Article by Rebecca Mason 21.10.15
Bookkeeping is probably not the most exciting part of running your own business, or, community group. However, it is a crucial component and cannot be ignored. In order to make bookkeeping a little less daunting, here are 8 bookkeeping tips.
1. Record all your sales and purchases that are “wholly and exclusively for business” use from day one of trading. This can be in a spreadsheet or specialist software. In some circumstances, you may have expenses before this, so keep a record of these too. They can be deducted from your profits and will reduce your tax liability. Remember, if you use it for your business you can claim for stamps, stationary, bus and train tickets, fuel, etc. If you use your home as an office you can claim for proportion of your domestic bills.
2. Use a business bank account. Use this account for business transactions only. If you need money for yourself, transfer it from your business account in the appropriate form of drawings/salary/dividends/reimbursed expenses to your personal account.
3. Set aside time each week to manage your finances and update your records.
4. Review your cash flow regularly. Cash flow for small businesses can fluctuate, which means it needs to be regularly monitored. This way you can avoid insufficient fund charges by researching financing options in advance and making sure all of your debts are covered.
5. Reconcile bank statements monthly. Even if you regularly review your cash flow statement and your bank statement separately, they should still be double-checked and reconciled. This will help you quickly spot discrepancies.
6. Follow-up on past due invoices. A majority of your clients will pay on time, but you will always encounter a few who take longer than agreed. Regularly running an account receivable report will help you identify these clients sooner, so you can follow-up with a professional reminder.
7. Budget for taxes. These are usually paid at set intervals during the financial year, so you need to have sufficient funds to pay them once they are due.
8. Hire a bookkeeping service once bookkeeping starts taking up too much of your time.
For further advice on bookkeeping, please feel free to contact me email@example.com; 07531051264.
Written by Rebecca Mason, Owner of RM Troubleshooter.