One of the most exciting career paths is being self-employed, but for those who have never worked for themselves, there are certain crucial responsibilities that might be a bit intimidating, such as managing your small business's accounts.
Fortunately, the procedure isn't as daunting as you may imagine. Seeking the help of a small business accountant London, will help small business owners adjust to their new roles and effectively manage their small business accounting.
Steps for Proper Small Business Accounting
The following are some of the essentials steps one must follow with regard to small business accounting.
1. Open a bank account for your business.
The first and most crucial step is opening a bank account specifically for your business. Effective management of your business finances depends on organisation, and it will be more difficult to navigate if you mix personal and business activities in your bank account.
You are free to choose whatever bank you want to create an account with. It's wise to compare online banks with established traditional banks in order to get the best deal.
2. Recording Business Expenses
A crucial element in maintaining the organisation of your business finances is setting up a system for recording your expenses. Actually, keeping track of the business's expenses is one of the main benefits of opening a separate bank account for your business.
When it comes to determining what counts as an allowed business expense, HMRC's basic rule of thumb is very simple: was the purchase done solely and exclusively for business purposes? Any number of products, including furniture, computers, clothing, and even industry equipment, may be claimed as business expenses when the parameters are so wide.
Thankfully, the days of having a box full of receipts are long gone when it comes to managing your finances. For sole proprietors or limited enterprises, it is suggested to use online accounting software, which includes software, support, and accounting guidance.
You can consult with top accounting companies London, who can offer online accounting software that integrates with your small businesses.
3. Create a schedule for bookkeeping.
The main task of bookkeeping is keeping track of your inflows and outflows. This is one of the most crucial financial management duties you'll have to perform as a small business owner.
Many small businesses have failed due to poor bookkeeping, so take note of what your peers have done wrong and establish a pattern for yourself early on. Create a schedule and follow it, whether you prefer to update and balance your accounts for 30 minutes every day or set out an hour or two at the end of each week.
Consider hiring a bookkeeper or a small business accountant, London to assist you with the financial aspects of your company. Accountants can prepare your financial documents. Your sales, assets, stocks, loans, and personal income tax can all be recorded by them. They may handle your bookkeeping and categorise the payments and expenses.
4. Establish a payroll system.
You should consider the ideal payroll system setup if you are a company director seeking to pay yourself a salary or if you have staff (even if you operate as a sole proprietor). If you wish to maintain good relations with HMRC, you must ensure that your employee payroll system complies with Real Time Information (RTI).
Payroll administration is a key function of accounting companies, London. They ensure accuracy and compliance in payroll management by bringing to the table their knowledge of tax laws, regulations, and accounting concepts.
5. Understand your tax obligations
The next major task for you will be to comprehend the several tax responsibilities associated with managing your own business. Again, these will differ based on the type of your business.
Whatever your setup, you must submit an annual Self Assessment to HMRC by January 31st (the deadline for online submission is April 5th, the day after the tax year ends). HMRC uses a self-assessment to determine the amount of income tax and national insurance you owe on any income that isn't subject to source taxation.
It is usually advised to file your self-assessment early since HMRC receives a constant stream of calls and help requests from individuals attempting to file in the final few days prior to January 31st.
Conclusion
Learning and development are the true keys to success in life, just like in anything else. All of the above-mentioned steps are crucial for handling the accounting for your small business, and some will take some time and a lot of effort to develop as routines.
It might be time to hire a small business accountant if you find yourself falling behind on your bookkeeping, having trouble understanding your accounting data, or simply wanting to spend more time doing the things you enjoy rather than your accounts.
No comments yet