Let’s face it— bookkeeping isn’t the most exciting part of running a business, but it’s a really important part to get right.
Managing your bookkeeping records well will save you a lot of time, hassle and future stress. It could also potentially save you money in the long-run by avoiding penalties and fines. Most importantly, it’ll allow you to spend more time growing your business and doing what it is that you do best.
Here are our top 5 tips to be a badass bookkeeper and how to nail your accounts:
Keep your business and personal transactions separate.
This might seem like an obvious one, but it’s super important and something a lot of business owners get wrong. Try to avoid paying for business expenses on your personal bank account and paying for personal things on your business account whenever possible as you could get fined by HMRC for mixing up your transactions. Plus, keeping them separate will avoid any unnecessary confusion and it’ll be much easier to keep on top of VAT.
Make the most of accounting tools, apps and software to stay organised.
Online accounting software has helped to revolutionise the world of accounting. Apps such as Xero, FreeAgent and QuickBooks allow you to access your accountants from anywhere and digital tools like AutoEntry or Receipt Bank let you instantly upload your receipts to Xero, FreeAgent or QuickBooks. There’s no need to hold on to physical copies of receipts anymore, but we would recommend keeping a backup of most transactions just in case.
Once you’ve downloaded the AutoEntry app onto your phone, you can start snapping photos of your receipts. Just make sure you know what category they’re going into on AutoEntry and what amount of VAT each of them has. You can also use the software to push any PDF invoices for services and monthly subscriptions through to your accounting solution. If you’re unsure about how to use AutoEntry, here’s a quick video on how to get started.
Set time aside to do your bookkeeping regularly.
Keeping organised and up-to-date with your financial records is the key to being a badass bookkeeper. Setting aside a fixed amount of time each week to scan receipts and invoices will help you remember your recent financial activity and what your receipts were for. The best way to stay organised is to upload your receipts as soon as possible before you forget.
Additionally, you can keep on top of things by picking the same day of the week to sit down with a coffee and look at your accounts, that way it will become part of your routine. Unfortunately, if you don’t stay on top of your bookkeeping, it can be difficult to fix. You might forget what some transactions were for and your accountant may not know either.
It can also be helpful to set aside time each month to reconcile your bank accounts. Most banks will now connect to your accounting software so that your transactions will automatically upload on a daily basis. All you then need to do is match tell your system what those transactions were for, and if you’re using Xero it will do the bulk of that work for you too!
Know what business expenses you can reclaim VAT on and what things you can’t.
This is a grey area which is often unclear for non-accountants, and we’ve spotted a lot of common mistakes. However, it’s easy to avoid these if you familiarise yourself with some examples of taxable and non-taxable business expenses:
Things you can reclaim VAT on:
- Office & Equipment
This includes rent, stationery, utilities, computer equipment & repairs, maintenance of business property & equipment.
- Car & Travel
When travelling for work purposes, you may reclaim VAT on hotel accommodation & mileage for a business journey. If you lease cars for the company, you’ll be able to reclaim 50% of the VAT on the lease costs. VAT on the purchase of commercial vehicles can be reclaimed.
Clothing such as a uniform or protective clothing may be reclaimed if it has been provided by the company and carries company branding. Unfortunately, Hugo Boss suits don’t count!
- Advertising & Marketing
VAT may be reclaimed on advertising, marketing and website costs.
- Legal, Financial & Other
You’ll be able to reclaim VAT on the following: payments for accounting & legal services, subscriptions to membership organisations, software subscriptions (subject to where the provider is based), staff training.
Things you can’t reclaim VAT on:
- Insurance, finance & credit
- Publications, such as books & magazines
- Educational or vocational training such as connected services provided by a school or college
- Bank charges
- Goods & services you’ve used to make VAT-exempt supplies
- Anything bought from other EU countries
Always ask your accountant if you’re unsure about anything.
Surprisingly, it’s actually better to do nothing at all if you’re unsure about an element of your bookkeeping. Mistakes can be a lot harder to rectify than catching up with a backlog of bookkeeping as your accountant won’t know what’s been done incorrectly.
So, if in doubt, ask away! A proactive accountant will get back to you as soon as possible. At Ashton McGill, we use Slack to keep in touch with our clients. It provides a platform for them to ask us anything they’re unsure about and for our clients to interact with one another and answer each other’s problems. We’re online pretty much all the time, so we’ll get back to you that same day.
We hope you’ve found this blog post useful for upping your bookkeeping game!