Nothing is more inconvenient than having to sift through too many statements to find one small but critical piece of financial information. That's often the case if you haven't separated your personal and business funds, resulting in them always combining into one account and making it easy to lose track.
You can keep your finances and business dealings separate by opening a new bank account, ensuring that there is no confusion between the two. When it comes time to do your books, you'll know exactly where to look for the financial information you require.
Set aside money in your budget for tax purposes.
Rather than being caught off guard when the taxman arrives, it's a good idea to budget for tax as you go along, so you don't have to pay a large sum all at once. If you have a savings account or something similar, it can be a good idea to set aside a small portion of your income to easily pay off your tax bill while knowing you have money saved.
Always keep your records in order.
If it's already difficult to search through one account where both personal and business funds are received, cluttered records will make bookkeeping even more difficult.
When your records are in good condition and neatly organized, you know exactly what is stored, which saves you a lot of time. If you're pressed for time and approaching tax deadlines, you'll be glad you took the time to keep your records neat so you know exactly where to look.
However, ensure that you keep your records organized all the time, not just on occasion.
Keep Track of Your Expenses
Tracking business expenses can be difficult, but by using a business credit card, you can ensure that all of your expenses are kept together and tracked. The simplest and great way to do this is to categorize your bills into different types of expenses.
As an example, consider car mileage. If you're driving long distances for meetings, you can track your mileage and log how far you've traveled and the associated costs.
Keep daily records
One of the most basic rules to follow is to keep daily records. It is much more difficult to track the financial condition of your business if you do not keep accurate daily records.
Implement and stick to a system so you can keep accurate records daily and avoid mistakes when filing your tax returns.
Maintain an Audit Trail
If you do your books manually, you must keep an audit trail. Your record keeping will be much more effective if you can quickly and easily retrace your financial activities, which is why software is a good option to consider.
An audit trail ensures that your invoices are in order and that you can easily retrace your steps if there is a minor error.
Maintain Control of Your Accounts Receivable
Late-paying customers are never a good thing and can hurt your cash flow. Pay attention to when your receivables are due, and don't waste time acting when they are past due. See if you can devise a strategy to get the money you're owed as soon as possible; the longer you wait, the more it will harm your cash flow.
Remember Tax Deadlines
Anyone can be stressed out by a tax deadline. Make the simple step of reminding yourself so that you have enough time to complete your tax returns without making any mistakes. By keeping accurate records, you can ensure that your returns are submitted on time, and HMRC will not pursue you for any errors. You also avoid any unfavorable penalties.