Filing invoices, making a record of sales, submitting your tax return on time – these things all take time, precious time we might not have to spare. Does that mean you should just put them to the back of your mind and hope for the best? Absolutely not, because the time will come, sooner than you think, when your company accounts must be submitted – and your tax bill must be paid.
If you haven’t got your documents and financial information in order, how on earth can you even begin to work out just how much tax you owe?
I know from experience that in the early days of a business, paperwork and filing definitely take a back seat. I’m rubbish with numbers, and I’m pretty unorganized – but I didn’t just let my invoices stack up in a pile – I recorded them all in a homemade balance sheet, every penny I spent in my company was documented – every penny we took in sales was also documented. It took me just 2-3 hours every month to keep on top of things – then when it all became too much and I started to see some nice profits, I decided it was time to get a professional on the job – so I hired an accountant. Keeping the books in order is important because it allows you to see whether or not your business is viable – if you’re making little or no profit, is there much point in carrying on? Obviously keeping on top of your books also means you’ll be one step ahead when it comes to tax – you’ll know exactly how much you owe at the end of every financial year, no guess work here!
Accountants don’t come cheap, and the cost of hiring an accountant would usually be too much for a startup to bear, and that’s not really an issue because when you first start up, you probably don’t need an accountant in all seriousness. You should have no trouble filing your own books – there are lots of guides and tutorials out there on the internet that will have you managing your own books in no time.
All too often I hear horror stories of people who didn’t recognize the importance of keeping on top of paperwork from the outset. I came pretty close to disaster on my first start up – I started importing stuff at first just to sell on markets and to friends, early on I didn’t see why I should waste my time keeping my books for something that I saw as a bit of fun – a couple of years down the line that “bit of fun” has turned into a full time business – and I’m really glad I did choose to keep on top of things from the outset.
It sounds a lot more complicated than it is – and to stay organized you only need a few things:
- 2-3 hours per month spent doing admin (this may vary depending on the size of your business and the volume of sales)
- Three in-trays, one for invoices (that you’ve paid), one for funds you’ve received (sales), and one for your monthly balance sheets (which you’ll draw up using invoices and sales figures).
- A computer with Microsoft Excel or some accounting software, and a printer
That’s all there is to it, when your books become a little too much and you physically can’t keep on top of them anymore it’s time to call in an accountant to do it for you – until then, I’ve laid out a perfectly cost effective and extremely effective way of completing your own books to a very high standard.
There really is no need to fall behind with your books – save yourself a lot of hassle and anxiety by keeping on top of things from the outset.