17 Jul Top 10 Bookkeeping Tips
Looking to cut down on your accountancy costs? Here are our Top Tips on how to avoid more than you need to!
1. Go Paperless by Using Cloud-Based Accounting
There are a number of cloud based products and apps available to reduce the bookkeeping burden, making it easier for you to keep on top of your finances wherever you are. Cloud accounting increases efficiency for both you and your accountant. At AO we only use Xero, just because it’s really great.
2. Keep track of your expenses.
Always obtain a receipt for every purchase you make. If you can’t get a receipt for any reason, make a note of the purchase details and the reason why a receipt isn’t available. When entering your expenses into your accounts, make sure each item is categorised correctly, i.e. telephone, rent, stationery etc.
3. Keep Personal & Business finances separate.
Wherever possible, avoid mixing the two up because it can make the accounting more difficult. It’s easier to keep track of what you’re spending within your business if you only have one type of expenditure going through your accounts.
4. Avoid cash wherever possible.
With the technology available today, it is easier to make payments electronically from literally anywhere. It is harder to keep track of cash spending and often records of purchases are missed. By using a debit or credit card you can keep track of the amount spent, where it was spent and what it was spent on. This makes tracking your expenses far easier.
5. Set money aside for your tax bill.
Keeping on top of your financial records efficiently and in a timely manner can help you prepare for your tax bill early on so that you know exactly how much you need to pay later on. It’s good practice to set aside some money every month towards paying your tax bill so that you’re prepared for the payment.
6. Update your records regularly.
For most small businesses, updating your financial records is only a 5-10 minute job each day. Enter your sales and purchase invoices as you generate/receive them. Reconcile your bank account daily or at least weekly so that you know exactly what funds are available and what transactions have taken place.
7. Financial Agreements.
If you take out a bank loan, finance or hire purchase, make sure you keep a copy of the agreement and pass a copy to your accountant so that they can account for the purchase correctly and ensure tax relief is claimed.
8. Check your Books before handing over to your Accountant.
Always check your financial records before you hand them over to your accountant. As a taxpayer, you have a personal responsibility to ensure that your records are correct. Have you included all of your purchases, including cash transactions? Often regular standing order or direct debit payments are overlooked. Have you included receipts wherever possible? Are all of your bank transactions accounted for? Are all of the documents that your accountant requires available? If your accountant has to chase you for outstanding information it may cost you more in fees. Your accountant can work far more efficiently if they receive all that they need in one go rather than receiving varying amounts of paperwork sporadically.
9. Hand over your documents in plenty of time!
Make sure you give your accountant plenty of time to prepare your accounts and tax return and let them have all of the relevant information as early as possible. Most accountants will have a deadline for receiving your financial records in order to complete your tax return in advance of the filing deadline. If your tax return is filed late you will receive a £100 late filing penalty from HMRC.
10. If in doubt, ask.
Your accountant should be approachable and willing to help with any query that you may have. Ask them for assistance if you are unsure of how to process a transaction, it’s what you pay them for.