All small business owners recognise that feeling of dread when looking at the pile of receipts and invoices that really should be a set of books. This is the time to get them sorted, tax returns are due by 31st January plus with HMRC restarting checks on record keeping there’s never been a better time to make better record-keeping your New Year’s resolution. To help here are my top tips:
Keep it simple
Accounting records for small businesses don’t need to be complicated, however they do need to be accurate. They need to provide proper information to produce your tax returns and end of year accounts. Whilst computerised accounts systems are effective, they may be more complicated than you need; a simple spreadsheet could suffice. If you are planning on doing the books yourself, make sure the tools are up to the job by running your spreadsheet or system past an accountant or ask them to set you up a pro forma.
Don’t leave it until the last minute
The 2011/12 tax return is due at the end of this month and you are running out of time. So get cracking with the books if you’ve not yet submitted them – or you could face a penalty. Next, work on 2012/13 and get them up to date. It’s a good habit to record regularly, then the information produced will be timely and useful to you. If HMRC were to make your business the subject of a business record check then they would look at a selection of invoices and receipts from the preceding 4 months, so there’s even more reason to be up to date.
Keep accurate source records
File receipts in a way that fits with your book keeping systems, it’ll make recording a quicker job. Once you’ve recorded them make sure all original source documents are sensibly filed. In most cases, you are required to keep records for 6 years after your tax return.
Look for qualifications
If you are going to bring in an expert check they are qualified; anyone can provide bookkeeping services but look for someone who is a member of a professional body. To gain membership both qualifications and competence are assessed, including record keeping, end of year accounts and tax returns. Always ask a prospective bookkeeper which professional body they are linked to, and check it out. Common examples include AAT, CIMA, ACCA, amongst others.
Getting time to do the books is a common gripe of small business owners; if you are struggling, the question to ask is: ‘How much could I earn in the time I’m doing the books?’ You may find that a professional costs less than you imagine – and less than you can earn in the time you’d normally spend.
Otherwise, sleeves up and tackle that pile of receipts, make sure you keep going until you are up to date, then make updating your records a regular part of your routine, and stick to it!
by Gill Crann © 2013
For more information as to how Gill Friday can help you in your business see www.gillfriday.co.uk or ring 0191 580 1303.