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Bookkeeping Basics Every Business Owner Should Know

Better implement your business’s bookkeeping process using the below bookkeeping tips.  They will help you bookkeep more efficiently and reduce the possibility of costly mistakes being made.

Keep accurate records of your finances – Once you have a good system set up, it should take just a few minutes a day to keep accurate records. Do this as soon as possible. If a backlog forms you start losing track of what money has come in and what money has gone out. It can be difficult to get yourself on a level again. And keep these records for at least 6 years.

Review as well as record – Go through the financial data you’ve been logging for at least thirty minutes every week. For spotting discrepancies or irregularities, these sessions are invaluable. They will give you a sounder understanding of the financial ins and outs of your business too.

Separate your business and personal finances – Mixing the two up makes your bookkeeping a lot more complicated to handle. By keeping the two distinct from one another you’ll save yourself hours of work along the line as your business develops and your finances get more complex.

Pay by card not cash whenever possible – Because cash spending is harder to track. You will inevitably sometimes forget how much you spent and/or where you spent it. Paying by card solves this problem. If your memory fails you, you’ll have an online statement from your bank to remind you.

Don’t overlook the small costs – Such as stationery, transportation and office accessories. You can claim it back if you keep the receipts for your records provided the cost is incurred exclusively for business reasons.

Swap manual for digital – Keeping paper records of your income and expenditure is outdated. Not only is it easier to use a spreadsheet or bookkeeping software, it also means you’re able to use the raw data to produce useful charts and reports to analyse your financial status.

Back-up your records often – Not once a year. Not once a month. Once a week should be the minimum. Also have one back-up copy stored in a different location to your office. Saving one copy on a cloud server is even better.

Send invoices without delay – As soon as you’ve delivered the product/service is best. Research shows the quicker you send it, the quicker the payment will be received. Wait a week or two before sending an invoice is of no benefit to you to. Your cash flow suffers from it; even more so if you do it for all of your customers.

Set-up phone alerts ahead of important dates – So you have sufficient time to prepare your VAT, PAYE, etc. and have them submitted on time. HMRC accept no excuses regarding late payments: expect to be hit with penalties and/or fines for not sticking to the dates they issue.

You can’t beat the system – An audit (which anyone from a sole trader to a corporation can be subject to) will show that you’ve bent or broken the rules. Anything from a heavy fine, to a crippling penalty, to a stint in prison can follow as a consequence. However clever you think you’re being in taking a shortcut, someone has tried it before, someone has been caught for it before.

Get help if you need it – Even if you can just about handle your finances yourself, it’s often more cost-effective to outsource bookkeeping to a professional company. Doing so frees up your time, removes the risk of mistakes, and gets you insights you wouldn’t otherwise have.

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