As you begin your journey into self-employment, you’ll have your hands full with a seemingly endless to-do list. Leads to pursue, suppliers to arrange, office space to rent – your priorities focus on the here-and-now. These tasks that will set your business on the road to success.
At some point you will have to think about the nitty gritty of your financial records. And while number-crunching may seem tedious, it’s important to know what financial records a business should keep. We explain what details you need, how to do it, and why it is so vital.
WHY DO BUSINESSES KEEP ACCOUNTS?
- It may appear to be an onerous task, but keeping good financial records is a vitally important for your business. An accurate record of your business’ trading activities will enable you to:
- Prepare accounts with ease – whether for personal or corporation tax. HMRC keeps very strict deadlines for tax returns, so a little preparation goes a long way in avoiding penalties, interest payments, and soaring stress levels.
- Perform regular health checks’ to see which areas of your business are profitable, and which are not so lucrative. Many businesses rely on guesswork, but good financial records will provide an accurate and up-to-date picture so you can base decisions on fact, not whim.
- Claim tax relief on everything you are entitled to, such as office equipment, utility bills or travel costs. Offsetting these purchases means you will have less tax to pay at the end of the financial year.
WHAT DETAILS SHOULD YOU KEEP?
To keep your financial records in order, you will need to know exactly what details to keep. If you make a payment – from stationery to freelance work – you will need to make note of the date, amount, and invoice reference if applicable. Likewise, if you have received a payment, you will need to reconcile money in’ with specific invoices. In short, any money that comes into or goes out of your business will need to be accounted for.
HOW TO KEEP FINANCIAL RECORDS FOR BUSINESS
Exactly how you maintain your accounts is down to personal preference. Some will be more comfortable with a manual system such as a cash book or receipts file, while others prefer to use a computer to keep track. Take some time to decide your own system, asking yourself questions such as:
- Do you have regular access to a computer? If you have a desk job, it may be more convenient to record your figures via digital means – whether that is desktop or cloud-based software.
- How many people require access to your accounts? If more than one person needs an overview of your accounting figures, it is much easier to use cloud-based software, which can be accessed by multiple users.
- Do you work in a fixed location? If you the answer is no, you can still keep records on-the-go by using cloud accounting software. It will allow access from your smartphone, tablet, laptop, or any other web-enabled device.
If in doubt about keeping financial records, seek advice from a professional. They will explain exactly what needs to be done. If you require professional accounting assistance in the UK, we can help at UWM. Our business know-how and fully compliant bookkeeping and accounting services can help your business grow and develop.
For more information, contact us today call 0113-231-0202, e-mail mail@uwm.co.uk or take a closer look at the UWM site. Jonathan Myers can be found at Google+
