Starting a new business can be a bit like falling in love. In the beginning, everything you do with your business is exciting and new, and even the supposedly dull things like doing your expenses are fun.
But what about when the rose-tinted spectacles have fallen off and the bookkeeping stops being new and exciting – and becomes repetitive and mundane? Do you start thinking, “Oh, no, I really can’t be bothered”, and ignore your accounts? And do you end up with a huge pile of paperwork to do which you just can’t bear to tackle?
Little and often
Bookkeeping can be a chore and there’s no getting away from it. The trick is to do a little bit regularly, rather than leaving your papers to pile up and then having to spend hours organising and cataloguing them.
Set aside a regular slot, say an hour each week, to do your books. This will not only make the job of bookkeeping feel less onerous but will also help you have accurate, timely, up-to-date information available for your business.
As to when that hour should be, make it a time when you’re fresh and alert and have enough energy to get you past the “oh, I don’t want to” groan in the back of your mind.
True story: In my final year at university, I deliberately asked my supervisor to put the tutorial for my least favourite subject at 9am on a Monday morning. Straight after that lesson I would then go and do my homework for the following week’s class, and then I had a clear conscience for the rest of the week, which was a brilliant feeling!
Keep it simple, silly
The K.I.S.S. principle works perfectly here. Don’t make your bookkeeping more complicated than it needs to be, because this will only take up more time than it needs to.
For example, if you’re paying your costs straight away, such as with a business debit card, don’t worry about entering bills. Put them into your books as bank payments to the appropriate category, for example if you buy a new power pack for your iMac online and pay with your business debit card, that would be a payment to Computer Hardware.
Entering a bill and then showing that bill as paid would take twice as long, and if you’re paying immediately, you don’t need to do that anyway!
Issuing customer invoices on a timely basis is crucial. For one thing, if your customers don’t have an invoice, they can’t pay you, which means you could run out of cash to pay your bills. For another, if you’re registered for VAT and are invoice accounting, did you know that if you don’t invoice your customer within 14 days of supplying the goods or service, you have to include the VAT on your return at the point when you make the supply, not as at your invoice date?
Make sure you include time to issue your customer invoices in your hour a week.
Don’t lose that piece of paper!
If you miss expenses out of your accounts then you could end up paying too much tax!
By using a record-keeping app – or an online accounting system – you may be able to record an expense such as a train journey or cup of coffee as soon as you’ve incurred it, and then you don’t need to worry about losing the receipt.
Make the software do the work
As well as the tools we’ve already seen, you can save yourself a lot of time in other ways.
Check whether your accounting software makes use of automated bank feeds, which pull in your transactions from your online bank account directly into your online accounts. This way, you won’t have to log into your bank account, download a file and manually upload it…
You can also file your VAT return online direct with HMRC, instead of having to have a separate screen open to type the details into.
And give your accountant access to your accounts so that you don’t have to go through the hassle of exchanging spreadsheets with him/her and wondering who’s got the latest version…
Bookkeeping may never be your favourite business task, but by making it as simple and as automated as possible, you can at least save yourself the spectre of the looming pile of paperwork to plough through!