What Are the Basic Accounting Needs For a Small Business?
When you first set up your new business, you’ll have a lot on your mind. How to offer a better service than your competitors, for instance. How to market your business and make sure it gets noticed. But amidst all the excitement of establishing and promoting your new company, there are all kinds of behind-the-scenes tasks to attend to.
Of those, bookkeeping and accounting are among the most important. They might not be the most exciting, but they’re vital if your business is to succeed in the long-term. If you’re serious about the future of your business and making it a success, it’s crucial that you establish watertight bookkeeping and accounting processes from the outset.
Whether you plan to do this yourself or outsource your accounting needs to a specialist firm like us, it’s important to know what’s expected of you before you get started. That’s exactly what we’re covering in this blog.
Below, we’re going to run through the key components of small business bookkeeping and accounting, giving you an overview of what to expect when you launch your company. By no means is this an exhaustive list, but a beginner’s guide covering the building blocks of bookkeeping and accounting. If you’d like to learn more and get your specific questions answered, don’t hesitate to get in touch with the Stonehouse team for advice.
Bookkeeping
Although it’s often confused with accounting, bookkeeping is an entirely different (but equally important) task. While accounting focuses on presenting and interpreting financial data, bookkeeping is all about recording that data with pinpoint accuracy.
For that reason, it’s one of the most crucial elements to get right. Without bookkeeping, the accounting process would be redundant. From expenses to invoices, every financial action your business takes needs to be recorded correctly. We’re talking receipts, bills… everything.
Not only will accurate bookkeeping enable you to create insightful balance sheets that tell you exactly where your business is at financially, it’ll help you avoid any tax discrepancies (and resultant fines from HMRC).
Payroll
Although it’s often considered part of the bookkeeping process, payroll is a significant task in its own right. You might not need to worry about this from the get go, but as soon as you hire your first employee, establishing a robust payroll process becomes vital.
To make sure everyone gets paid on time, you’ll need to work out a schedule and ensure that everyone you hire is paid and taxed correctly. The payroll process will change depending on whether you hire employees or contractors too; understanding the differences between each process is key.
Taxes
When you’re running a business, making incorrect (or late) payments to HMRC can have serious consequences. Aside from tracking your company’s earnings and expenses, you’ll need to pay close attention to HMRC deadlines and ensure you file your tax returns in advance to avoid any unexpected fees. If you’re unsure of your tax obligations, always consult a professional for advice – it will usually save you money in the long run.
There’s more to taxes than just making payments. You will be able to reclaim tax you pay on various business expenses too, so make sure you take advantage and reduce your tax obligation where possible. Even relatively small expenses can add up – and any taxes you’re able to claim back can reduce your overheads significantly.
Financial reporting and forecasting
Creating accurate profit and loss statements and balance sheets will not only give you a clear view of where your business is at currently, but help you predict where it’s likely to be in the future.
Whether or not you have specific revenue and profit targets you’d like to hit, it’s important to make sure your business is going in the right direction. Detailed financial statements will give you the information you need to establish this, allowing you to compare your company’s performance month-by-month and pick up on trends (for example, seasonal revenue spikes).
Find out how Stonehouse can help your business
With more than four decades of experience working with businesses of all sizes, Stonehouse Accountants is here to help you get your company off the ground with tailor-made bookkeeping and accounting services.
From taking care of your day-to-day bookkeeping tasks to handling payroll and tax returns, we can assist with all your accounting needs no matter how small or large they may be. To find out more, check out our complete range services today.