When operating a small business, there are so many important daily tasks to remember especially if you are also the business owner. Your day is most likely jam-packed with numerous to-do lists and other miscellaneous tasks that need completing. When your day is filled up like this, sometimes the last thing you want to do is think about your finances. Often, a lot of business owners find this task stressful and confusing, and they don’t even know where to begin.
However, organisation of your finances is key when running a small business, as it will keep you aware of your present financial position, and where you are able to position yourself in the future. Especially when pesky deadlines like taxes are due, uniformed business finances can save you a significant amount of time rummaging through a lot of clutter. In this article, we are going to give you four accounting tips for your small business to help keep you organised and in control of your business finances.
Separate your personal and business finances
When initially starting up your small business, it can be easy to simply have all of your money in one place to make it accessible for you. However, after a time it can be extremely easy for these finances to become mixed up, which can become confusing for you in the future. Particularly when it comes to the point of organising your expenses, it is probably best to avoid rummaging around your personal spending for hours, looking for a single business transaction. To avoid this, it would be beneficial to open a separate bank account for all of your business-related finances. Doing this will minimise any chance that your personal and professional spending can be mixed up, and will allow you to remain organised when it comes to any business payments and expense tracking.
Keep your bookkeeping clean and tidy
When it comes to business, it is best practice to keep all of your bookkeeping neat and tidy. Although you might not naturally be like this in your personal life, you do not want this to translate over to the organisation of your business finances. Having unorganised bookkeeping often ends up in time being wasted when it comes to looking for important documents when they are left in no order and all over the place. Particularly when tax deadlines are looming, this will be of no help and will potentially add more stress for you. Make sure you have an efficient storage plan in place for your books, to ensure that all of your documents are easily accessible at a moment’s notice when you might sporadically need them.
Be aware of pending tax deadlines
As already mentioned, tax deadlines can be frustrating if you do not have the right documents to hand when they come around. However, these deadlines can be even more painful for you if you forget about them completely. These deadlines often come around quicker than you think and are extremely important, so it’s best to be knowledgeable of them in advance if you can. Make sure that these dates and deadlines are scheduled into your company calendar, phone, or diary to help you remember them in enough time. You most probably use these devices on a regular basis, so will be able to foresee these deadlines well in advance and complete associated documents accordingly, ready for submission. If these tax deadlines are forgotten or dismissed, you could be creating substantial additional costs for your businesses. Any documents that are completed incorrectly or include misinformation will need to be sent back to you, making this process longer. As a result, you may incur interest and penalties for late payment, as these documents will most likely be sent back after the tax deadline. This rate is often charged on a daily basis, which can add up to a substantial total if you are waiting on incorrect documents to be sent back to you and awaiting proper completion.
Keep your receipts
At the outset, this does not mean that you have to keep every single receipt on file after every purchase that you make. However, it is important to keep receipts for any business-related purchases. This can be important when you need to claim for any business expenses, as these receipts act as evidence of the necessary purchase. These receipts also have to be the result of a purchase relevant to your business for example, if you are working from home and need to cover the extra expense of household bills during working hours, or you need more office equipment for staff to use whilst working. Be aware that these expenses can’t be claimed for anything and everything there are strict tax rules that determine what constitutes a valid, claimable business expense. As we mentioned earlier, when storing these receipts keep them in an organised and orderly state so you can refer back to them whenever they are needed.
Why should you keep your business accounting organised?
When scanning through these tips, the general theme amongst them is organisation. When it comes to your business finances, there is no such thing as ‘too organised’. However, it’s understandable that the management of your business finances can sometimes be overwhelming and a daunting task to complete. If this is a feeling you are experiencing on a regular basis, accounting software could be a beneficial tool for you to use. Through the use of accounting software, you can use a variety of tools to support the jobs listed above. From automatic capturing of your invoices for your bookkeeping to the scheduling of reports and tax organisation, these are some of the many beneficial features that accounting software can bring you.
Although the tips above aren’t overly complicated, they can be vital to the success of your business, and financial software can help to achieve this.
WRITTEN BY THERESA CLARKE
Theresa Clarke is the marketing manager at Yorkshire-based Deans Computer Services Ltd.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)