The life of a business owner is jam packed with ups, downs, mistakes and advice you wish you’d known from the start.
The following five accounting tips — from bookkeeping to hiring a small business accountant — will prevent future financial mishaps.
The rise of small businesses in line with the on line revolution has been astounding. While there is plenty of potential for success, many small businesses fall short due to mistakes that could be avoided — and it doesn’t get much more important that maintaining efficient accounts. Finances are the bread and butter of the business world. The following five accounting tips are examples of some small business practices required for success.
1. Separate your personal and business finances
Becoming a small business owner will inevitably bring about a few changes to your everyday life. As an employee, your income and other funds will be held in a personal account, whereas being a company owner will bring business-based finances into the mix. Opening a new bank account for your business transactions is essential for organisation and preventing an abundance of stress when the tax deadline comes around. Every financial aspect of running a small business will be more difficult if you fail to separate your accounts. Invoicing, tax forms and bookkeeping will all become a bit of a nightmare if you have to search through hundreds of personal transactions to find a particular piece of business.
2. Maintain neat and accurate accounts
Everybody is different. Some prefer everything around them to be neat and tidy, whereas others have no problem with a little bit of clutter. That’s all well and good for your personal life, but when it comes to the accounts of your business, untidiness can have serious ramifications. Efficient bookkeeping not only makes day-to-day tasks more fluent and easier to handle; larger-scale financial tasks will be less stressful to organise. If you’re a one-man operation or smaller company, you may well manage your finances in-house. Doing so may save you a small amount of money, but if organisation isn’t your forte, you’ll soon have a problem.
3. Recruit a tax accountant for small business
Following on from the previous point is a piece of advice that small business owners are often reluctant to take on board: seeking the accounting tips, guidance and expertise of a small business accountant. Small businesses tend to work with a tighter budget and are less inclined to pay for additional services. But in reality, the assistance of a tax accountant for small business can save you money in the long run. A small business accountant has the skills and know-how to organise your accounts efficiently, not to mention the familiarity with small companies and all of the issues that can occur. While your tax accountant for small business is hard at work, you have more free time to spend on other crucial aspects of running a company.
4. Be aware of tax deadlines and stick to them
A looming tax deadline can be quite stressful, to say the least — even more so as a business owner, with more economic variables to consider. Tax forms that have been filled out incorrectly or missed the deadline altogether will result in late fees and fines, neither of which are good news for a small business with a tight budget. Also, the longer it takes you to send your tax return (after deadline), the more it costs, due to the delight of daily charges. Again, this is where a tax accountant for small business comes in handy. They certainly won’t miss the deadline and you can be sure that your tax return will arrive at the HMRC as a well-organised, accurate depiction of the accounts of your business.
5. Embrace accounting software
In the digital age, technology is an essential part of both everyday life and the business world. In fact, it’s quite difficult to think of an industry that hasn’t changed in some way during the digital age. Go on, try to think of one now. Personal and business finance is no different. Accounting software provides the ideal digital tool to keep your incomings, outgoings and taxes organised. The user-friendly nature of the software is also perfect for business owners who are a little less tech savvy. If you already have a small business accountant, using accounting software in tandem is an ideal way to save them the job of tidying up your mess, leaving them more free time to focus on other financial aspects that could potentially increase your profits. LeeP are partnered up with Quickbooks online to give you full training and preferential subscription costs.
It is also worth noting that from April 2018, many small businesses will need to start reporting to HMRC on a quarterly basis using a digital format – this is part of the new MAKING TAX DIGITAL legislation which comes into force from next year.
As a small business owner, finances and accounting are just one branch of a complexed tree. The accounting tips above aren’t complicated and don’t require a financial genius to take on board, but they are no less vital to the success of your business. The benefits of organised books, the genius of accounting software and the peace of mind provided by a small business accountant are all points you should consider and apply to your life as a business owner.