7 Major Tips for Simplifying Your Small Business Accounting

One of the most exciting things a person can professionally do is to be self-employed. However, sometimes, it can be a bit daunting if you are a novice. Being the owner, you must wear a cap for various important aspects. Looking after your small business accounting is one of them.

Luckily, you can handle this process with professional assistance. You will find several experts that offer accounting & taxation in Berkshire to help you in your new responsibilities.

Here are 10 major steps you should consider for successfully guarding your small business accounting.

1. You should open a bank account for your business

This is the most vital step to be taken while taking care of your small business accounting. Your organization should manage the business finances. Combining your personal and business transactions in your bank account can make your life harder.

It is entirely your choice and decision in which bank you want to open your account. You should always shop around for the best value. Also, you have to make sure you have a business debit card.

When you pay by card, it will assist in building up your credit profile for your business. This denotes that everything is recorded in the online records of the bank.

2. You should record your expenses

This is another vital step to consider in keeping organized business finances. Thus, you should set up a system to record the expenses of your business. Getting a separate account for your business can significantly track your business spending.

All products can be claimed as business expenses consisting of laptops, uniforms, furniture, and industrial equipment. Nowadays, people use dedicated online accounting software for managing expenses. Some tax consultants offer packages for limited companies or traders that include software, services, and accounting advice.

Through this, they help in keeping records updated. Also, they make your stay as tax-efficient as possible.

3. You should set up a bookkeeping routine

The process of bookkeeping is recording all your outgoings and incomings. You should undertake this vital financial management task as a small business owner.

If you become loose with your bookkeeping, it will come with a number of bad consequences. You will lose track of the amount of cash your business should pay your taxes. Not only that, but also you will be confused to perceive the amount you need to keep your business going.

Thus, you must get into the bookkeeping routine as quickly as possible. Also, you should set up a routine for balancing or updating your books and stick to them. It will be helpful for you when it comes to the long run.

4. You should determine the way you will pay yourself

Paying yourself is literally an exciting one. You need to decide how much and how to pay yourself. Doing that will heavily rely on whether you establish yourself as a limited company or sole trader.

Being a sole trader, you can derive money from your business account as “drawings” for paying yourself. You should confirm that you keep records of your withdrawal from the business. Besides, you must remember to put money aside for the taxman.

Simultaneously, you can take a combination of salary and dividends as a limited company. This is the most tax-efficient way of paying yourself to be a limited company. You will get the salary as a director.

This denotes that you should set up a payroll scheme. When it comes to limited companies, salaries are considered an allowable business expense. This means they can minimize the profits of your company and the amount of Corporation Tax your company should pay. Thus, generally, paying yourself a salary is a good idea.

Both bookkeeping management and cash flow understanding will play a significant role in your business. It will assist in determining the amount you can afford to pay yourself without shortening your business.

5. You should establish a payroll system

It is the best way of implementing a payroll system when you are a company director to pay salaries. Make sure your employee payroll system is RTI (Real Time Information) compliant. This will help you in staying on the right side of HMRC.

6. You should understand your tax obligations

Understanding several tax obligations with running your business is your next big task. These will differ depending on the structure of your business.

You should file a Self Assessment with HMRC every year regardless of your setup. It is a way for HMRC to determine the amount of Income Tax and National Insurance you should pay. The amount you have to pay here is on any income that is not taxed at source.

7. You should get an accountant

Having professionals for accounting & taxation in Berkshire is the best way to be on top of your bookkeeping.

An accountant is responsible for reminding you of vital tax dates and payments due. Also, he will show you the ways to keep your accounts in the best shape.

Not only that, but also he will advise you on allowable expenses. Moreover, he will assist you in the way of reporting them. All these will immensely make you as tax efficient as possible.

An accountant will help you to estimate the amount of tax and National Insurance you should pay. It will pay the amount quarterly for VAT or every six months. Also, he will ensure you do not forget a payment on account.

Handling a business is not a cakewalk to enjoy for both a novice and an established business owner. A business owner has to undertake several business functions, which makes managing cash sometimes difficult. Thus, getting assistance from Specialist Tax Consultant Berkshire can be a plus. He will help in managing business finance to draw an entire business growth.