Bookkeeping tips all new small businesses should know

When you set up a new business there will be many tasks that you will be looking forward to getting your teeth into, but it’s unlikely that bookkeeping will be one of them.

However, it is an essential task and a vital part of your business, so to explain further, Rogers Spencer, Chartered Accountants in Nottingham share their advice on why it is important that you understand the subject and the best ways to manage it.

Keeping your financial books up to date means you will have accurate accounting records whenever you need them, and you can ensure your business is safe, secure and successful. To do this, there are a few points to remember that can be extremely useful.

Understanding your finances

When running a small business, it is important to differentiate between personal finances and business ones. Make sure you have a business bank account to help you keep these separate and to organise what you are doing. This is particularly important if you run a limited company as this is deemed to be a separate legal entity and there are strict rules on how you report its financial activity.

Getting a good understanding of your tax implications from the start can be useful. Working out what you will be asked to pay and setting it aside throughout the year means you will not have any problems when it comes to paying your tax bill.

Save time

When you run a business, you need to ensure your processes are as streamlined as possible so that your time can be better spent on other tasks. When it comes to your finances, automate as much as possible to help achieve this by using accounting software that will reduce the need for spreadsheets and calculators. These will help you issue invoices, organise payments and produce reports.

They will also help you to keep the thorough records that your accountant and the tax man will want to see and produces an audit trail. Accounting software is a good way to set deadline reminders for payments, tax submissions and other important dates. It can help you to keep track of which invoices have not been paid so you know who you should be chasing and when.

Track expenses

The money your business spends can sometimes be anticipated, but there will always be unexpected costs too. Keep a track of all your expenses to help you plan for the future and be able to handle those unforeseen costs and to avoid paying more tax on business profits if allowable expenses have not been taken into account.

This could be done by looking at direct debits, examining overheads and keeping and recording all of your receipts. Using dedicated accounting software will help you to manage staff costs, VAT and any other overheads all in one place, so it is easier to see and assess.

When it comes to expenses, it is important to know what you can claim and what you cannot. General costs for running your business, such as salaries, suppliers, marketing, premises and travel are all legitimate expenses, and you should keep an accurate record of mileages, receipts and invoices. If you work from home you may be able to claim for a proportion of your rent or mortgage and utility bills.

You should not be tempted to push your bookkeeping to the bottom of your list of priorities, as it can be a task that either makes or breaks your business. By keeping your books organised, the job will be less time consuming as well as less daunting, so set aside regular time to review things and avoid them piling up.