Simplifying Accounting for Your Diverse Businesses: Tips for Effective Record Keeping
In January, we had the pleasure of engaging with a group of dynamic individuals, each with their unique businesses, seeking clarity on how to maintain comprehensive accounting records.
Here's a distilled version of their queries and some practical advice for seamless record keeping:
Embrace Organisation
Keeping your accounting records organised is paramount. Avoid relying solely on email for crucial documents. Instead, create dedicated folders in your email or use an electronic filing system to store documents like:
loan statements,
bank statements,
lease agreements,
registration documents,
interest or investment certificates,
purchase documents,
P60 and P11D,
invoices, and
HMRC correspondence.
This prevents frantic searches and potential loss of important paperwork - trust us 😄
Take Prompt Action with HMRC Correspondence
When you receive letters from HMRC, address them promptly.
Log into your Government Gateway account to understand the issue or settle any outstanding dues.
Procrastinating will only exacerbate problems, and having the necessary documentation on hand facilitates smoother resolution, especially when seeking advice from your accountant or tax advisor.
If you can, scan or take a photo of the document and send this to us. This makes it easier for us to follow up for you.
Make the best use of Accounting Software
Invest in user-friendly accounting software like FreeAgent or Xero to maintain up-to-date records.
Timely recording of transactions ensures accuracy and completeness in your accounts, optimising tax efficiency.
Additionally, annotate transactions promptly to provide clarity on expenses, making it easier to identify deductible items.
Maintain Business Segregation
If you operate multiple businesses, it's essential to keep their records separate.
This separation not only simplifies tax compliance but also enables you to assess each business's profitability independently. Consider using separate bank accounts for each business to streamline expense tracking and financial analysis.
By implementing these strategies, you'll establish a solid foundation for effective record keeping across your diverse ventures.
Remember, maintaining organised accounting records is not just a compliance requirement but also a strategic asset for optimising your tax efficiency and helping with your business success.