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Opening a business account should be one of the first things you do: there are so many benefits to keeping your business incomings and expenses separate. It’ll make you feel more professional, clean up your books ready for your tax return, and, in some cases, it might even be a requirement by your banking provider!
By keeping your records online instead of on paper, you’ll be able to pull together financial reports in the blink of an eye, track cash-flow in real time and easily access your data whenever you need it. And, since everything will be stored securely on a server or cloud, you’re less likely to lose your valuable data to damage or theft.
Categorizing your income and expenses is vital for healthy books. You’ll be able to see at-a-glance exactly where your money is going, and whether savings can be made in particular areas. Modern accounting software makes categorizing an easy process: many now come with pre-programmed tax codes!
We know you’re busy, but seriously—keep good records! When you spend something, record it on your (digital) ledger as soon as possible. Same with outgoings. Accurate records make for an accurate tax return, helping you to avoid over- and under-payments.
Regular profit and loss statements are like a health check for your business. They will tell you if your projects are on budget, if you need to cut costs anywhere, and—perhaps most importantly—if you’re making any profit. A good statement will also be useful if you have plans to approach investors.
Paying your invoices late will damage your reputation, put a huge strain on your relationships with suppliers—and may even stop supply altogether, bringing your business to a standstill. Late payment may also incur additional fees, or even court action. The same goes with billing on time. Timely billing maintains cash-flow and ensures that you’re perceived as professional.
You may not be aware of it, but there’s a chance that you’re paying more tax than you need to be. A lot of completely legal tax deductions are unclaimed each year, simply because people don’t know they exist. You could also try looking into more tax-friendly business structures. Find yourself a good tax adviser who can tell you what is best for your company, as well as let you know about where you can make deductions.
One inevitable fact of business is that some customers won’t pay their invoices on time. Whether your payment terms are within 10 days or 30, make sure you know when payments are due. This will keep your cash flowing smoothly, since you’ll know when to start chasing, and prevents you from missing out on money owed.
It’s also important to make a note of each tax deadline. While for freelancers this may be a simple as a statement of income, depending on your business there could also be payroll taxes, sales taxes and more. Make sure you know what you have to pay, and when, to avoid late penalty fees.
The days of archiving every single bill in your wallet are over. Its 2017, and there are now more organised, more efficient, and safer alternatives to bookkeeping on paper. Of course, that’s our favorite tip over at Holvi: create a Holvi account, move your bookkeeping over to our digital service, and stop wasting time (and money) on the old-fashioned ways of bookkeeping.
Surrounding yourself with knowledgeable professionals will save you time and energy. Hiring an accountant, for example, means your tax return will be taken care of, and they may even be able to lower your tax bill. A professional bookkeeper, meanwhile, will be able to track everyday incomings and outgoings, helping you to monitor budgets. If you can’t afford to hire professionals, there are plenty of great software options that offer a comprehensive set of accounting features. Try Xero, Quickbooks or Wave Accounting, for instance.
This article was offered to you by Holvi. Holvi offers Digital banking combining everything a modern entrepreneur needs in one digital business account. The useful built-in business apps like paperless bookkeeping and invoicing will help you to focus on your core competences again. Let Holvi do all the daunting tasks and be a Maker and Doer again.
Holvi's user-friendly app is available on both Apple & Android.