The start of the year is the ideal time to get things organised for better efficiency and bigger profits through the coming year. January and February are the prime months to put systems in place that make it easier to follow through as the year progresses. For business accounts, this is especially true, particularly if you’ve just finished scrambling to meet the January tax return deadline.
Having organised books makes it so much easier to file your return without extra stress or hours worked.
Have a Separate Business Bank Account
This makes everything much easier as long as you’re strict about choosing which account to either make or receive payments from. Mixing up business and personal transactions sets you up for time wasted when you have to plough through both accounts to weed out the ones that don’t belong. A business bank account also means you’re not sharing with HMRC how you choose to spend your personal money, should they decide they want to see your records.
Since most banks offer a year or more of free business banking when you open an account, it won’t cost more in the short term. Better financial transparency should lead to a more efficient business operation, so when charges do kick in you will be in a better position to budget for them.
Treat Receipts with Respect
These are your proof of purchase, and you’ll need them should any questions arise over your accounts. Even those for very small purchases, like a box of pens or your taxi fare into town, mount up over a year, so don’t neglect those in favour of the bigger ones. Give invoices sent and received equal importance, and remember to save any email receipts.
Store them safely and logically so they’re easy to find, and make sure you know how long to keep them. You could separate them into folders every month, or create digital copies an upload them to a backup drive or cloud account. If you choose digital storage, make sure HMRC will accept the digital alternative (there are some legal documents you still need paper for), then choose a name and filing system that makes sense so you’ll remember it. One good tip is to devise your own number system for receipts to make cross-referencing easier.
No matter how tempting, try and avoid throwing them all in a box. After a few months, the task of sorting them becomes time-consuming and frustrating.
Have a Simple, Efficient System
Routine may not sound exciting, but it’s an excellent way of getting a job done. Set aside an hour or two each week to bring accounts up to date, catch up with filing, and pay bills or issue invoices, and you’ll always know where you stand.
Some people set up a workbook in Excel, others subscribe to online accounting services, and many employ professional help to stay on top of things. If you’re considering professional bookkeepers or accountants, understanding the different services can help you decide what you need:
- Bookkeepers will take care of the day to day running of your accounts. They’ll have a system that accountants like, and you can get help either full time or just for an hour or two each week.
- Accountants check through the books and prepare your tax return. They’ll analyse how your money is performing and offer business advice if they see where you could make savings to be more efficient. They’ll also make sure you’re claiming all your allowances, so can save you from paying too much tax.
How you organise your books is up to you as long as you comply with legal requirements. Now is the ideal time to give it some thought and set up a system that will help you stay on top of your business accounting this year.