I am fully licenced to offer bookkeeping in Gloucester, and I’m always available to help self-employed people. If you’re just starting out in business or have been self-employed for a long time, we know that bookkeeping can be a daunting challenge. Hopefully, my 12 Bookkeeping tips for self-employed people will help you out a little.
1. Keep business and personal finances separate.
All new business owners need to prioritise opening a new bank account for their business.
There is nothing more time consuming than sorting through your business and personal expenses when it comes to keeping track of your business finances.
2. Recognise business vs personal expenses.
A sole trader is likely to transfer funds from their business account to their account. It is easier if this is done regularly on a weekly or monthly basis.
It is also good to know the difference between personal expenses and business expenses; the month one tip helps you keep track of this.
3. Set reminders for important deadlines.
As a business owner, time can pass by quickly with the day to day tasks required. It is essential you know key dates for various business tasks that must be done and note not to miss them.
4. Choosing the right bookkeeping software.
There is numerous software available for day to day bookkeeping, and not all will be relevant for your business. The type of bookkeeping software you choose will depend on what you need it to do. If you are a sole trader, you may only need a basic package to record the income and expenses of your business. In contrast, a bigger company with employees will need a package that deals with the day-to-day transactions and payroll for the business.
5. Organise your business documentation (Create an easy to follow record-keeping system).
A business needs to keep a record of any transactions through your company. Maintaining documentation in an organised order will be crucial to you. This will help you answer any queries directed at you promptly. It will also help if everything is in place to maintain tax compliance in case of an audit.
6. Learn to understand monthly bookkeeping reports.
Keeping track of your income and outgoings cash makes it easy to perform regular financial checks. Accounting software can ensure that your customers pay their invoices on time and avoid any gaps in reporting. It is surprising how many business owners do not understand the reporting side of bookkeeping. To learn how to read and understand the reports, you will be able to act upon any issues that may arise, i.e. huge debts and your business surviving another month.
7. Outsourcing your bookkeeping when it becomes too much to handle.
As a business owner, you may be completing all the business admin and bookkeeping tasks; if you find it difficult or have no time to complete these tasks, you may consider outsourcing this work. You can outsource as much as you want. It may prove valuable to your business as a bookkeeper will advise if you are using the software correctly, process your transaction, reconciliations and reports every month, saving you around 15 hours per month.
8. Budget for tax payments.
As a business owner, you will know that a self-assessment is due by 31st January every year; this will be for the previous financial year. By doing monthly reports, you will see how much you owe for that month and put this to one side so when the payment is due, you are aware of how much it will be. As a business owner, you are liable to complete the tax return and make payment based on this report; if you do not keep an eye on this throughout the year, you could find yourself with a hefty bill to settle.
9. Pay your employees on time and file your reports.
If you employ people within your business, make sure you are a responsible business owner and pay your employees on time. Payroll can be run on your bookkeeping software, or HMRC provides free bookkeeping software. As part of making tax digital, HRMC introduced on 1st April 2019 bookkeeping software has now been updated to automatically send any reports needed by HMRC when you are und payroll. If payroll is run through your bookkeeping software within the programme, this will automatically update the relevant statements within the software. It is easy to link your account software with HMRC.
10. Be involved in your business bookkeeping checks even if you have employed an administrator.
If you are a small business and have employed a person to maintain the admin, including the bookkeeping side of your business, it is still worth understanding and keeping an eye on. You need to keep an active role in this part of your company, as this is not fair for the administrator to be solely responsible for understanding this. It will also eliminate the risk of your business going into financial difficulty due to incompetence or even fraud.
11. Keeping on top of your sales invoices.
The importance of invoicing for work that has been completed in good time is vital to your business as this is where your income is generated from, and if you fail at this, it could be costly to your business. There is nothing more annoying than having worked completed and waiting around for an invoice to pay.
12. Keeping track of cash payments.
As a business, you will, from time to time, receive cash payments. A record of these transactions must be kept up to date and accurate. This could be using a simple spreadsheet, and once the money is banked, you will record what these transactions relate to. If you purchase out of any cash, these items need to be registered because if there are any missing transactions, this could mess up your finances. It will then be difficult to reconcile and could be costly to your business.