Bookkeeping tips for a small bakery business

A small bakery business can have surprisingly complex finances. There are taxes to pay, expenses to record and budgets to create. This all means that you might struggle with bookkeeping for this sort of business if you don’t have a ton of experience. Fortunately, we have a few bookkeeping tips that should help you greatly.

This article will look at a few ways you can make bookkeeping for a bakery business easier. We’ll provide a variety of tips, including:

• Record your expenses
• Pay attention to your cash flow
• Consider using an accountant
• Try accounting software

Bookkeeping is vital for any small business. Selling cakes, pies and bread is no different, as without well-organised financial information, you’ll struggle to run your business effectively. One of the most critical tasks that make up bookkeeping is recording all of your business expenses.

Since you’ll likely be baking regularly to fulfil customer orders, there will be a lot of expenses to keep track of. Try to put a system in place for organising your costs to ensure they’re easy to access in the future. 

One of the best ways to do this is by using a business account to make any company transactions, as the account will record and store all your transactions (including expenses). One example of a good business account is Countingup, which has a ton of built-in accounting software to make bookkeeping simple.

The primary reason to track your expenses is to claim them back when filing taxes. For instance: if you earn £40,000 and claim £10,000 worth of expenses, you will only have to pay tax on £30,000 of your earnings. 

Claiming expenses can reduce your tax bill greatly, so remember to look into the range of business expenses you can claim while doing taxes. In addition, if you take commissions that you bake in your own kitchen, remember that there are also expenses you can claim while working from home.

One vital point to remember if you’re trying to run any kind of retail store (whether you sell clothes or baked goods) is that you need to monitor your cash flow. The motivation behind monitoring your cash flow is fairly simple: cash is necessary for your business to continue running. It allows you to purchase inventory, pay your operating expenses and ensure you can continue to sell your products.

It’s best to maintain a positive cash flow, which means that your income is higher than your outgoing expenses. Negative cash flow is the opposite: it means your expenses are greater than your income. If you don’t keep a careful eye on your cash flow — which means tracking your spending, sales and operating expenses — you might notice it turning negative.

The health of your cash flow has an enormous impact on your business decisions, so it’s a good idea to make it a priority when you’re doing bookkeeping. For instance, your cash flow may dip during a month of low sales. If you don’t monitor your cash flow and purchase the same amount of ingredients and packaging you normally would, you may find you don’t have enough money to cover other operating costs of your business. 

Some business accounts can assist with tracking cash flow if they have additional features that record your incoming and outgoing cash. For instance, Countingup offers real-time profit and loss reporting. 

A profit and loss statement is a financial document that shows how much money your company has made and lost over a set period. The Countingup app displays a real-time view of your profits and losses, updating as you make transactions on the business account. 

It also shows your net profit by automatically deducting the losses from the profits. So by using Countingup, you’ll be aware of every single transaction your business makes, meaning that tracking your cash flow is as simple as checking your app.

If you’re still struggling with some bookkeeping tasks, specifically filing tax returns, it might be better to hire an accountant than to spend a lot of time learning to do it yourself. 

Although having the extra skill is handy, your time is immensely valuable, so hiring an accountant might actually be the best option despite the fees they charge. If you hire a chartered accountant, you’ll pay more than you would for most accountants, but they’re likely to do a far better job with your finances. 

That said, if you do some research on how much accountants charge for filing a tax return, you might be able to get away without paying too much.

If you do hire an accountant, another obstacle is sharing your documents with them. This can be a frustrating process if your financial data isn’t all in one place, but if you use Countingup, it becomes much easier.

With the Countingup app, you can share your accurate, real-time bookkeeping data with your accountant in seconds with the tap of a button. This way, you won’t have to worry about being chased for missing data, duplication errors, data lags or inaccuracies.

One of our best tips for bakery bookkeeping is to start using accounting software. This software can automatically do a lot of the more complex or repetitive bookkeeping tasks, saving you from spending a lot of time manually doing them. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Click here to start your three-month free trial today.