If you run your own business, you are probably aware of how essential it is to keep track of all your financial records, including, of course, your expenditure, your income, and your investments and assets, amongst others. But keeping an accurate record of your financials is just the tip of the iceberg, as any bookkeeper or accountant will tell you – you also have to ensure that your business is compliant with all legislation and regulations, and you also have to ensure that you meet whatever deadlines are there, including deadlines for tax returns and HMRC. So how can you handle your accounting and bookkeeping tasks in a much better way? If you want to make it easier on yourself, here are some best tips for managing your accounting and bookkeeping responsibilities for your business.
- Ensure compliance
It’s not easy to ensure compliance on top of everything else you need to do (including keeping accurate records of your profits and expenditure), but it has to be done, nonetheless. You will need some time to completely understand your tasks and responsibilities in regard to legislative compliance, which includes payroll, VAT, tax, and more. For instance, the deadline for a small business to begin submitting its monthly RTI payments is in April, and this would mean that you will have to submit your payroll to HMRC in real-time; otherwise, you may be faced with a fine. Let’s face it – it can be quite scary to think about all the changes which can happen in just one year, so you may want to seek help from an accountant for this. Your accountant or bookkeeper, such as the expert accountants from www.gsmaccountants.co.uk, can keep you updated on various legislative changes and make sure you are fully compliant as well.
- Understand the proper VAT for your enterprise
You also need to understand the proper scheme for VAT for your enterprise. More importantly, do not be late when it comes to registering for it. Whether your enterprise falls below or goes above the threshold of £85,000, you can apply for standard VAT. The benefit to this is that you should be able to reclaim the VAT on whatever purchases you have made, whether your invoices have already been settled or not. If you have a yearly turnover of less than £1,350,000, you can go for VAT cash accounting. This is different from standard VAT in that you don’t have to calculate the VAT until an invoice has been paid. This can benefit the cash flow of your business in the short term because you don’t have to pay VAT for whatever sales you have until you have received payment for it. Of course, until you have already paid for whatever purchases you have made, you can’t reclaim the VAT from HMRC.
Another scheme is referred to as the Flat Rate VAT scheme, which is cash- and invoice-based. This is ideal for freelancers, sole traders, and small enterprises which may make low-cost or occasional purchases. With this scheme, you cannot reclaim VAT on purchases, and it was created to help simplify the entire process of VAT payments. To give you a better idea: the VAT will still be charged (at 20% of
the invoice), but it will be paid or settled with HMRC at lower rates, which leaves a difference that can give your business additional profit.
- Keep yourself organised
Last, but definitely not least, make sure you are always organised. Even if you are tempted to put off your accounting or bookkeeping responsibilities, don’t do it. Make sure you have full knowledge of your invoices, both those coming in and going out, and keep the necessary records related to the tax schemes of which you are taking advantage. When your information is accurate and updated, you can have fuller control over your business – and when you do this from the beginning, you can even save money as well as avoid issues from unexpected payments, late payments, fines, and so on.
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