Accounting Advice for Small Business
Perth, Perthshire and Kinross
Are you looking for accounting advice for small business in Perth, Perthshire and Kinross? Any business requires key accounting practices to be successful, and below is accounting advice for small business owners.
Top Tips for managing your accounts
Separate your personal and business finances
Owning a small business brings with it a few changes that you should prepare to adjust to appropriately. As an entrepreneur, your money and that of the company might mix up if you do not take measures to prevent it. As an employee, you got your salary from a personal account, but a business owner needs to consider additional running costs. So it is prudent to open a separate bank account for the organisational funds. That way, you will avoid spending business money, and consequently stress over tax deadlines.
Maintain neat and accurate accounts
We are all different when it comes to personal organisation. Some love everything to be tidy while others do not mind clutter. For your home, you may not have huge repercussions to have clothes lying everywhere on the floor. Unfortunately, such a mess in your business accounts will result in serious problems. Not knowing exactly when you need to re-order some products results in failure to get new stock in time. It could also lead to loss of customers, hence lower margins.
Recruit a tax accountant for small business
A small business has fewer resources which may cause owners to avoid hiring experts in a bid to keep overheads low. However, the guidance and expertise of tax accountant can help a small business owner save money in the long run. By enlisting the help of a professions, the business owner can then focus on other aspects of business, including growth.
Be aware of tax deadlines
An approaching tax deadline always exerts pressure on business owners, especially small-scale ones who have limited resources. It is therefore imperative that an entrepreneur takes extra care when filling out tax forms and ensure he submits them in time. Submitting incorrectly filled forms, or delaying in form submission results in the business having to pay fines.
Keep and file every single receipt.
Another of our top small business accounting tips is to retain and sort all of your receipts. This does not mean you need to keep track of every invoice following a purchase, but you should ensure you keep hold of any purchases related to your business. What receipts you should keep also depends on what form of business you are running. For example, if you are working from home, you may claim on a selection of your domestic bills. These claims could be for practically anything, even stationary. Therefore it's best to hold onto and file away any business purchase receipts you might have.
Attend Free HMRC Workshop
It may also help you as a small business owner attend one of the HMRCs free workshops. They also offer useful e-learning resources and tutorials to help small businesses owners get their finances in order. These resources include advice on establishing a limited company, online filing systems, information on VAT, and so much more. There is a wide range of valuable materials and information that the HMRC offers to help small business owners manage, so it is well worth considering.
Budget for Tax
It can often shock when independent, small businesses come to file their taxes at the end of the year. While it is easy to become over-excited when you see great profits on the horizon, you should always ensure that you have accounted for any tax you are required to pay. It is easiest to account for this tax payment as you are moving along to budget for the chunk of profit you will eventually be handing over. Should you own a savings account or a similar secondary bank account, you can place your tax payments here. This will allow you to avoid any end-of-year shocks, assess your business' finances, and accurately fill out your tax returns.
Understand Tax Rules
It is also crucial that you fully understand whatever tax rules are pertinent to you and your small business. Knowing which tax rules apply to your business further helps you account for your taxes more accurately, letting you know exactly how much your income you can pocket. Looking at National Insurance, Income Tax, Corporation Tax and VAT, plus any other taxes that may apply to you, will let you know where you stand financially at the end of the tax year.
Profit and Loss Statements
Profit and Loss statements (P&L) give you a brief overview of how financially healthy your business is. This statement is necessary mainly to fill any requirements HMRC has of you, summarising your small business's expenses, costs, and revenues over a specific period of time. Your P&L statement should include figures about your gross profit, net profit and profit before tax. It will also help you see where your business stands financially; by logging your earnings, assets and liabilities, you will be able to track and assess how your business is performing.
Accurately record income
Recording your income accurately again allows you to chart the cash flow and progress of your business correctly. As mentioned before, you must maintain accurate records of your business finances to help you account for tax and chart the profits and liabilities your business may have. It is also beneficial to record your income accurately if only to placate and avoid any HMRC problems. You may use accounting software to help you run your accounts more smoothly.
Track every business expense
Much like filing all of your business expense receipts, keeping track of your business expenses, in general, is also a good practice. These expenses can be offset against your taxes, even if your business is only small. You should be dedicated to keeping track of any costs incurred in your business.
Follow up on invoices and receivables.
It is always good practice to chase down any money that you are owed in invoices or receivables. Owners of small businesses, in general, have tight budgets, so they need as much income as possible to reinvest and grow. Therefore you should make sure to reasonably follow up on invoices and receivables as often as possible to keep your books in order.
Follow up on invoices and receivables.
It is always good practice to chase down any money that you are owed in invoices or receivables. Owners of small businesses, in general, have tight budgets, so they need as much income as possible to reinvest and grow. Therefore you should make sure to reasonably follow up on invoices and receivables as often as possible to keep your books in order.
Small Business Owners
If you require accounting advice for small business in Perth, Perthshire and Kinross contact us today. Call 01738 621431 today to speak to our accounting specialist today.