If small business owners want the best chance of success, they need to offer a service or product that meets a need, promote their offerings and make sales. They also have to boss the books.
While bookkeeping may seem confusing, it’s fairly straightforward. It involves recording the amount of money that enters the business and the amount that’s left it. By keeping track of these details, HMRC can calculate the tax that the business owes.
To boss the books, there are a number of things to do.
Business owners must keep an accurate record of all transactions. Each time a purchase is made or a payment is received, it should be recorded.
Deal with bank reconciliation
The aim of reconciling transactions is to get an accurate view of the business’s financial health. It involves checking the debits and credits on a monthly business bank statement match up with the business’s financial records.
Manage cash flow
Managing cash flow is vital. If a steady flow of cash comes into the business, paying for expenses won’t be a problem.
However, if the money coming in dries up, paying for the likes of inventory won’t be possible – and the business will soon stop functioning.
Deal with late payments
Late payments slow a business down and can occur for numerous reasons, such as suppliers changing their terms or forgetting to pay.
To combat this, business owners should clearly state their payment terms on their invoices. And if an amount is overdue, they should get in contact with the late payer, stay calm and be clear on the goal of getting paid.
The financials are the reports or statements that offer vital insights into the health of the business and how it’s performing. The key financial statements are the balance sheet, income statement and cash flow statement.
Manage business taxes
Business owners need to stay on top of their taxes. Sole traders must submit Self Assessment tax returns so HMRC can collect income tax, while limited companies have to file company tax returns and pay corporation tax on profits.
Then there’s VAT, a tax charged on most goods and services sold by VAT registered UK businesses. It’s collected on behalf of HMRC by registered businesses. Under Making Tax Digital for VAT, businesses with a taxable turnover of more than £85,000 over a 12-month period must submit tax returns using software.
Using cloud accounting software such as Sage Accounting can make bossing the books quick and easy to manage. And by staying on top of their bookkeeping, business owners can be confident they’re prepared for all tax requirements and ensure the business moves in the right direction.
To find out how you can boss your business admin, visit the Sage website.