Bookkeeping 101

Many new business owners tend to take on all roles of the business in order to have more control and to save on money until such time they can afford to hire a professional.

Marketing, advertisement, website design and bookkeeping are some of the areas of the business we tend to need professional help with as our business grows.

Bookkeeping is certainly one of those areas that can become complicated, especially when you become much busier, you start using accounting software and/or start hiring employees.

I have come across too many clients and read too many bookkeeping horror stories over my time in this industry and wished they had sought the advice from the start rather than getting themselves into a pickle, which has led to the unravelling of years worth of data and realising they owed much more tax/VAT then they had originally paid.

And I am talking, in some cases, tens of thousands of pounds. Enough to put any small business owner under.

Rather than scaring you in to submission to hire a bookkeeper I would instead like to give you some tips to help you on your way.

• Research and make a list of the all allowable business expenses you can claim.

• Get yourself onto a cloud accounting software. Not only will this allow you to look after your finances on the go but you will be ready for the Making Tax Digital (MTD) deadline.

• Use the free online training that is provided to you by your software provider. This is invaluable, use it.

• Think about what you want from the software and get it set up right from the start – automated invoicing, online supplier payments, business analytics, customer job tracking, payroll, inventory, multi currency, quotes, contact management, VAT.

• Use the software to it’s full potential, automate as much as you can. This will save you so much time. Download the app to your phone.

• Familiarise yourself with the coding the software provides you and ensure you have the categories set up as you would like to see. For example, if you pay for networking events you may want to track how much you spend, set up a network category. Or perhaps you have more than one sales product or service which you would like to track.

• If you are VAT registered you must check the company settings on the software are set up correctly from the very beginning. Add your VAT registration number, ensure you have selected cash or accrual basis (if you are a sole trader it would be cash basis), make sure you have the correct financial year your business runs from and to – for a sole trader it is usually the 6th April to the 5th April.

• Reconcile your bank accounts regularly. Simply this means you must ensure the balance on your bank statement at any given date matches the balance on your software. If it doesn’t then you could potentially be missing business expenses or income. Check the software transactions to the bank transactions, even if you have an automated bank feed.

I hope this has helped but if you would rather hire someone to get you started we can certainly help. Give us a call.