VAT increases to 20% with effect from the 4th January. The normal tax point rules…
Here are three quick bookkeeping tips based on my experiences of working with successful small businesses over the years.
1. Do it Frequently
How often have you looked at that ever growing mountain of paperwork and groaned? How often have you then put off processing the paperwork in favour of doing something “more interesting”? Then, when you finally can’t put it off any more, you have to spend what seems like days processing it all.
Setting some time aside in your diary each week to keep your books up to date will vastly reduce the amount of stress you suffer trying to get it all done just before the VAT deadline/ year end deadline. It will also give your accountant many more opportunities to undertake some tax planning work for you to keep your tax bills down!
2. Use a System
Systems help you keep everything in order and track activity. Without them it’s easy to lose track of where you are with your business numbers. We recently saw a great example where the business owner didn’t really keep his books during the year and preferred to pass over a box of papers to us at the year end. In the process of pulling together his accounts, we found invoices that he had issued to customers and had never received payment for. they totalled over £20,000!
I’m sure you are all familiar with computerised bookkeeping systems such as Sage & Quickbooks, which are, in my opinion, far too complicated for a small business owner to use. Instead, I’d suggest using a system more in tune with your needs. This can be anything from a manual system, through to a full blown ledger system that stores details of all the customers that owe you money and all the suppliers you owe money to. At Accountancy Extra, we recommend two systems. For a cash based business (eg cafes, restaraunts, shops etc) we have a free cashbook system that we give out to clients which helps them record all their takings and outgoings. For more complicated businesses that sell or buy on credit, we recommend Kashflow, an online system that does so much more than just keeping track of your expenses.
If all of this seems too much like hard work. Or, if you could be doing something else, such as selling more of your product, why not consider outsourcing the bookkeeping to a qualified bookkeeper. Bookkeeping rates vary between about £15 an hour up to £25 an hour. Here, we charge £20 an hour for bookkeeping and generally find that we can complete the work in about 2/3rds of the time that it takes the business owner. That frees them up to go and do what they do best, sell their own products and services. they can also sleep easily at night, knowing that the VAT is taken care of and that they can spend their weekends with their friends & families!