1st Tip For Doing Your Own Books
1. Keep Good Financial Records from the Start
Record all your transactions from the off, both costs and sales. You may also incur start-up costs and make sure to document these as they can be deducted from your profits thus reducing your tax liability.
Ensure you know the dates when your accounts, tax, vat, paye etc. are due as late payments and returns can incur fines and penalties.
2nd Tip For Doing Your Own Books
Choose An Accounting System
You don’t need a fancy system, and often a spreadsheet or simple accounting software will be sufficient. If you plan to use an accountant, then it’s advisable to agree on the accounting system you will both use in advance.
It’s often surprising how much is saved on fees by using a system your chosen accountant is familiar with or recommends. Some even offer a free, ready to use spreadsheet to make things even easier.
3rd Tip For Doing Your Own Books
Attend a free HMRC Workshop
Why not take the opportunity to expand your knowledge base and, more unusually, get something from HMRC for free! They usually run workshops across the country so there should be ones near you, and they cover all sorts of topics, but we’d recommend the following:
- Employer online filing and running a payroll
- Self-assessment for self-employed people
- Construction Industry Scheme
- Setting up a limited company
- Introduction to vat
- Introduction to international trade
4th Tip For Doing Your Own Books
Budget for Tax
If you have made a profit, then you will never know in advance exactly how much your tax bill will be. Our advice is to budget as you go and recommend putting aside 25-30% of all your income and you’ll probably have your tax bill covered.
5th Tip For Doing Your Own Books
Claim All Business Expenses
Any expense that is ‘wholly and exclusively for business’ can be claimed against profits and so reduce your tax bill. Even the smallest costs like envelopes and train tickets can be claimed so be careful not to throw anything away. You may also claim back a portion of your fuel, utility and even rent charges if you operate from home so take the time to investigate exactly what you can deduct in your particular situation.