There’s no getting away from paperwork and bookkeeping when you’re in business. Even the smallest and simplest of operations has to keep records to satisfy the taxman that they’ve paid all their dues.
There are ways of taming the monster, however, and here are three of them.
Get Ahead at Tax Time With Cloud Accounting
Over the next few years, the government plans that all businesses, large and small, will complete a quarterly tax return and have a digital HMRC account.
If you’re not up to speed with the ways in which accounting can be done in the cloud, now’s the time to investigate. By getting on the bandwagon asap, you’ll save yourself unnecessary headaches down the line when it becomes compulsory.
The government claims the move will make tax returns simpler, that it will just involve updating filed data that HMRC can’t get elsewhere. Whether it is or not remains to be seen, but if you’re manually keeping your books then passing a load of paper over to your accountant once a year, you’ll end up on a steep learning curve.
Current plans see the start of the roll out in 2018, with full adoption by 2020. Now is the time to investigate online options, of which there are plenty. You’ll usually pay a monthly subscription for advanced services, but the time saved makes it worth the outlay for many.
Digitise Paperwork
We are creeping ever closer to the vaunted paperless office, and it makes sense. With modern technology and the Internet of Things, creating digital copies of paper documents is simple now compared to just a few years ago. Thanks to smartphones and their apps coupled with linked cloud accounts, you can snap a pic of your receipt or paid invoice and keep that as your accounting record rather than the physical piece of paper in a box file.
You need to be a little wary, however, because there are certain papers that HMRC still wants in its original form. These include documents that show tax other than VAT, such as dividend vouchers or bank interest certificates. They need to be kept in their original form, which means if you receive a paper document you must keep the paper, and if you’re emailed a .PDF you have to keep that rather than change it into an image.
A few tips:
- If you’re scanning, copying or photographing documents, remember to include the back, which is often where you’ll find terms and conditions.
- Organise a structured folder hierarchy on the computer that’s easy to update and search. You could do this by client, by year, or by month.
- Keep a backup of your files on an external hard drive or use an online back up service. Most businesses need to keep their records for at least six years so don’t risk a computer crash devastating your accounts.
Make a Regular Bookkeeping Date
Most small business owners complain they just don’t have enough time to dedicate to bookkeeping, having to work through the evening to stay on top of it.
Set up a system that answers your needs. Keep it as simple as possible so you’re not battling against a programme that’s too complicated for your business model. Then, adding a new expense or generating an invoice takes just a couple of minutes.
It’s when you let it pile up that it becomes a marathon. If you allow half an hour at the end of each working day to update the records, you may find you don’t need anywhere near that long and can bask in having finished early.
And if you’re still struggling to stay on top, don’t be scared to outsource your bookkeeping. Hire someone to keep your records up to date on a regular basis so everything is organised for the end of the tax year. Once you have it all sorted out, ready to hand off to the accountant who prepares your tax return, that dreaded annual deadline won’t keep you up at night.
Drew writes for Braant Accounting, accountants in London and ten regions across the UK.
