Updated: Jun 18, 2019
Bookkeeping and Accounting is an important part of running any business, but sadly, many entrepreneurs are not prepared to maintain and organise proper financial auditing records. Regardless of your level of experience in the cleaning industry, you need to be conscious of managing and maintain records which could impact on your business survival through cash flow and a proper bookkeeping and accounting system will help with this.
The following bookkeeping and accounting tips will help you clean up your books, and keep you on the right path moving forward with your business and tax obligations.
Keep copies all of your receipts
Regardless of the amount, be it £10 worth of paper towels or £100 worth of cleaning supplies, keep track of your receipts. All the little chunks of money you pay for supplies throughout the year are considered business expenses. In addition to keeping your receipts organised, you can also try smartphone apps that allow you to snap pictures of your receipts and organise them online. Whatever process you choose, make sure your receipts are easy to access so you can deduct the right amount of money from your taxable income. This will also make you compliant to MTD should your business meet the tax threshold.
Analyse your costs
Do you know if you’re overspending in specific areas on a monthly basis? If not, you may not be able to react in time to cut costs moving forward. Having a proper bookkeeping system with categorised expenses allows you to make informed business decisions regarding flexible costs.
Reinvest in your business
Investing in your small business takes discipline and proper budgeting. Without affecting cash flow to the point of not being able to pay monthly bills, make an effort to set aside some funds for new equipment or vehicle maintenance. Having capital on hand also allows you to grow your business without seeking outside funding. #selfreliance
Separate your personal and business accounts
As your business becomes more profitable and experiences growth, having a clear distinction between personal versus business funds is crucial for tax purposes. If you don’t already have a separate bank account and credit card, establish both immediately. That way, you won’t be in a pickle come tax time determining what you can or can’t deduct.
Pay estimated taxes in advance
As a small business, you should be making estimated and or provisional tax assessment throughout the year. It’s a responsible way to avoid surprises at the end of the year. Plan ahead for little things like a VAT bill, this shouldn't be an issue. A simple solution is to work out average sales and then set aside a minimum of 20% each week in order to ensure you pay the Taxman when due. This will enable you to ensure you pay the Taxman and eliminate cash flow issues and or subsequent interest and fines for none or late payments.
If you need help with setting up accounting, bookkeeping, tax payments, or payroll for your cleaning business, request a call back. We’re here to help hard working small business owners maximise their profits and tax savings.
We look forward to speaking with you.