(Gloucestercitynews.net)(Dec. 9,2019)--Managing and staying on top of your tax can seem like a daunting task for a small business and one that you are probably putting at the bottom of your to-do list. But it is highly important to understand how your business accounting actually works, in order to manage a successful and growing business.
Here we take a closer look at the most important things you need to know for healthy, stress-free accounting. Start here and take the most positive steps forward to building a robust tax regime.
1. Operate a Separate Current Account for Business
If you are a sole trader, you are not legally required to have a separate current account for your business, but you will find it easier to manage your accounts if you keep things separate. It's very simple to open another bank account, and once you have set up your account, you will be able to manage your transactions without getting mixed up with personal expenditure.
2. Work With an Accountant
According to hazlewoods, even small business owners can take advantage of the many benefits working with an accountant brings. Running a small business takes a lot of time and effort, so it makes sense to hire someone else to take care of important tax issues. You can always do a lot of the smaller tasks yourself, preferably with the help of online tax software, but the business acumen of a professional accountant will really help you plan and effectively manage your finances.
3. Keep Track of Your Expenses
Expenses are easily neglected, but it is important to stay on top of this important aspect of accounting so that you don't run into cash flow problems. Expenses are the costs that you incur when running your business, and they can be taken away from your income before tax calculations are made. Therefore, it is important to record expenses accurately, so you are not paying more tax than you need to.
4. Be Accurate With Your Invoicing
When you get your invoice system working smoothly, you are well on the way to successful accounting. The sooner you send your invoices, the sooner – in theory – you get paid. Leaving invoices late means you will get your money late, which means you will often run into cash flow problems. There are many automated invoice generator systems available to help you streamline your invoicing.
5. Be Early With Your Tax Return
One of the most common mistakes small businesses make is leaving their tax returns to the last minute. This causes immense panic and also the risk of mistakes being made, which could be costly. So long as you leave yourself enough time to complete the tax return, it shouldn’t be stressful. There is plenty of help available online and a variety of tutorials and FAQs to answer any questions you have. Just don’t leave it to the night before.
Managing accounts as a small business is not as tricky as you might imagine. With some forward planning, some professional help, and a little patience, you’ll find it easy to keep on top of your finances.