‘I have just started my own business but how can I stay productive with my accounts?’
Whether you are self-employed or run your own Limited company, it can be a very daunting time to suddenly be responsible for all your own finances, paying tax and getting it right. We all lead busy lives as it is, juggling after school clubs, your husbands diary, family get togethers and childcare so it is easy to put off. You can’t ignore it, you need to make time to prevent the worry at the end of the financial year. If you leave it until the last minute things will get missed, penalties will be imposed for late submission and you will always dread at the same time each year.
So, the question is how can you stay productive with your accounts to prevent a last-minute rush to find receipts at the bottom of your handbag or filing your accounts late with HMRC? Here are some quick wins that I have learnt myself along the way and I am sure these will help you get off to a good start.
- Keep a record of your mileage
Keep a record of mileage using a little book in the car and write down the postcodes to and from your journey each day or perhaps you have a diary and you could make a quick note of the customers postcode you are dropping off an order to/meeting a client. Choose a system that is going to work best for you.
- Have a place to keep all your receipts
This could simply be a box or plastic wallet in a draw, or like our clients in our prepaid envelope, which will prevent you emptying your handbag and purse at the end of the month searching for receipts.
- Keep all electronic receipts in a folder
It can be easy to store your electronic receipts in your inbox but get into the habit of dragging it into the appropriate folder (by month) so you can easily locate it when you finalise your accounts or send them to your accountant.
- Plan time into your day
Whether it be a Monday or a Friday, set some time aside each month to get your accounts up to date. This way you can ensure you have all relevant income and expense receipts. You need to avoid a last minute panic as that is when mistakes are made or expenses are missed that you could have claimed. If you have an accountant then get into the habit of sending your information each month. Our clients have a prepaid envelopes each month to keep all their receipts and invoices and they send them to us.
Don’t forget that in 2019 HMRC are introducing Making Tax Digital (MTD) which will mean most people will be required to send quarterly accounts to HMRC. Get ahead of the game now and be productive, get processes in place and teach yourself some new accounting habits.
- Open up a separate bank account
If you are self-employed it is not a legal requirement to have a separate business bank account, however if you have your business expenses and income separate from your personal then this will save so much time when completing your accounts. Print off your bank statements each month and attach all related receipts to the bank statements. As MTD comes into effect in the next few years it will be easier to complete your quarterly accounts if you have all your business income and expenses separated.
- Set aside month each month
It is not uncommon to make a loss in the first year of business and therefore may only owe little or no tax, however it is best to get yourself into habits now which will prevent you from worry later on. Set aside around 10% of your income for the tax you are due to pay when you have submitted your accounts. Once you have got yourself into the habit of setting money aside you won’t miss it.
These steps can be used even if you have been running your business for a while, it is about getting yourself into better habits and being productive with your time. Start off with small changes to your processes and quick wins.
Time is precious when you run your own business and your time is money. If you can afford to outsource your accounts then it will be money well spent to prevent the worry and stress at the end of each financial year. You are not an accountant so let someone who is support you in this area so you have more time of your business and with your family.