3 Clever Bookkeeping Tips to Help Streamline Your Accounts

Keeping good business accounts doesn’t have to be complicated or burdensome. When they’re done right they provide a window that can give a clear view of growth pathways or show where there is waste that could be cut back.

Keep Personal and Business Finances Separate

It may sound obvious, but for sole trader startups it can often be tempting to allow personal and business finances to mingle. No matter how small a business is in its early days, it makes accounting and tax reporting very much easier when the business has its own bank account and all business monies are treated separately from personal assets.

One of the main reasons, apart from simplifying the record-keeping process, is that HMRC may want to see your business records. This applies to sole traders and partnerships, including those in the business of letting out property.

The type of detail HRMC requires you to keep includes:

  • A record of business receipts (such as sales), including till rolls or electronic sales.
  • Backups of bank statements, paying-in slips or invoices so you can show where money came from.
  • A record of all purchases noting the date of the purchase and the amount. Some businesses like to run a petty cash account for very small purchases.
  • A record of all the monies taken from the business account for your personal use.
  • Records of all the money you may pay into your business account from your personal accounts.
  • Records of sales or purchases of assets used in the business.

It’s far easier to keep a dedicated record of business finances than it is to wade through personal accounts to weed out the business transactions – which would then need categorising anyway.

Have a System and Stick to It

 Consider how you’ll manage your accounts before you open for business. There are many different ways including setting up a spreadsheet in excel, subscribing to online accounting packages or simply recording expenses and outgoings in a physical book.

By considering your options at the outset, you avoid confusion several months in. If you’re totally new to bookkeeping, you could consider taking a short course. You don’t need a full accountancy qualification to keep basic books yourself, but you do need to understand a little of what you need to keep and what can be safely disregarded.

You also need a system if your books are kept by a bookkeeper, since they will need to access all the information and their job will be much simpler if all your receipts are together.

You’ll save time and money by grouping all the paper your business generates according to expense type, such as travel, office rental, receipts, invoices or equipment and stock bought. At the most basic, gather everything together in one or more box files, placing loose bits of paper (like till receipts) in plastic folders. Being consistent so nothing is missed or lost is more important than devising complicated methods.

Hire a Bookkeeper

Financial transactions pile up fast and in some business models faster than others. There are multiple threads to keep up with, and most business owners are more interested in running and growing the business than they are in recording every minute detail.

An accountant is invaluable for filing tax returns or creating other official reports, or for giving high level business advice, but for daily bookkeeping tasks that create the accounts, bookkeeping skills are needed.

The type of task undertaken by a bookkeeper will include:

  • Gathering all your receipts or other transaction information and invoices.
  • Logging the information in accounting software according to accounting methodologies.
  • Help you understand the numbers and their relevance to how you do business.

Bookkeeping is a daily task, and if you’re not comfortable with numbers or routine jobs it’s easy to put off updating your accounts. When this happens you risk a marathon struggle to make sense of the figures when it’s time to submit the tax return.

By keeping the numbers straight, you can see where the biggest expenses are, which your most profitable lines are or where economies can be made.

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