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5 Ways to Organise Your Small Business Finances

Does the thought of your small business finances make you anxious? Are you fed up of finding yourself in tax-hell because you’ve ignored your accounting for yet another year? Or is bookkeeping the thing you dread most in your weekly schedule? The let’s do something about it! In this guide, I’ll share 5 easy ways to organise your business finances, that best of all, are really EASY to implement right now so you’ll finally feel in control of your money and accounting.

1. Understand What You Need to Do and Why

Sometimes we feel overwhelmed because we just don’t know what we need to do and why. So if you feel like your business finances are in a mess, take a step back and ask yourself whether you are doing all the right things, why you’re doing them and whether you’re focusing your efforts correctly.

Do you think you are storing paperwork and records for no reason? Are you confused by what numbers HMRC need from you and the reports you need to give them? Then you may be doing things you don’t actually need to do!

Part of what you need to be doing will come down to your business structure. If you are registered as self-employed, you’ll need to fill in an HMRC tax return declaring your income and expenses each year. But if you have a Limited Company you’ll need to submit annual accounts and a corporation tax return once a year, so you’ll need to produce a balance sheet as well as statutory accounts.

If you are struggling to understand the legal and tax requirements when you’re self-employed, then read my blog series Understanding Self-Employment, where I unravel some of the most confusing aspects of HMRC and taxes.

In addition to understanding what you need to do, it’ll help you to decide on your purpose. Do you want to prepare your numbers once a year for tax-time or review monthly figures to help you stay on top of your business finances to grow your business?

If you go for the first option, you’ll need to do your accounting once a year so you’ll probably want to make sure you store your paperwork on an ongoing basis carefully, so you have it ready for when you need it. But if you want more regular numbers to understand what is happening inside your business, you’ll need to do your accounting on a regular basis, with an accounting system and work out which areas of your business are important to you, so these are prioritised alongside your legal requirements.

What Business Records Should You Keep If You’re Self-Employed

2. Check You Are Using the Right Accounting System for You

If you find your accounting system confusing, then you’ll be put off from doing your bookkeeping and, no doubt, end up ignoring your business finances. You wouldn’t use a social media scheduling software you don’t understand, you’d find another! So why would you take the risk of using something you don’t 100% feel comfortable with when it comes to your money?

When you’re registered as self-employed you can either use accounting software, like Quickbooks, or a bookkeeping spreadsheet. If you have a Limited Company then you’ll need to produce a balance sheet, so I would recommend you use an accounting software rather than a spreadsheet.

Whichever you choose, make sure it’s the one you feel most comfortable using otherwise you’ll be banging your head against a brick wall. So if you have a spreadsheet but feel it’s time consuming and want a more automated solution, then make the change (and vice versa). But try not to chop and change; otherwise, you’ll spend hours getting set up and never quite settle into using one properly.

3. Separate Your Business and Personal Bank Accounts

If you spend hours doing your accounting and taxes because you have income and expenses coming and going from different bank accounts, then the easiest way to get organised is to take the plunge and open a business bank account.

It isn’t a legal requirement to have a business bank account if you are self-employed but it makes managing your business finances easier because everything is one place. The bank charges for a business account are also tax-deductible and I love knowing when I look at my business bank account I can fully focus on my business.

Take a look at Starling, which is a popular option in the self-employed community. And even though you’ll need to invest some up-front time moving all your payment details to your new bank account, Starling connects to Quickbooks pulling in your income and expenses straight from your bank account, saving you the hassle of typing in individual entries. So in the long-run you’ll save yourself a lot of time and hassle.

4. Set Time in your Calendar Every Week to Deal With Your Small Business Finances

If you bury your head in the sand when it comes to your bookkeeping or you PROMISE yourself you’ll do it at the weekend, but never quite get around to it then you are probably feeling like you’ll never get on top of things. The easiest way to get your business finances in order is to stay on top of them.

Set time aside for your bookkeeping in your diary and get into the habit of staying on top of things – whether its Friday afternoon when you’re feeling less productive or Monday morning so you can start the week strong, find a spot in your diary and stick with it (I always treat myself to a hot chocolate when I do my accounts to sweeten the deal!). You may need to make more time in your diary to get on top of things initially, but once you have a regular routine chances are you’ll be able to do your bookkeeping quicker moving forward.

5. Get Some Help with Your Small Business Finances

There are things we all do and don’t like doing when it comes to running a business. That’s a fact. And we don’t have to do it all. If, for you, its the finances side of things you dislike, then consider getting some help.

Bookkeepers tend to charge either an hourly rate or offer monthly fixed fee arrangements to help you stay on top of your accounting. Many will also run essential reports and help you review them, giving you helpful insights into your business. You’ll also have the added advantage of having an expert by your side to help you understand what is happening inside your business so you can learn more about money and finances.

If you only want your accounting done once a year for tax reasons, you could consider outsourcing things entirely for minimum stress. Many accountants will charge you a fixed fee for producing your accounts and filing your returns, which includes going through all your paperwork and making sure you are receiving all the income tax allowances and reliefs you are entitled to.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.