Keeping your business accounts tidy
Unless you’re actually a trained accountant, chances are the thought of doing your business accounts is hardly one that’s going to thrill you. The world of tax and accounting can often be a baffling one, which is why so many individuals and businesses have a tendency to put off doing their accounts.
The longer you leave your accounts in a disorganised pile though, the more difficult it’s going to be for you or your accountant to sort through them and make them coherent. So to make life that little bit more straightforward, find out some handy tips here to keep your business accounts tidy.
The first and most important thing to remember as a small business or self-employed person, is the fact that it is a legal requirement to keep accurate records, so it really is in your best interest to get on top of them now. Any successful business will keep track of theirs, so if you’re a bit sloppy with your business records, it is time to change that! Businesses are required by law to be tax compliant, meaning you must keep records of every transaction made.
When it comes to keeping track of your business accounts, there are certain things that you’re required to have for HRMC when you do file a tax return. The first of these is of course invoices, since they keep tabs on your business’ income.
An accurate invoice should contain information about the type of work performed, the date it was completed, the amount paid, as well as additional info such as company addresses and details.
You also need to be good at keeping hold of your receipts, since this is the simplest way to work out your expenses. Any and all receipts relating to your work, like travel and lunch expenses need to be accounted for, and remember failure to do so can result in a hefty fine from HRMC.
You’ll need to keep a hold of these invoices and receipts for at least 6 years, since HRMC has the power to conduct an audit at any time.
Happily you don’t have to have the physical copies these days – store everything securely online in files and it makes searching for dates and information so much simpler. And if you have an accountant, they are going to thank you for making their job less tedious!
Another important thing to consider, is that you need to keep your personal and business finances separate, which can seem like a tricky task, especially when you’re self-employed. No matter how small your business is, it is much easier if you keep things segregated from the start.
For instance, as soon as you get going with your business, open a proper business bank account which will help to make everything clear in terms of your income and outgoings.
If you dread the annual tax return, then keeping your business records in good order is one way to make the whole process less stressful. With tax law being what it is and with a reputation for its complicated ins and outs, another good move would be to hire a trusted accountant if you haven’t done already.
An accountant is able to navigate with ease the complexities of HRMC tax requirements, especially when you can present them with clear records and paper trails. They’ll be able to help you with tax returns, VAT, national insurance requirements and more, meaning you can relax knowing that you’re following the law correctly. We recommend a dedicated service like what we’ve found over at Tax Kings, since they are up to date with all the latest tax laws and returns information.
Whatever the size of your business, keeping clear records is not only recommended, it’s required by law, so don’t let your records get out of hand. With these tips, get them in shipshape order meaning when it comes to filing your tax return, you know you’ll have everything ready.