If you’re a business owner it’s likely that you’ve heard horror stories about the accounting year end. Hopefully you haven’t had such an experience yourself and you need never have to – read on to find out how to take the hassle out of your financial year end.
Choose the right time
If you’re a business just getting started, choosing the right dates for your accounting year can make life an awful lot easier for yourself. We’ve covered this in more detail here, but even if your accounting year end is set, you can always change it if you really want to.
Separate bank accounts
If you’re a small business and you’re still mixing your business and personal transactions through the one account this needs to be item number one on your to do list.
You can’t run a successful business without a dedicated bank account. What are you going to do when VAT falls due? Use the money you usually pay household bills with?
Ideally, you should have a standalone business account for day to day transactions and an account solely for your tax liabilities. Setting the money owed aside in this account means that you know you have enough when you are due to pay your taxes. It also makes your year end easier because having three accounts is a lot easier to decipher than one account with every single transaction you’ve ever made.
File Invoices
Taking the hassle out of your financial year end is really a culmination of being organised. So the sooner you start, the better. You should have two different filing systems for purchase invoices and sales invoices.
For purchase invoices: keep two files, one for what you have paid and one for what you still owe. Once you do pay an invoice, mark it with the relevant information and move it into the paid file. You should organise the files alphabetically by supplier name. This will make it easier to find what you are looking for later on.
For sales invoices: you should number these sequentially. That means you can easily see what invoices still need to be paid when they fall due. There’s no harm in using two files here either, one for what invoices are still outstanding and one for those you have received payments for.
Not only will this make your bookkeeping easier, and therefore your year end accounts easier, you’ll also be looking after your business’ cash flow, which is probably the most important thing you can do.
Retain Everything
Remember that quick stop to the petrol station to fill up the company van last week? Did you keep the receipt? Did you keep all of the receipts throughout the whole year? Every scrap of paper that is related to a business transaction needs to be kept.
You’re probably not going to remember every minor business expense involving petty cash. Having a record means that your transaction entries at year end will be more accurate. They’ll probably be quicker too, wracking your head to try and remember exactly how much you put in the tank need not enter the equation.
Use Software
Using online bookkeeping software such as Big Red Cloud is beneficial for managing your business in general, and taking the hassle of our your financial year. We’re not just saying it either.
The simple truth is, you’re less likely to make a mistake using dedicated bookkeeping software because it automatically completes double entries for you. Online bookkeeping software also saves a lot of time over spreadsheets because it’s ready to go – you don’t have to spend time formatting all of your accounts. If you make a mistake in excel, your accounts could end up being useless.
Be organised
This is probably the central theme of the conversation. The more work you put in prior to your year end and the more organised your records are, the less hassle you’re likely to encounter.
It pays to keep on top of your bookkeeping throughout the financial year and not just leave it all until the end. Scheduling certain tasks for certain days, such as doing your sales invoices on Mondays will allow you to keep on top of your bookkeeping as well as giving you a good overview of how your business is performing from week to week and month to month.
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Big Red Cloud
Big Red Cloud provides simple online accounts to small businesses and their accountants. We can make running your accounts easier by providing unlimited transactions and invoicing, all backed up by full telephone, email and live chat support.
The start of a new financial year is the best time to get started with Big Red Cloud. So why not take a Free Trial
