same.