23 Apr Accountancy tips for startups
Starting your own business is an exciting time, but, beware, it’s important to keep financial records from the very start of business operations. Failing to maintain accurate accountancy records could result in hefty fines from HM Revenue & Customs or even cause your business to fail.
It can be difficult to know what records you need to keep and how to go about setting up financial accounts for your startup business. The following tips may prove useful:
1. Retain all paperwork
It is very important to keep all relevant paperwork and to ensure you obtain receipts for all expenditure, including any employee expenses. You should retain all your accountancy records for a minimum of six years as there could be times you need to refer back to them, or you may need to produce them for statutory checks by government authorities.
2. Filing and invoicing
Sales and purchases invoices should be filed separately. You should allocate a sequential number to sales invoices and file them in order, so they are quick and easy to access for reference. You can set up any type of system for filing purchase invoices, just so long as it’s logical and you can retrieve your receipts quickly.
3. Maintain regular bookkeeping
Making sure your books are up to date does take time. If you establish a regular routine for this it will be easier to keep on top of tasks. This will reduce any chance of paperwork getting lost. You should raise sales invoices as soon as possible as this helps maintain your business cash flow. At least once a month take time to reconcile your bank account, so you know exactly where the business stands financially.
4. Petty cash receipts
If you keep petty cash on site, take time to reconcile it on a regular basis and ensure all cash payments made are recorded so you can keep an eye on how much is being spent by your business. Keeping track of petty cash also helps reduce risks of casual theft.
5. Financial control
When customers make late payment for invoices it affects your bottom line profits, so ensure you chase all invoices at the earliest possibility and manage all debtors effectively. It’s also a good idea to carry out your banking regularly, ideally every day. This way all cash and cheque payments received will help keep your bank balance healthy and cover outgoings.
HM Revenue and Customs do penalise businesses that don’t maintain regular VAT and tax payments, it’s a good idea to set aside funds in a separate bank account to cover these bills when they fall due.
7. Hire professionals
If keeping up to speed with accountancy requirements proves too much for you to handle, you should consider the benefits of hiring a professional accountant. Outsourcing your bookkeeping and accountancy helps you maintain focus on the daily operational needs of your startup business and reduces worries about any financial or statutory problems.
SQK Accountancy specialises in cloud accountancy and VAT for small businesses. Contact us for more details.