Bookkeeping: Tips for Keeping Your Books in Order
Not many people start their own business because of their passion for completing paperwork so it is understandable that people often do not think that completing paperwork is a crucial part of any business. It isn’t fun but unfortunately, it really needs to be done!
Bookkeeping for anybody but bookkeepers or accountants is a sure way to bore somebody to death but it is important that you stay on top of your paperwork. With starting your own business, good comes with the bad. If you do not make sure that you complete all of your paperwork in the set time, you can end up with hefty fines from HMRC which will get worse over time. Whilst it is the definition of tedium, there’s benefits to having your files in order. You will be able to maintain a healthy cash flow within your business and spot trends as they begin. This means that you will be able to capitalise on any trends when the time is right before your competitors get chance! Now we have established bookkeeping as a necessary evil, here’s a few tips on how to make sure you do it right!
Collate your financial records appropriately
Making sure that all of your records are not only stored but stored in the right manner is crucial to any business. Whilst all businesses are different, there’s bare minimums that any business will need. Here’s what we think any business needs to succeed:
- Invoices file: When storing invoice files, you will be able to store them in multiple ways. Whilst you can go old school and store them all physically, many people now store them locally on their computers or on the internet in a place such as Google Drive or services specifically for storing sensitive material. Remember however that if you have not accessed a file for a long time, some online services retain the right to delete your files as they please. As it is important that you keep files for a considerable amount of time, if you keep all of your files via an online ‘cloud’, make sure to have a backup. We would recommend ordering them alphabetically or by date so that they will always be easy to find. Maybe order them by date in a file specifically for the business that you are invoicing to make finding them even simpler. Also, remember to keep those who have not paid to the forefront of your invoice file so that you do not forget that they haven’t paid.
- Purchases file: Making a habit of tracking what you buy is important to tracking cash flow. Making note of what you’ve purchased, when and how you paid is crucial. This will help you save money when it comes to your accounting but not only that is allows you to easily find anything that you might need quickly, for example, to return a purchase you will need the receipt.
Keep your personal and work accounts separate
If you are running a limited company then as a director you cannot spend the company’s money unless it is something for the business. This means that you cannot go out and buy a new games console with that money as it is unlikely that this is something that will be used for your business.
Whilst as a self-employed person it is ok to draw from your account in case of an emergency or something for the business, it is important to make sure that you still have separate bank accounts. The reason for this is that if you simply share an account, it will get difficult to keep track on how your business is performing.
Put aside time to make sure you do your bookkeeping once a week
Leaving your bookkeeping until the last minute is a sure-fire way to make plenty of mistakes. Getting into the habit of putting aside some time on a regular basis will make your business more successful than if you never keep track of your income and expenditure.
That’s what we think that any business should do to keep your books in order. We hope that you’ve found our article helpful!
If you need help with your accounts we are here to support you so give us a call now.