The Definitive Small Business Guide To Keeping Financial Records

Running your own business and being your own boss is truly liberating. Bringing those dreams to life can be a rewarding experience that improves the health and happiness of the work-weary, downtrodden employee. Perhaps self-employment is a long-planned event for which you have saved over half a lifetime. Every contingency has been considered, and nothing left to chance. Sometimes though, an opportunity can arise that is just too good to pass up. You may find yourself rapidly searching for premises, stock, or clients. It is always a good idea to prepare a business plan. This can be as complicated or as simple as you need it to be. If it is for your eyes only, it may only be a few notes on a sheet of paper.  You can check this site to get more information about it.

When compiling your business plan, one should always include a system of accounting.

Your small business is like a bucket with a hole in it. The bucket will always leak and your aim is to keep topping it up constantly at a faster rate.

Money in and money out. That is the basic principle of any business, and a vital element for the entrepreneur is keeping track of it.   When most businesses first startup, the money will go out at an alarming rate. Hold your nerve though, this is quite normal.

VAT, on the other hand, is a different matter entirely. One should always use the accounting services from RJP or one of the other highly reputable firms that can be found on the internet.

Bookkeeping in it’s most simple form involves using an accounting book, that is available in any stationers. It will have two columns for money in and money out. Every time you are paid enter it in the money-in column. Every time you spend something, enter it into the money-out column. This system is perfect for a sole trader who doesn’t have to deal with large amounts of stock, suppliers, etc.

Your well-organized books will have to be backed up by receipts and invoices. Give each a unique number that is entered in your books alongside the corresponding financial entry.

If you have started something like a retail business, you may want to keep records a little more organized. The principles are still the same, however. If you have a basic knowledge of spreadsheets it can be advantageous to have different pages for each supplier, service provider, client account, etc. An overview page can automatically calculate the totals in the other pages to give you a constant view of how your business is faring.

If you are a little more confident, there are some excellent bookkeeping software solutions on the market. Sage is probably the market leader and is available at cost. There are free applications available for download though, or even cloud-based, that does a very effective job.

Keeping clear and accurate records, whatever your system, can give you a good idea when to spend on further investment for your business. This makes sense as it can reduce your tax liabilities considerably.

Clarity and accuracy also help when presenting your finances to your accountant. By presenting well organized financial records, your accountant can complete your tax return once a year without having to spend days trying to figure out what all those receipts are actually for. This can even save you money.

Whatever system you adopt for your business be honest and open. You never know; HMRC may have you in their sights for their next audit.

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