If HMRC came knocking tomorrow for an audit, would you be ready? If the very thought is making you uncomfortable, now’s a good time to start getting those books under control.
Manage Your Paper
Much has been written about the so-called ‘paperless office’ but for most of us the concept is still in the land of dreams. For all that, if you have a system there are ways to prevent almighty paper jumbles.
First, minimise the amount of paper you handle: send electronic invoices wherever possible and correspond via email when it’s feasible. Second, reduce the amount of paper you store: digital or virtual storage is acceptable for many accounting records.
For the paper you do keep, maintain strict order by having separate files divided by month, client, nature of work, or whatever category makes sense for your business model.
If you’re not clear about which paper records you need to keep in physical form and which can be copied for digital storage, your accountant will be happy to advise. You need originals for some, including those dealing with tax other than VAT.
Optimise Your Tech
Smartphone apps do a great job of helping small business owners stay on top of purchase and expense records. Receipts, for instance, are acceptable in digital form by HMRC, so instead of hanging onto every last petty cash receipt, take a quick photo with your smartphone and digitally store that instead. You can dispose of the original and cut down on the paper trail.
You need to be as diligent with digital file organisation as you are with physical paper organisation, and it helps if you use a similarly named system of files and folders for both types of records.
Mark Up Your Receipts
We need to keep business records for years. Can you remember why you were in that restaurant on the 6th Feb four years ago? You may have a vague recollection, but the whys and wherefores are likely lost in the mists of time. So, when you get a receipt, write on it what it was for, and add client details if it was a hospitality receipt. Do this before you take a photo, scan, or copy if you’re moving into digital record keeping. Similarly with paper invoices paid, write on them the date you paid and the payment method used.
Stay On The Ball
Accounting often isn’t the first choice when it comes to business activities, so it’s easy to skip daily bookkeeping tasks. If you’re not a ‘numbers’ person, bank reconciliation, debits, and credits probably make your eyes glaze over. Find ways to make it quicker and easier through automation.
For instance, use a cloud accounting package the lets you link your business bank account, then set up automatic syncing for transactions. When you log in, bank transactions will already be entered in your books for you, and all you have to do is go through and provide explanations. It makes the task of reconciliation very much faster than if you have to manually enter each one by hand then check them off against bank statements. You’ll still have to do some manual cross checking, but nowhere near as much.
And as a bonus tip, probably the best hack of all is to engage an accountant, regardless of how big or small your business is. Even if you just need them at tax time, they can advise on bookkeeping methods so you’re able to present all your end of year records in a format that suits how they work. Not only will this save everyone time and money, it will give you confidence that your bookkeeping is accurate, with nothing missing.