For many, Bookkeeping can be seen as a chore (a time consuming one at that!). Understandably, core business activities must come first and there are only so many hours in the day. However, regular Bookkeeping is imperative to the success of a business and enables year end Accounts/Tax Returns to be completed much more efficiently.
So, what is Bookkeeping? Bookkeeping is essentially the process of recording the financial transactions of a business. This can be done in many different ways, can take many different forms and can also be done at various different frequencies. Ultimately, Bookkeeping requirements and needs will vary from business to business and may depend on level of activity, business size and business/owner requirements.
Recording the financial transactions of a business can be a simple as populating a spreadsheet at the end of each financial period (i.e. Annually for a non-VAT registered Sole Trader). However, some businesses may require a more frequent Bookkeeping operation (i.e. a VAT registered company with a quarterly VAT return requirement) or require a particular Accounting software in the light of MTD (Making Tax Digital). We have partnered with Nomisma and Quickbooks, so are able to pass on handy discounts too!
Thorough and accurate Bookkeeping can help ensure your financial affairs are correctly reported to the appropriate bodies and minimise the risk of Accounting errors, whilst also providing accurate calculation of tax liabilities (in some cases reducing said liabilities with correct treatment of certain expenses). As per HMRC guidance, Accounting records must be kept for a minimum of 5 years from the end of the Accounting period as checks can be carried out during this period to ensure the correct amount of taxes have been paid.
Business Expenses
Business expenses, and what can be treated as a business expense, is one of our "hotter topics". After all, we want to ensure we do not exclude any potential business expenses that could be used to reduce tax liabilities.
Generally speaking, most expenses directly attributable to the business can be treat as such. We have provided a summary below of some of the more common expense categories, however this list is by no means exhaustive. There are one or two exceptions and some expenses (i.e. capital expenditure) which are treat differently, so should you need to discuss further please feel free to contact us and we'd be happy to discuss.
Tip #1 - Keep on top of your Bookkeeping
Bookkeeping should be completed as frequently as possible. It can provide useful information on the performance of your business and help make those important decisions. If you feel you are struggling for time, please check out our professional Bookkeeping services.
Tip #2 - Keep your Accounting records safe
As above, Accounting records need to be kept for a minimum of 5 years following the end of the Accounting period in case of any HMRC checks. We securely file our client's Accounting records for 7 years as standard to take away this burden.
Tip #3 - Record all business expenditure
Don't forget to include ALL acceptable business expenditure. It is important that your income and expenditure accurately reflect that of the business and, after all, these expenses help reduce your tax liabilities and ensure accuracy in your returns.
Tip #4 - If you're unsure about anything, reach out!
We are more than happy to discuss your Bookkeeping/Expense queries. Visit our contact page to reach out, or email us at info@ne-accounting.co.uk.
HMRC have a handy page on business expenses. So if you're unsure about something, feel free to look it up here first: https://www.gov.uk/expenses-if-youre-self-employed