Unless you’re an accountant or a massive fan of working with numbers, bookkeeping is probably not one of your favourite tasks, but getting some useful tips will help avoid costly errors and inconsistencies. Keep reading for our tips on how to make your small business bookkeeping as efficient as possible.
1. Be prepared for major expenses
The best way to deal with major expenses that can appear out of the blue is to be prepared for anything. Think about how you plan to grow your business over the next few years, make a note of any expensive situations that could occur, and make sure you have a plan in place to deal with those. For example, are you looking to grow your team, or what would happen if you needed to upgrade all of your technology? These are costly scenarios, but if you’ve prepared in advance, they won’t leave you in a bad financial situation.
2. Keep an eye on accounts and expenses
When you run a business, it can be difficult to keep track of your costs and expenses and avoid getting confused between your personal finances and your business’s finances. If you don’t stay on top of your bookkeeping or hire a professional to look after this for you, you risk missing out on benefits such as tax deductions that could save you money. You should also use a business bank account to help make sure you don’t get personal expenses mixed up with your business expenses. Make sure you also keep a record of your car mileage, business lunches and meetings and anything else that can help you keep track of your finances.
3. Keep all receipts
We’re all guilty of instantly throwing away our receipts, or shoving them somewhere out of sight and forgetting about them, but when you run a business it’s vital that you keep a record of all of your expenses. File away your receipts, either physically or using a scanner, so that you can track where your money has gone throughout the year.
4. Stay on top of tax deadlines
You know that you are going to have to pay taxes so, why not put that money aside? If you miss the deadline to submit your tax returns you could face a large fine from HMRC. Working with a professional bookkeeper means you don’t have to worry about fines and late penalties.
5. Do regular invoice check-ups
A late or unpaid bill can seriously hurt your cash flow, the main way to track this is to assign someone to keep an eye on the billing. Make a plan for what to do if clients are 30, 60 or 90 days late as every late payment is an interest-free loan that harms your cash flow. It’s also important to make sure you communicate clearly with your clients or customers as to when you expect payment, and what your process for dealing with late payments is.
If you’re a small business and need help with your bookkeeping, follow these tips to make your process more efficient, or feel free to get in touch to find out more about our small business bookkeeping and accounting services.