The team at Positive Accountants understand that business owners should be aware of every transaction that happens within their business. As Xero Gold partners “meaning we have a wealth of experience in managing the books for SMEs”, our bookkeeping services give small businesses more time to focus on sales and growth.
But how many new or small businesses fully understand the basics required for bookkeeping and how they intrinsically link with accountancy services.
In our insightful blog we deliver some tips, and clear the odd patch of muddy water regarding bookkeeping basics for UK business owners.
Bookkeeping Basics
No small business should ever underestimate the vital role that a good bookkeeping service can play if you wish to ensure that your business finances make sense.
Even if initially the bookkeeper is you, many small businesses swiftly find that as soon as business grows you simply don’t have time for efficient bookkeeping.
When you’re answering the phone and emails, meeting customers, checking orders, marketing and all the other tasks you should be doing for your business, it is easy to forget to complete those essential bookkeeping basics.
Not keeping your bookkeeping up-to-date, could mean that you neglect to invoice a customer, or make the important call to chase up a payment. This could mean your business paying unplanned bank charges for overdraft facilities.
As a business owner there is a lot to think about, that encroaches on your time. Small business accountants like the professional team at Positive Accounts, are here to guide you and help you grow your business.
Bookkeeping or Accounting?
This is often where confusion can rise and we will simply explain the differences. Firstly bookkeeping is a smaller but equally vital part of the overall business accounting process.
Fundamental bookkeeping is the day to day process of diligently recording the businesses financial information for that day. Accounting is the more technical process of using all of the data received and compiling reports and further data to establish the business’s financial position. This area is vital for the ongoing decision making and investment for the business, as well as meeting HMRC requirements.
Bookkeeping is about managing the day-to-day finances of any business, making payments for business bills and stock items and chasing any outstanding payments from customers, basically tracking payments in and out of the business.
The Essentials
- Keep records of every payment
Every payment needs to be tracked and recorded so they can be easily found if you need to refer to them later.
- Choose an accounting method
Your bookkeeping will underpin your accounting, so it’s wise to take recommendations from your local accountants in London and decide which method works for your business. Traditional accounting records income and expenses at the date of the invoice. Cash accounting records them on the date when you actually receive or pay the money.
- Be strict with deadlines
A golden rule is to never make late payments (especially to HMRC) and give your clients a clear payment deadline. This is called credit control, and the goal is to ensure your business has sustainable cash flow.
- Keep track of expenses
There are a number of business expenses that are tax deductible, but ensure you have receipts to support your claims ref HMRC. Always make sure you keep business expenses separate from personal ones. It can be time consuming, but part of the accounting services provided by professional accountants, will help administrate this task.
- File bank statements and invoices in order
Keep your bank statements and invoices in date order where possible. With purchase invoices, keep separate files for paid and unpaid invoices, and file both by supplier name. Remember if documents go missing, then you could end up facing a fine for late filing. As professional small business accountants, we ensure our clients are never late!
- Budget for your tax bill
Always a grim word for small businesses, but some business owners get far too nervous. It’s vital you’ve budgeted enough money to pay the tax bill, and as part of outsourcing your bookkeeping, you will be advised and guided, and have the required funds. If you do your own bookkeeping, you will have to try to work it out yourself.
- Outsourcing your bookkeeping
If your business starts small, you will probably receive family and friend advice to handle the bookkeeping yourself. But what happens as soon as you grow?
Quantify how much time per week you spend on the books, and attach a value to it. Work out the monetary value of your own time and the sales growth you could achieve, then compare this with the cost of a bookkeeper, who probably only needs a few hours per month to handle bookkeeping as part of the accountancy services.
It will swiftly be clear that outsourcing is of better value.
The Wrap
Find out how we can provide day-to-day book-keeping at an affordable price, and all with the personal touch of a qualified accountant in central London on hand to help you at all times.
Handing your small business bookkeeping over to a professional bookkeeper or accounting technician can be useful for freeing up your time and getting an expert to provide you with your management accounting information.
Contact Positive Accountants for an informal chat about your needs.
