While it may seem like a tedious process, bookkeeping and accounting are essential to the running of any business. Organising your bookkeeping and accounting helps you manage your daily operations, plan ahead, and provide HMRC (HM Revenue & Customs) with the information they need.

This guide offers accounting advice for small businesses you can implement today to improve your bookkeeping. This includes:

●        Separating your personal and business finances

●        Keeping your records organised and tidy

●        Using modern accounting systems

●        Tracking all your expenses

●        Budgeting and planning for taxes

1)   Separating your personal and business finances

Perhaps the most important piece of advice for small businesses is that it is essential to keep personal finances separate from business finances. Thus, opening a business current account with which to accept payments and make any purchases for your company is imperative.

Keeping your business and personal finances separate this way will save time. It eliminates the need to sift laboriously through your accounts to identify those transactions related to your business.  Instead, all your business-related expenses and income will be gathered in one place.

Opening a business current account is a legal requirement for limited companies and has benefits for sole traders as well.

2)   Keeping your records organised and tidy

Some people might like a bit of clutter in their lives and get stressed out when everything around them is perfectly organised. However, while a little mess is fine in your personal life, failure to organise your financial records could cause you massive headaches down the line.

Keeping your records neat and tidy makes it easy to find documents when you need them, allowing you to devote your time and energies to expanding your business. When the time comes to send in your Self Assessment forms, you’ll be glad that you kept your finances in order and made sure you had all the information required.

Organising your finances included ensuring that you keep records of every transaction you make. Hence, you must store all your receipts, invoices, bills, and other documents in a location where they can be readily accessed. These documents will be needed when you claim for any business expenses. This is more information about tracking expenses later in this guide.

3)   Use modern accounting systems

Another piece of advice we have for owners of small businesses is it is a good idea to leverage modern technology wherever possible. Accounting software is an excellent way to keep track of your incoming and outgoing payments, estimate and plan your taxes, and keep track of cash flow.

In addition, when Making Tax Digital (MTD) comes into full force, you must start using technology that supports this system and helps you get your taxes right. Read our guide to learn more about Making Tax Digital.

Moving your financial admin onto an accounting system like Countingup allows you to automate most of the time-consuming processes involved in bookkeeping and accounting.

Since Countingup is designed for small businesses, there is no need to have much experience in accounting technology. The system is designed to be easy to understand, simple to use, and include only the tools and features you need. There will be no need to feel overwhelmed.

Moving your finances onto a digital system will give you more peace of mind since you will know that everything is organised and ready to submit to HMRC.

4)   Tracking all your expenses

Another pro tip designed to improve your accounting is that it is important to remember to track all your expenses and categorise them. Expenses can quickly mount when running a small business so running out of money is always a danger if precautions are not taken.

Moreover, as a self-employed business owner, you can claim tax relief on most of your expenses and deduct them from your profits instead. This allows you to improve your cash flow ratio (the balance between the amount of money you spend and the amount you earn) and enhance your overall financial health. Learn how to improve cash flow for your business.

Make a habit of logging your transactions as they happen to ensure none are missed.  The best way to stay on top of what you spend is to use your business card to pay for as much as possible. This way, all your transactions are recorded on your bank statement.

However, if you must pay for something in cash, Countingup has a built-in receipt capturing tool so you can record your transactions on the go. Your accounting software will categorise each transaction, eliminating the need for you to do so.

5)   Budgeting and planning for taxes

All companies have to pay taxes, so it is important that you budget for this. Staying on top of your revenue and expenditure will help you estimate how much you must pay to HMRC.

Again, this is where accounting software like Countingup is so invaluable. The system provides tax estimates that you can use to plan your budget and helps you set aside in preparation for tax season.

Furthermore, Countingup allows you to keep track of any deadlines you need to meet during the financial year. For the 2021/2022 year:

●        The deadline for registration is 5th October 2022[VP1] 

●        The deadline for the paper tax returns is 31st October 2022[VP2] 

●        The deadline for the online tax returns is 31st January 31st 2022

The end of January is also the deadline for paying the first instalment on your tax bill, after which the second instalment is due on July 31st.

Keeping up to date with your accounting with Countingup

To save time and automate daily accounting admin, thousands of small business owners across the UK use the Countingup app. 

Countingup is the business current account that comes with free built-in accounting software, automating the time-consuming aspects of bookkeeping. With instant invoicing, automatic expense categorisation, and cash flow insights, you can confidently keep on top of your business finances every day.

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Find out more here.