Bookkeeping is an essential part of being self employed. It’s not just a legal requirement but it will also give you an accurate picture of your income & expenses. This will help you to track how your business is doing and keep you ready for tax time.
Here are my four essential bookkeeping tips to help get anyone who is self employed started or back on track.
What is Bookkeeping?
Bookkeeping is the recording of your day to day business transactions on a spreadsheet or accounting software.
You’ll find your business transactions on all your business paperwork so you’ll need to gather together things like:
- Business bank statements
- Sales invoices
- Purchases invoices
- Cash Expenses
- Mileage Claims
Bookkeeping Tip #1:
Open a separate business bank account
HMRC guidance recommends that you keep your business and personal banking separate when you are self employed, so if you haven’t opened a business bank account then consider doing so. Not only is it preferred by HMRC but it will make tracking all your income and expenses for your bookkeeping much easier and quicker.
Bookkeeping Tip #2:
Keep All Your Receipts
You are legally required to keep proof of all your income and expenses which includes things like:
- all receipts for things you have bought
- bank statements
- sales invoices and till rolls
Get into a habit of keeping and storing your business receipts and paperwork. I have written a blog on ‘How to Organise Your Business Receipts‘ where you can find one of my recommended approaches to dealing with your business receipts and paperwork.
Bookkeeping Tip #3:
Stay On Top of Your Bookkeeping
By staying on top of your bookkeeping and setting a good routine up for organising your business receipts you’ll:
- Minimise the risk of loosing a receipt and missing out on a tax deduction
- Avoid last minute stress when it comes to filing your tax return
- Save on accountants fees if you choose to use one
All my bookkeeping spreadsheets include a list of recommended daily, weekly, monthly and annual bookkeeping and tax responsibilities that you can add to your diary to help you stay organised.
Bookkeeping Tip #4:
Use a spreadsheet or cloud software
Depending on your business you can opt to use a cloud based software, like Freeagent to manage your records. Or, if you want to avoid ongoing subscription fees, set up a bookkeeping spreadsheet in excel. When you are self employed, generally speaking a spreadsheet should be sufficient to manage the recording of your income & expenses.