Accounting isn’t one-size-fits-all. What works for a sole trader will differ from what works for a multi-national company with multiple offices. However, we hope these top five tips will help with your accounting, no matter your size.
Tip 1 - Keep your bookkeeping up-to-date
When the end of your financial year comes around, you don’t want to have to run around looking for invoices and hunting down receipts. It can be time-consuming, time that you could spend in other areas of your business.
If you have an easy-to-use bookkeeping system, the whole process can be smoother from the outset. Try setting aside a small amount of time each week to dedicate to bookkeeping; once you’re in the swing of things, you’ll wonder what all the stress was about.
Tip 2 - Keep personal and business accounts separate
If you’re a limited company, this is a requirement, not just a tip.
You need to be able to track your business expenses and report on them at the end of the financial year, but if they’re all lumped together, how do you separate them to make this possible?
Having a business bank account will allow you to make purchases, accept sales and transfer money straight from the funds within the business. But you need to weigh your options carefully because each account has different perks and fees associated with it, so do your homework.
Tip 3 - Keep your receipts
Imagine for a moment that HMRC is auditing you. You’ve claimed a big expense within the business that’s raised some flags with them. Are you able to prove you made the purchase?
If you can’t prove you have a receipt and a corresponding bank transaction, you could find yourself in hot water.
This doesn’t just go for the big expenses; you could be questioned about any money that moves through your business.
Tip 4 - Know your dates
At the very least, you need to know your accounting year and accounting reference date.
Your accounting year is determined by your accounting reference date. For new companies, the accounting reference date is the last day of the month during which their anniversary falls.
This sounds complex, but it essentially means that if you register your company on 06/05/2024, your accounting reference date is 31/05/2025.
It’s your accounting reference date that you make your accounts up to. For more information, check out a post by our sister company, Company Wizard: Reference Dates and Accounting Periods.
Tip 5 - Don’t ignore problems
You could end up with minor errors creeping into your accounts. Whether they’re caused by rounding errors or including something in the wrong accounting period, errors always find a way to creep in.
Don’t ignore these problems, hoping they’ll disappear on their own. As time goes on, they can grow and snowball out of control. When this happens, you could find yourself struggling when you need to submit your accounts.
If you’re unsure what to do and how to correct the error, you can always speak to an accountant who can give you advice that fits your needs.