Doing your own books, or maintaining your own financial records, can provide a steep learning curve for first time bookkeepers. However, looking after your own payroll, VAT returns, forecasting and expense allocations is not as difficult as it first seems. Here are some top tips from our experts to help you with your bookkeeping, and to ensure that your accounts all add up. Here are our top 5 tips for doing your own books.
1. Keep records from the beginning
As soon as you establish your business, you must ensure that you keep a record of all of your financial transactions from the start. Attempting to work backwards from memory means you are more likely to make mistakes, and present inaccurate information which may cause additional problems further down the line. You may incur some costs before you start up, which still should be recorded, as these could be deducted from your profits, reducing your tax liability.
2. Consider attending an HMRC workshop
HMRC provides a number of workshops for new businesses and employees in a number of areas including VAT, self-assessment for self-employed individuals, employer online filing and running payroll. All of these workshops are free, and can be extremely beneficial in gaining a solid grounding in all of these areas. They also provide the opportunity to ask any questions you may be unsure about, and receive professional advice without the expense of hiring a consultant.
3. Budget for tax
Hopefully your business has made a profit; it is worth remembering that not all of this is yours however. A proportion of this profit must be paid to HMRC as tax, and this must be budgeted for throughout the year to avoid any nasty shocks and steep financial outlays at the end of the financial year. By setting aside 25% of your profits each month in a dedicated savings account, you will easily be able to pay your taxes.
4. Work to a system
Establish a working accountancy system from the start. Whether this means setting aside a specific time each day to input data into a spreadsheet, collecting all your receipts in a certain tray, or notarising business expenses once a week, it is important to adhere to a system. This means you will always be on top of your bookkeeping records, and will be able to manage them in an effective and efficient manner.
5. Hire a Bookkeeper instead!
As highlighted above, bookkeeping can present a steep learning curve, can take up huge amounts of your resources and the consequences can be disastrous if done wrong – HMRC aren’t known for being lenient with mistakes! In order to ensure that all of your finances are in order and your books are perfectly balanced, the best solution is to hire a bookkeeper. Most bookkeepers provide services to small and medium-sized businesses. They will sort invoices, statements and receipts, prepare VAT returns, incorporate new businesses, amongst many other services, meaning that you don’t have to worry about any of the tips above.
Tips for doing your own books – where to find out more
If you’d like to hire some external help to do your bookkeeping, prepare VAT returns, handle your credit control or manage your payroll, we can help. Please get in touch to tell us your requirements.
You can read about the services we provide here.