As a small business owner, you probably don’t want to spend more time on your accounts than is absolutely necessary, but there are a few things you simply must do.
In this guide, we’re going to take a look at the essential tasks you must perform to meet all your obligations and keep everything in check. And the good news is it will take just 30 minutes a week.
Before we start, it’s important to note that these are the absolute essentials you must do. The more information you have about your business, the more insight you’ll have into its performance. However, these are the tasks that cannot be avoided.
Whether you decide to do your own bookkeeping or employ an accountant to help you out, there are certain things you will need to keep from the off. This includes records of all business expenditure, such as utility bills, credit card statements and all your cash purchase receipts. You will also need to fill out your paying-in books and maintain payroll and VAT records.
These details can be kept on paper-based records, computer spreadsheets or simple bookkeeping software, which small businesses are increasingly choosing to use. This specialist software has become extremely popular in the past few years due to the tax return and PAYE information that has to be submitted electronically to HMRC.
You should record the week’s transactions and check your cash position to make sure you have enough money in the business. This should include money coming in and payments made to suppliers, employees and HMRC etc. Doing this on a weekly rather than a daily basis will help to reduce the time you spend on data entry.
Sending out invoices and managing the accounts receivable ledger is something you must do in a timely manner to keep money coming into the business. This is also the time to chase late payments.
It is advisable to keep a hard copy of all the invoices you send out and to organise the receipts for the cash payments you have made. A simple folder system is perfectly fine, as long as you have everything you need in the same place.
You should carry out a weekly review of the due dates on the bills and invoices you have received, and pay any that are due to avoid late payment penalties or interest charges. You should also look out for any early payment discounts you can take advantage of if your cash flow position allows you to do so.
Every week you should check your bank and credit card statements to make sure all your transactions are as they should be. With the huge rise in fraud in recent years, this is certainly time well spent.
Check your cash flow position to make sure you have enough cash in the business for the coming weeks. Any sign of impending problems should be addressed immediately.
Bivek Sharma is head of KPMG Small Business Accounting