Checklist: Keeping your small business accounts in order

 In General

Good financial management is essential for all businesses, whether they’re giant multi-nationals, or one-man bands. In either case, knowing the financial state of your enterprise, in real time, is what will keep you afloat and help you to grow.

Use this checklist to make sure you’re staying on top of your small business accounts:

  • Keep all receipts
    Want to claim that £2.50 coffee and muffin from your Starbucks client meeting as a business expense? Then you need the receipt! If your small business accounts are ever subjected to a tax investigation, you will need to be able to produce proof of all business expenses.
  • Invoice regularly
    If you don’t take the money upfront, then you need a system for invoicing your customers – especially if you have lots of them and they owe relatively small amounts. Even if you’re confident everyone will be invoiced eventually, it can play havoc with your cashflow to postpone asking your customers for money. Plus, it’s likely one or two may slip through the net, meaning you’ve given away your work for free!
  • Chase debts as soon as they’re overdue
    Many small businesses are timid about asking clients for overdue payments, but a polite reminder on the day the invoice becomes overdue is inoffensive. In fact, it achieves something important, because it shows your clients the way in which you like to do business.
  • Reconcile your bank account(s)
    Ideally, at the end of every month you will make sure that the transactions noted in your management accounts match the actual transactions on your bank statement. If you have a credit card, or PayPal account, these also need to be reconciled on a regular basis. Your accountant or bookkeeper should be able to help you if you don’t feel confident reconciling all accounts by yourself.
  • Record any director loans
    Many directors of small businesses lend their own money to their companies, or, conversely, borrow money from their companies as an interest-free loan. Your small business accounts need to record these deposits and/or withdrawals so that your accountant can calculate the tax to be paid or refunded.
  • Keep on top of taxes
    It’s easy to be caught-out by a tax bill if you haven’t mapped out what you are likely to owe HMRC in the coming months and noted when the payments are due. Set aside some money every month so that you can pay all of your Corporation Tax, VAT, PAYE and NICs when they are due. The taxman is notoriously unforgiving when it comes to late tax payments, so make sure you are not caught out in this way.

Just about everything on this checklist can be made a lot easier with the help of modern accounting software such as Xero. These systems automate and streamline most of the small business’s bookkeeping tasks. For the full benefit of this sort of accounting software, make sure you’re working with a modern online accountant who can use the same system to understand and analyse your accounts in real time.

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