Bookkeeping is fundamental to how well your enterprise runs financially.
For small businesses, bookkeeping might not be at the top of your list or priorities. However, if managed correctly, bookkeeping can provide companies with the basis for managing finances properly and laying the foundations for future growth.
Whether you are a small business, a start-up or an SME, bookkeeping is fundamental to how well your enterprise runs financially.
So with that in mind, these are the key areas about small business bookkeeping and tax which you need to know.
You need to keep up to date and accurate details of your income and expenses. This isn’t just a legal requirement, it’s also vital for managing your business effectively.
The bookkeeping records you keep will be the basis of the statutory financial statements you must submit as records:
Is bookkeeping complicated? It might seem daunting at first, but if you take systematic, step-by-step approach, it is much easier to manage.
You can breakdown small business bookkeeping into daily, weekly, monthly, quarterly and annual tasks. These categories make it more manageable, and provide a systematic approach to your accounting.
Check your business’s cash position, and that you have enough cash to cover your outgoings.
Cashflow is the lifeblood of your enterprise, enabling you to pay for the things that make your business run, such as stock, rent and employee salaries.
It can come from a variety of sources, such as payments from customers, loans, and money from investors.
Weekly tasks are something you should have built-in to your bookkeeping system, and include:
Monthly bookkeeping tasks should cover:
If you need to do quarterly bookkeeping, you should make sure any advance VAT payments have been arranged prior to performing your bookkeeping.
Annual Bookkeeping
If you are a limited company, then you must submit annual accounts. You must file these each year with Companies House, within nine months of your accounting reference date. This date either the day after your previous accounting year has ended, or your incorporation date, if you are a new company.
For a turnover less than £6.5 million, you can file abbreviated accounts, which just include a balance sheet and notes.
But for HMRC and shareholders, you will need make sure you have full statutory accounts.
For filing your company tax return and paying corporation tax, your accounting period determines your deadline.
If you’re a sole-trader then you do not need to file annual accounts, but you will need to complete your self-assessment tax return at the end of your financial year.
Your bookkeeping records should supply the necessary information for this return. What you must then pay in income tax and national insurance will then be based on the information in your return.
There are key aspects of bookkeeping for start-ups and small businesses that can help you stay on track, and give your business the best possible basis from which to grow.
You might feel that early on, if your accounts are relatively simple, then a DIY approach to bookkeeping will work for you.
But you should weigh up the time it will take you to stay on top of this against the cost of getting specialist help and support.
Plus, using a small business tax accountant offers plenty of added value, as they will have a huge depth of knowledge and insight that can provide you with long-term strategic benefits. This provides small businesses with a much firmer base to operate financially.
Venn Accounts are cloud-based chartered accountants, offering streamlined online bookkeeping services designed for small businesses and start-up businesses, particularly those based within London or the tech-sector. To find out more about their bookkeeping services, contact Venn Accounts directly by calling 020 8088 2590 or send your enquiry to enquiries@vennaccounts.com.
Tune in to hear from Chris Brown, Vice President of Sales at CADDi, a leading manufacturing solutions provider. We delve into Chris’ role of expanding the reach of CADDi Drawer which uses advanced AI to centralize and analyze essential production data to help manufacturers improve efficiency and quality.