Everyone is stressed at the moment, the pandemic has us working from home, home-schooling the kids, maybe unable to trade normally, seeing a reduction in business, not being able to get hold of essential supplies – it has been challenging and very overwhelming.
And, unless you have a passion for numbers and accounts 😊, bookkeeping just adds to the stress. Running a business ca be stressful enough and bookkeeping and accounting can be more difficult and time consuming than you think.
If you’re anything like me, you prioritise the things you know and like, and find reasons to delay on those activities you don’t. The more you delay, the harder it gets and the less you want to tackle it. When it comes to keeping the books in order, that’s a recipe for disaster!
So here are my top tips to get control and keep things in order.
A simple system
There are some basic accounting records that you need to have to hand:
- Your bank statements
- Supplier invoices
- Copies of your outgoing invoices (SALES)
- Credit card statement
- Receipts for any expenditure
- Business expense receipts
- A record of your business mileage
Keep these in a safe place and, that doesn’t mean thrown in a bag to be sorted later! Ideally, file them in alphabetical and date order – so if you have 3 receipts for 1st March, sort them in order of the supplier name alphabetically.
It doesn’t take long and means that doing your end of month, quarter or year accounts takes much less time and it’s easy to find that missing paperwork you need whenever you need it.
Make being organised a habit – whether it’s a daily, weekly or monthly task (the more paper you have, the more often you should do it).
Keep your finances separate
If you run a limited company you must have a separate business bank account, but even if you’re a sole trader it’s advisable to have a separate bank account.
This makes it easier to see how your business is doing and saves trawling through all your transactions to work out how much you’re making and how much the business costs to run.
When if the time comes to convert to accounting software it means your importing of your bank statement and reconciliation is straightforward, one final total, no complications in separating personal from business transactions.
This will actually save you a huge amount of time not just in the short-term and give you robust accounts should you ever decide to sell your business.
DIY is not always cheaper
When starting out you’re almost certainly trying to keep costs to minimum, but don’t underestimate the importance of having a qualified professional to help with your accounts.
Firstly, not doing accounts at all is a dangerous thing to do. With no way to measure your business’s growth or progress you could end up in very deep financial water.
Secondly, if you don’t have any experience in keeping even a basic set of accounts it’s very easy to make errors. As you will still have to submit a personal tax return that could end up costing you much more than you need to pay – or ending up with a fine. Especially if you are rushing this through to meet the deadline.
Thirdly, it’s probably going to take you much longer to carry out the task of sorting out and entering your accounts than someone who knows what they’re doing. The cost of a bookkeeper will almost certainly be less than the amount you could earn in the time it will take you to carry out this task.
Finally, getting it off your to do list will free up your mind to think creatively about your business development. No more nagging and guilty thoughts – just space to think.
In this particular period where many companies need to access government grants or loans, this can’t be done without up-to-date accounts to show your business’s situation. So if you need financial support, you also need your accounts to be in order.
Behind every good business is a great bookkeeper
If you want help with your bookkeeping, whether it’s to set up a system you can manage yourself or you just want to get it off your to do list, Helen Paul at Four Corners Bookkeeping specialises in helping micro-businesses to do what they do best.