Creative entrepreneurs may not like to think about accounting and bookkeeping for their new business. Getting started on the right foot with record-keeping and accounting can make or break a new venture.
First Steps
New owners should set an appointment to talk with someone at the local HMRC office before they even begin doing business. HMRC can show you how to begin and what forms are necessary. They can explain registering for VAT and other important issues. It can also be helpful to have someone to contact should questions arise further down the line.
Bookkeeping 101
Set up an organized system for keeping receipts, credit card bill, and all business-related documents. Several times a year check all the bank statements and make sure funds are flowing correctly in the business. Enter all payments in and out into a numbered ledger.
Business owners can also use accounting and tax software to make this work less time-consuming. If you must hire an accountant, find out what software he or she uses, and use the same one. This can save you in accounting fees.
Self-employed business owners would be smart to set aside some savings each month for tax purposes. When tax time comes, this practice will come in handy.
Limited Companies and Accounting
A limited company most definitely needs to choose an accounting software program for the business. Such a program will make bookkeeping easier and will make the tax issue easier, as well. An accountant will charge much less if all the daily account information is entered on to a disk.
Company owners must deduct National Insurance and PAYE from employees’ pay. Records of this should be kept and monthly or quarterly payments are made to the government. Owners also must keep up VAT forms and pay that every quarter. A software program can make all these tasks simpler.
Sole Proprietors and Bookkeeping
The self-employed generally have less bookkeeping to do than a limited company. Sole proprietors can use a computer spreadsheet to manage their accounting issues. Invoices can be tracked, and receipts for expenses can be noted. National Insurance payments can be set up, as well as VAT.
My advice is to get an accountant from day one. As soon as you setup a company you receive an avalanche of letters from the goverment asking for this and that form to be completed and returned. If you miss dates you can also get fined adding to the cost. Hire an accountant unless you have experience in accounting or at least a clerical role in a company, as you should concentrate on what you do best and not waste your valuable on a job someone can do better than you.