Advice for new start-ups on bookkeeping
So you’ve set up your own business and want to know how to account for this.
At Wenn Townsend we have our own dedicated outsourcing department who can assist you with getting things started, from choosing which accounting software most suits your needs, to ensuring all your receipts and invoices are correctly stored should HMRC come knocking. But before you get in touch here are some of our top tips for getting started with bookkeeping:
1. Understand what bookkeeping is
According to Google bookkeeping is the recording of financial transactions, and whilst Google makes that sound straightforward, bookkeeping can be that simple. Bookkeeping can be done simply or be more bespoke depending on the needs of your business. To start with it may be as easy as setting up a spreadsheet (not Excel proficient? We can help with that) and recording your incomings and outgoings for each month, before checking that back to your bank statement to make sure nothing is missed. Then as your business grows you can decide on accounting software and let that do the hard work for you, or even pass the baton over to us to process your monthly bookkeeping. Either way you don’t need to be a qualified accountant to do your own bookkeeping, you just need to understand the need to keep a consistent record of income and expenses, and ensure you have an eye on cash flow to ensure things don’t get tricky further down the line.
2. Be organised
From the start its important to be as organised as possible. From making sure you don’t lose your VAT receipts to deciding on a reference for your client invoices, having a system will save you (and your accountants!) time and money. The more organised your records the quicker it is for your accountant to process your accounts and the smaller the bill! There are many ways to organise your bookkeeping, from not organising it (and hoping for the best), to being super organised and using filing systems and intuitive software, but we recommend finding a system that works for you and sticking to it.
3. Know the basics
If you’re planning on doing your own bookkeeping its important you have some grip on your accounts. By no means do we expect you to be the experts (after all what would be the point in using us if you were!), but it can help if you know how to categorise your spending e.g. travel, purchases, motor, and keep a record of which of your customers has and hasn’t paid. Ensuring you check this back to your bank statements once a month will allow you to keep on top of your finances, and more importantly this will help you to understand your cash flow i.e. how much money you have now, how much money you will have, and how much money you need to have, to keep your business afloat.
4. Decide on your accounting software
Whilst not everyone will need accounting software (if you’re not VAT registered you are not required to have HMRC compliant software currently) we recommend you future proof yourself by choosing software which will suit your business and its needs as you grow. The biggest software providers are Xero, Sage and Quickbooks, and whilst all do the same thing, the user friendliness and practical application differs. As a firm we recommend Xero, and all our staff members are Xero certified, meaning we can offer you plenty of help and advice. If you’re uncertain which software would work best for you one of our outsourcing team will be happy to discuss your requirements and point you in the right direction.
5. Use your bookkeeping to help your business grow
You can maintain a record of your finances purely to keep on top of the books. However if you maintain your bookkeeping regularly you can use it to help you get a better understanding of your business, allowing it to grow and develop bigger than you may have imagined. You can use your bookkeeping to understand who your biggest customers are and what similarities they have, and use this to target your advertising and marketing, or to determine whether with projected income you will have the funds to cover the big project you plan for 6 months time. Bookkeeping can be more than simply keeping a record of your finances. Contact us if you want to know more about how to utilise your bookkeeping to suit your business.