Ways to make your bookkeeping easier

Ways to make your bookkeeping easier

When you are running a business or are interested in starting one, there are many decisions that need to be made and a steep learning curve to master as fast as you can. One of these areas is bookkeeping. This blog will guide you through the nature of bookkeeping and exactly how it affects or may affect your business and how you can make alterations and changes to your work in order to get the most out of your business with a simplified and less complex bookkeeping strategy.

What is bookkeeping?

First it is necessary to explain exactly what bookkeeping is and how it affects businesses. Bookkeeping is the retaining and checking of all financial transactions and payments to and from your business. It is important that you keep a record of every monetary transaction with both physical and electronic receipts to confirm and acknowledge that money has changed hands. All receipts and records must be collected continuously across the financial year in order to be part of the tax returns. Without these records being retained and checked it is very difficult to accurately and satisfactorily complete your tax returns to the level legally required by HMRC. It is therefore vital for you to participate in bookkeeping to be in a position to complete your annual tax returns.

Ways you can simplify your bookkeeping

That being said, bookkeeping can be challenging, with a constant and heavy flow of information that you need to keep track of and preserve properly. So here is some advice about how you can carry out your bookkeeping requirements in a less stressful manner.

1. Make sure to keep your business bookkeeping and personal bookkeeping separate.

When conducting bookkeeping especially as a small business, it is easy to muddle and mix your business records and receipts with your private transactions. This is a very bad idea as both you and HMRC will be wondering which is which, and how it can be justified. Making it more likely for you to make a mistake which HMRC will not look kindly on. This is easier to avoid with separate accounts and systems for your private records and your business records. Your business and personal tax requirements are different so keeping them separate is extremely prudent.

2. Be sure to pick the bookkeeping solution that is right for your business.

There are several ways to manage bookkeeping, increasingly this is done online with various software options. This would be suitable as your business grows and moves away from small business status, although while you remain a small business using spreadsheets should suffice. More and more businesses are storing and recording their bookkeeping information online with specialist software, as stipulated by HMRC as part of “making tax digital”.  At the moment, any VAT registered business is required to comply with the making tax digital directive, so those with a turnover of under £85,000 would be exempt.

3. keep your bookkeeping up to date

This is very important, because if you fall behind with your record keeping it will be difficult to sort it out and catch up again, wasting valuable time and having a knock-on effect for your future bookkeeping efforts. It is much easier to keep up to date with the information and record it as and when it happens to be sure it is correct and can be relied upon for tax returns. You’ll also want to ensure you don’t leave it to the last minute, as this is where mistakes can happen and receipts go missing. Which never bodes well with HMRC.

4. Take your time

It is necessary to give your full attention to your bookkeeping and tax returns when you are filing them. This is a common point where mistakes are made and your financial declarations are put together to be examined and approved by HMRC. You must not hurry this process and be sure to check all your records, transactions and invoices etc several times to be in the best position for HMRC approval. It would be a wise solution to employ a full-time accountant/bookkeeper to monitor your businesses financial information and keep your business on track and fully recorded. Alternatively, you could consult an accountancy firm.

5. HMRC rules

For business owners it is very important to have a firm grasp of the taxation laws which are complex and strict and are often subject to change. Which means your requirements and obligations are probably not fixed and could be different only to change again, so it might be a good idea to keep your eyes peeled for the latest updates from the chancellor of the exchequer, or as he is more affectionately known; ‘Fiscal Phil’. Failure to provide adequate records to HMRC and on time could result in a fine, which you would do well to avoid.

Sticking by these 5 points will make sure that you’re in line with HMRC and everything’s in order. If you are still unsure or confused about any aspect of bookkeeping or the advice given, you could always contact Contractor Unlimited whose bookkeeping services , accounting, and business support is sure to point you in the right direction and provide a solution that is just right for you.