I would guess that you started your own business as you found something that you were really good at and could make a living from, not because you thought it would be fun to collect receipts, chase debts and prepare accounts and tax returns. However, we can help you make this as pain free as possible.
It is worth noting that within the next few years all businesses including sole traders and partnerships need to keep digital records so going onto online accounting software now, such as Xero Cloud Accounting, in preparation for this is worthwhile and the easiest way to keep records. Therefore, all tips below will be based around using an accounting software.
Small business accounting
The key thing to remember is to record all expenses that are incurred for the running of your business and all income earned when running your business. If you’re not sure if an expense would be allowable as a business expense, then upload it and ask your accountant if they believe it is allowable. Your accountant will also discuss with you any costs that they believe you may have missed and advise on other amounts that you could claim. They will also look out for other things that you may need to consider such as payroll schemes, CIS and VAT registration.
Bookkeeping for small businesses
Expenses – The easiest way to keep track of all your expenses is to use a receipt capture app. If you can get into the habit of taking a photo of receipts whenever you spend any money on the business or forward any emailed invoices as soon as you spend the money this will save a lot of hassle at a later date when you need to try to find a receipt.
Sales – If you raise sales invoices for your customers then accounting software will allow you to raise the invoice and email it to the customer. You will also get a notification when it was delivered to them and read by them. Some accounting software will also enable you to link a payment platform to the software so customers can click a pay now button to make a payment to you. Some software will also automatically chase any customers that have not paid their invoices within certain time periods.
Bank transactions – All accounting software should include a bank feed facility, set this up as early as possible so that you can keep track of all money going in and out of your business account. This will allow you to tie up any receipts to the payment coming out of your business account and any money coming into the bank against invoices.
In an ideal world all business expenses should be spent from the business bank account, but we all know how easy it is to use the wrong card. Therefore, because you’ve taken a picture of all receipts you will still be able to claim the expense even if it was not taken out of the business bank account.
Benefits of accounting software
Archimedia use Xero for all our clients as it contains all the advantages listed above at a reasonable price. There are also numerous apps that link to Xero if there are any other areas of the business that can be automated such as tripcatcher to record the number of miles you travel for business purposes.
Xero also allows VAT and CIS returns to be filed directly with HMRC.
Using accounting software regularly allows you to get a better picture of the profitability of your business and be able to see as early as possible if there is there is any cause for concern or if you are going to go over the VAT threshold for example.
Accounting services for small businesses
Accounting services for small businesses can be provided doing as much or as little as you need. Some customers prefer to do as much as possible themselves and the accountant just prepare the accounts and tax returns. Other clients prefer to raise sales invoices and take pictures of receipts only with everything else being done by the accountant.
At Archimedia we have a quarterly planning meeting with clients and can use the figures in your software to help with your tax planning or look at how you can save costs if you are looking to apply for a mortgage for instance. We can also use these figures to see if a sole trader would be tax beneficial becoming a limited company.
Tips for small business accounting
Accounting for your small business does not need to be scary if you are using the right software and getting the right support.
Keep on top of the areas that you are responsible for such as receipt capture, its much easier to get into the habit of doing it as you go along rather than playing catch up later.
Always work with an accountant that understands what you went into business to achieve and what your short term and long term goals are both for your yourself and your business.
Don’t stress about tax. If you’re having regular meetings with your accountant, they will be able to point you in the right direction and notify you with plenty of notice when a tax is due to be paid and how much will be due. This will allow you enough time to budget for this. Your accountant has trained for years to be able to give you the right advice, they understand how scary it can be so please never assume that any question you want answering is a stupid question, just ask.
Looking for small business accounting advice? Contact us
At Archimedia Accounts, we are a team of certified accountants, who can provide tailored advice for your small business accounting needs with a real difference.
We offer a wide range of tax planning and accounting services, and enable you to make the most of local business schemes. We can help you with everything from ensuring proper tax compliance and financial management to providing a comprehensive financial analysis of your business.
Get in touch with us here.
