The very last thing you want to think about when you are starting your new business is accounting software!
You’re thinking about customers, contracts, cash flow, staff, offices and so you should be… after all, your enthusiasm, drive and vision is the lifeblood of the business. Don’t lose or suppress it.
But, unfortunately, HMRC is watching you. (ok, that sounded less creepy in my head)
Maybe they aren’t watching you… but they do want to know what you are doing, expect you to keep good records and pay any tax due.
I promise you, if you get set up now it will be so much easier for you in the long run.
Convinced?! Ok, let’s get you started.
Set up a business bank account
You are going to need a separate bank account for your business. If you are a limited company the account will be owned by the company and as director, you get access to the account. (make sense?!)
It’s worth shopping around here and getting the best business bank account that’s right for you.
Some things to watch out for:
- Any monthly banking fees or charges
- Do they have an easy to use app?
- Can they connect to accounting software easily? (any software you choose will link up to your bank account and see money coming in vs going out)
- Do they offer any additional services you might need? (foreign currency transfers, taking payments over the phone etc)
It’s worth getting this right as it’s quite a hassle dealing with the whole setup. Once is enough for anyone… try some of the newer banks like Starling, Tide and Revolut alongside the usual high street names.
Link up your bank and get a plan together for your bookkeeping
You’re going to need a plan of action for dealing with your everyday transactions.
Once you’ve linked up to your business bank account to your accounting software all the transactions will be sitting there needing some attention!
This is where a process for bookkeeping makes sense. Will you log in and reconcile all the transactions or will you pay someone to do it for you?
You’ll need to keep track of receipts and note down what each expense is for.
Eg: Marketing, training, travel etc.
It’s so so so much better to do this as you go along. There’s nothing worse than looking at your transactions 6 months later wondering what a transaction was and scrambling to find the invoice for it.
Either pay someone to do it or make sure you have a system in place yourself.
Activate VAT Returns
If you are registered for VAT, your bookkeeper will often do your VAT return for you as well. Accounting software can do most of the heavy lifting if you are keeping on top of your books.
Tell the software you are VAT registered and as long as you are submitting invoices via the software and your books are up to date, it can draft a VAT return for you to cast your eye over before you submit it.
Easily Draw Up Annual Accounts
This is the big one that everyone gets in a panic about… relax! If you’re using business accounting software correctly and everything is up to date this will be a stroll in the park.
When your accounts are due, your accountant can simply log into your software see the current business situation and draw up the accounts. Sure, maybe there’s the odd thing missing here and there but it’s twenty minutes of your time rather than days of hunting for invoices and receipts!
Pay Your Corporation Tax
Another benefit of having accounting software that’s kept up to date is that you won’t get any nasty surprises when it comes to calculating the tax due. You can prepare and budget for it as it’s calculated as you go along.
So let’s summarise:
- Choose your software (we like to use XERO)
- Open and connect your business bank account
- Keep good records and implement a solid bookkeeping strategy (we’ll do the bookkeeping for you, just send us the receipts via our app when you get them)
- Keep on top of it all and everything else should fall right into place when you need it!
Oh and I nearly forgot to mention, accounting software is almost essential now with the Making Tax Digital directive.
Everything needs to be filed electronically so you may as well get yourself set up and do it right. We are here to help!