When running a small business, every penny counts and can make the difference between meeting a financial target and missing out. Managing money is a skill that can be learned and honed as the years go by. Here are some top tips to help you look after your money and make sure your accounts are in good order.
Setting up a small business will impact on your personal life in more ways than one. However, it is very important that you don’t let your finances become too entangled. Open a separate bank account for any and all business income. Even if you end up transferring funds into your personal account to meet bills and daily expenses, having two accounts will help keep things organised and will be a godsend when it comes to sorting out your tax return.
Less is more
Small businesses often have smaller premises in which to operate – sometimes just a single room or desk. Try and stop the clutter from building up, especially when it comes to paperwork. Work out what you need to keep and what can be disposed of, taking care to find out about what HMRC need to you to retain in case of tax investigations – and for how long. Go through your paperwork regularly to see if you can cull anything – don’t forget to use a shredder to destroy any papers that you no longer need for maximum security and financial data protection.
Scan and save
A great way to manage archives and essential paperwork, such as receipts and invoices is to ‘go digital’, taking advantage of the many online and cloud-based tools out there for safe, simple electronic storage. Receipt scanning software is really useful when it comes to storing and sorting all the evidence you need to file expenses with a client or complete your tax return. You can opt for a more sophisticated service, such as Receipt Bank Small Business, which not only scans your receipts, but also analyses them and retrieves the salient data from them, presenting it back to you in a useable format.
Thanks to tools such as Receipt Bank Small Business, you can stay organised when it comes to your receipts. However, the digital advantages don’t stop there. If you are running your own accounts, you should also look into dedicated accounting or bookkeeping software to help you stay on track. This enables you to input your income and expenditure, as well as balance your accounts and gather the information needed for tax compliance in just one place. As well as digital scanning, accounting and organisation tools, you should also invest in some ‘real-world’ storage and organisational solutions for accounting paraphernalia like invoices, quotes, end of year accounts, self-assessment paperwork and petty cash slips. Allocate an area on your desk or a shelf to keep your accounts paperwork together so you know how to get hold of it when you need it.
Get help if you need to
You may be extremely organised, highly numerate and able to dedicate enough time to your accounts to stay on top of them alone. Many people are. However, many people find it harder, if not impossible to organise accounts at the same time as establish their small business and attract new work. If you fall into the latter camp, it is a good idea to hire an accountant to help you sort out this crucial area of operations. Penalties for not submitting tax returns on time, or not adhering to regulations around VAT can be severe. Small businesses do work on tighter budgets, but if you shop around you should find an accountant whose services fit what you need and can afford to pay for. Professional support like this can save you a lot of money in the long run.
Dates for your diary
Make a careful note of any accounting deadlines in your diary and add in reminders a few weeks beforehand to make sure you don’t miss them. This includes all tax assessment and payment deadlines, as well as due dates for paying your suppliers, meeting invoices from any freelancers you may have engaged and settling any IOUs from petty cash. You may also like to note other key dates, such as the Government Budget speeches that may contain information affecting your business financially, or dates when insurance renewals are due or rent contracts on commercial premises become eligible for renegotiation.
Finally, don’t feel as if you have to go it alone. Small business workers and sole traders often work in isolation and can be reluctant to ask for help or seek other people’s advice. Take advantage of any networking opportunities out there. Take a look online at relevant forums, discussion groups and industry websites that can help you work out how to manage your finances and accounting responsibilities. As you gain knowledge and increase your confidence, you may find yourself able to help out another small business in return.