Top Tips To Getting Your Business Accounts In Good Shape
Posted on 10th January 2022
When you run a business there will come a point in the year when you need to create your business accounts often referred to as year-end accounts. In effect. this is a presentation of all the financial information relating to your company over 12-months. Sounds reasonable and only happens once a year.
But if you haven’t kept accurate records of your invoices and expenses throughout this period, it can be a time-consuming task. And this is why it’s a good idea to keep your business accounts in good shape every month so you don’t have a huge admin task over a short period.
Let’s have a look at how this works in practice and the sort of activities you should consider to help you complete this task.
A brief overview of your legal obligations
Operating as a limited company, Limited Liability Partnership (LLP) or a sole trader means you will need to prepare year-end accounts and submit your tax returns. Every year, there is a certain amount of information HMRC and Companies House will want to know about your business.
You can choose the date for your year-end and normally you have 9 months from this date to complete your accounts. Many companies like it to coincide with the tax year. This would mean a date at the end of March or 5th April – popular because it keeps everything in sync and current.
Another option would be the calendar year running from January to December. For some companies, it’s beneficial to undertake this exercise during a quiet period for the business. If you’re not sure, a bookkeeper or accountant can advise you on the best option for you.
Make your life easier with accounting software
There are accounting software systems specifically designed to help small businesses with keeping accurate records. Companies such as Quickbooks, Xero, and Sage offer these types of packages. Ready-made business processes you can easily adapt and build into your operations.
You can create invoices, record expenses, even keep a running total of your tax liabilities throughout the year. Everything you will need to create your year-end accounts can be recorded using this software. What’s even better is it’s all stored in the cloud, so once you have input the information, it’s kept safe and easy to access when you need it.
Get into the habit of recording everything
It’s not always something you think about or maybe you’re unsure, but keeping records of all your business transactions will be key. In its simplest form, this is the money coming into the company and the money going out. Using an accounting software package will provide you with good prompts.
You’ll get to know the important elements, but here are some of the most common areas:
Income – money coming into the business from invoices you’ve raised for work completed or product sales.
Expense – purchases made by the business to enable you to operate, this could include buying stock, travel costs, property rents, and running costs.
Fixed assets – a list of the equipment owned by the company such as computers, desks, chairs, this would also include property.
Liabilities – any money the business owes as debt or investment.
Outstanding – the unsold stock you have, usually accounted for by carrying out a stock take or work you’ve started but not completed at year-end.
Payroll – the process of paying your staff, recording how much is paid including any expenses they have claimed back against the business.
Another great tip is to keep all your receipts as your financial information will need to be reconciled with proof of purchase. There are accounting packages that will allow you to scan these into the system, allowing you to keep everything together on a single platform, then you don’t have to worry about losing paper receipts.
Ask the experts for help and advice
It’s that adage of you don’t know what you don’t know, which is why it’s always good to ask the experts. There’s also that time factor, how long does it take you to navigate yourself around company tax and regulation. It can distract you from the day-to-day running of your business.
A bookkeeper can help you set up the systems and processes you need to record all your financial transactions. Many businesses use a bookkeeper to do everything for them in terms of inputting all the data and making sure the processes are being followed. It just depends on how you want to operate.
They will know how to create your year-end accounts and in what format. If you were to use an accountant they will be able to provide more detailed tax advice. Interpreting what the numbers are telling you is all part of this and they can also advise you on how to become more tax-efficient in the future.
A final thought…
Keeping on top of your record keeping is the only way you can ensure your year-end accounts are not a huge headache. If you leave it to the last minute, you’ll struggle because it’s difficult enough to remember what you did two weeks ago let alone for a whole 12 months.
This relies on the right systems and processes being in place. Spend a little time on keeping your business accounts in good shape throughout the year and save time in the long run.
Have you used a bookkeeper or accountant recently, what was your experience?
Tagged as: Assets, Bookkeeper, Bookkeeping, Bookkeeping tips, Fixed Assets, Income, Legal obligations, Liabilities, Payroll
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