1. Keep your personal and business finances separate.
You are only going to give yourself a headache when is comes to filing your tax return and you have to sort through your bank statements and receipts to find all your income and expenses for the year.
Get it right from the start and set up a separate bank account. There are some great challenger banks out there now where you can open up an account in minutes through an app on your phone. Monzo, Starling, Coconut, Tide and Mettle to name but a few.
2. Use an accounting software, preferably cloud based.
Using a great piece of software for your bookkeeping will not only save you time but you'll find that there is less room for mistakes too. Most accounting software will have the ability to automate tasks such as bank feeds for reconciliations; no more scanning and importing bank statements.
Easy access to your numbers; cloud software can be accessed from anywhere at anytime.
Quick collaborations; invite your bookkeeper or accountant in to your software so you don't have to send wads of paper or tonnes of emails at year end or tax time.
Invoice organisation; all your sales invoices, purchase invoices, receipts etc stored in one place.
My software of choice is Xero, but there are several more on the market so make sure you do your research.
3. Schedule bookkeeping in to your diary weekly.
Now this one may sound obvious but when you're busy working on or in your business, time can escape you and the next minute you are a couple of months behind. How can you make important financial decisions when your data isn't up to date?
Get yourself a calendar and just like you would note down your kids after school clubs, the food shopping delivery or that all important hair appointment, schedule it in once a week just like that, no excuses!
You've got this!
4. Automate as many of your processes as you can!
As a virtual bookkeeper, I love technology and the automation it can create. In fact, I love anything that can save time so make sure you use the technology available to its full potential.
For example, if you are using Xero for your accounts - set up bank rules for regular payments and receipts that need reconciling in your bank. If you have a customer that you charge the same price each month, set up a recurring invoice that can be emailed to them directly from the software. Look out for integrations between apps too, add-ons such as Hubdoc can automatically pull information from receipts and bills, saving you time on manual input, oh and by the way it's free for standard and premium users of Xero! Bonus!
And if there is no direct link between apps, then check out Zapier! You're welcome! 😉
5. Keep on top of tax deadlines and budget for tax payments.
This one is so important! Know when your tax deadlines are, put them on the calendar, set reminders in your phone but whatever you do, don't forget!
So if you are self employed, the dates you need to remember and budget for are the 31st January and 31st July. 31st January is the deadline for submitting your tax return online and is also the deadline for your 1st payment on account for the next tax year, your 2nd payment on account is 31st July.
If you are a Ltd company and VAT registered, your VAT liability needs to be submitted and paid exactly a month and 7 days after the end of your VAT quarter. Your corporation tax bill is due exactly 9 months after the financial year.
If you check your VAT liability and calculate the tax due on your profit each month, then you can set aside this money ready for those big bills, which also stops you from spending it.
6. Understand what expenses you can and cannot claim for.
Questions about what you can and can’t claim as a business expense come up all the time
and sometimes there is no definite answer depending on the use of those expenses but the general rule of thumb is that the expense is allowable for tax purposes if it was incurred ‘wholly and exclusively’ for business use.
7. Keep a record of all income and expenses for a minimum of 6 years!
Now I know what you are thinking... “but I don’t have the space to keep files of invoices and receipts!”
Who said anything about keeping paper copies?! 🤷🏼♀️
If you’ve tuned in to any of my other tips so far, you will know that I hate paper and I love automation. 📝❌ So get yourself an online filing system (preferably cloud based of course) and save them in there. File them by month and year or simply file them by customer or supplier, whatever works for you.
Keep the files for 6 years and as you come to the end of one financial year, delete the the oldest.
8. Keep a close eye on your cash flow!
I'm pretty sure you don't need reminding in these difficult times about how important it is to keep an eye on your cash flow, but it should always be on your radar regardless of a global pandemic.
Poor cash flow is one of top reasons for why businesses fail so if you want to succeed, map out all your income and expenses and don't let your debtors take too long to pay!
9. Invoice promptly and make it easy for your clients to pay.
If you send your clients invoices as soon as the work is complete you are more likely to get paid sooner, as its fresh in both your mind and the clients mind. If you collect payment before a job begins or at the start of the month for that month then even better.
My other tip for getting paid sooner is to have a 'pay now' button on your electronic invoices, a client is more inclined to do this as they receive it. Just having bank details on an invoice may result in delay, due to the client not having the time to make a bank transfer there and then, especially if they need to add you as a new payee.
Better still if you know your clients will be paying the same amount each month then send them a direct debit mandate. Your days of chasing payments will be greatly reduced.
10. Hire a bookkeeper if its all getting on top of you.
The finale and the moment you've all been waiting for! 🤩
Don't suffer in silence, hire a bookkeeper! Preferably me 💁♀️😂
No seriously, all jokes aside if you find you are spending your valuable family time catching up with your bookkeeping, unsure if you are doing it correctly or want to find out about automating your processes then hire a bookkeeper.
Bookkeeping isn't just about data entry so outsource the stress and the worry to a skilled professional who will love getting your finances in order and advising you on how you can streamline your processes and save you money!
Book a free call with me now to see how I can help you.