5 accounting tips from an accountant
Specialising in small businesses and start-ups means we get asked all sorts of weird and wonderful questions every day on what to think about, how to process things, how to get organised, you name it! As an accountant, I've seen too many business owners struggle with managing their finances effectively. Whether it's failing to set aside money for tax payments or intermingling personal and business finances, these mistakes can be costly and even jeopardize the success of your business. So, here are my top five tips to help you stay on top of your finances and set yourself up for success:
Tip 1: Set aside money for tax payments in advance
One of the most important things you can do as a business owner is to set aside money for tax payments in advance. You don't want to be caught off guard when tax season comes around and find yourself unable to pay your taxes. I recommend setting aside a percentage of your income for tax payments each month. This way, you'll have the money you need when the time comes to pay your taxes.
Tip 2: Separate your personal and business finances
It's important to keep your personal and business finances separate. Mixing the two can create unnecessary confusion and make it difficult to keep track of your expenses. It sounds simple enough but if you don’t do this you’ll come to doing your accounts and realise you have to leaf through all your food shops and Spotify payments to find what actually relates to your business. Save yourself time and separate the two now. Consider opening a separate bank account for your business and using it exclusively for business expenses. This will make it easier to track your income and expenses and will make tax time much less stressful.
Tip 3: Track your receipts as you go
similar to number 2, this can be a massive time saver. If you’re busy running around with 1 million things to do it’s easy to miss place receipts in the process. Even email receipts get lost in junk boxes or accidentally deleted. Save yourself the headache of hunting for them later and set up a quick system to save them as you go. It doesn’t matter whether its a separate folder in your emails or a photo album on your phone. Whatever works for you. Just make sure that you know where they are and that you’re entering them into your accounting system on a regular basis.
Tip 4: Understanding what HMRC requires of you
So you’ve started a business, but what does that really mean? Depending on what kind of business you are, where you are, what industry you’re in, how much you’re making etc your filing requirements will differ and it is your responsibility to know what they are. This includes knowing what taxes you need to pay, when they're due, and how to file them. If you're unsure about your filing requirements its time to start learning. Get on google, check out gov.uk and consider consulting with an accountant or tax professional. They can help you understand your obligations and ensure that you're in compliance with HMRC regulations.
Tip 5: Find an accountant that you click with!
This one is arguably the most important. Find an accountant that you LIKE. Obviously, you’ll want to work with someone who understands your business and your goals and who can provide you with the advice and guidance you need, but a GOOD accountant is someone you can trust, someone you can confide in, someone who supports you, someone who you feel like you can talk to and ask questions without feeling silly! Taking the time to find an accountant you actually like can make everything else feel easy.
Managing your finances can be a challenge, but following these five tips can help you stay on top of your finances and set yourself up for success. By setting aside money for tax payments, separating your personal and business finances, tracking your receipts, understanding your filing requirements with HMRC, and finding an accountant you click with, you'll be well on your way to financial success.