Overview of Sole Trader Bookkeeping:
Becoming a sole trader remains the simplest way to set up a business. There can be much less tax admin, too, but there is no avoiding keeping financial evidence. So if you are a sole trader or considering soon becoming one what key issue should you know about keeping financial records?
As a sole trader, in-depth bookkeeping is critical as you must report your business profits at the end of each tax year. You will need a full set of your accounts showing your sole trader’s income and expenditure, from which they can work out your tax liability.
All businesses keep accurate financial records:
It’s a legal requirement for traders to maintain their financial records accurately and update them. It is necessary by law to keep their records/books minimum of at least 6 years. HMRC can ask to see your books to verify figures submitted via your tax returns, to ensure that you have paid the necessary amount of tax. HMRC can visit your business to check your financial records and if they are not accurate and complete, there can be financial penalties.
Bookkeeping requires taking care of many tasks:
It involves recording and storing all sole trader financial transactions, in other words, all money entering and leaving your business. But it includes many other tasks too.
This can include, recording and keeping safe sales and purchase receipts, verifying, recording and paying supplier invoices, bank and petty cash reconciliation, managing payroll and PAYE, invoicing clients and chasing overdue payments, preparing profit and loss account, and balance sheets, and financial reports. Having access to such data can enable you to forecast future costs and sales, so you can better manage your cash flow and plan for the future.
Accounting Software makes bookkeeping simple:
Upholding your financial records is much more convenient when you use accounting software. It can save you lots of time and enables you to rapidly find out key numbers, so you can more easily comprehend how well your business is performing. Moreover, you can share data more conveniently with others who work for your business or your accountant or access your accounts, when you are away via Smartphone or laptop.
Accuracy and diligence:
Mistakes in your financial accounts can prove costly. At one end of the scale, they can mean that your tax returns are not correct, though not deliberately, which can cost you a lot of time and money. And you would not know appropriately how your business is performing financially.
Staying organized:
Excellent organization is significant in business, but it’s particularly true when it comes to bookkeeping. Thankfully, accounting software can help to make sure that you enter data in exact places, but good organization also widens to recording and storing purchase sales receipts, invoicing, bank, and petty cash reconciliation and managing payroll.
Do not need to bookkeeping experts:
You don’t need to know everything there is to know about bookkeeping, just sufficient to take care of basic bookkeeping tasks if you do them yourself. For more compound accounting requirements, you can reach out to others for advice and support. One really good tip is to have a separate bank account into which you can pay your tax bill.
Contact Us for free Advice:
To discuss how Accountants in Slough can assist you with your Accounts Preparation, please contact us for a free, no obligation consultation on: 0333 772 1616 or complete our Contact form and we will get back to you.
