Bookkeeping is something most small business owners dread, we’ve put together our top tips to make it as painless as possible for you.
Set a Regular Schedule:
Set yourself specific times each week or month to update your books. Consistency is key when it comes to bookkeeping. Put it in your diary to block it out! By setting aside dedicated time, you can prevent a backlog of transactions from piling up, making the process feel less overwhelming and more manageable. The more regularly that you look at it the less time you will have to dedicate to it in one go!
Use Technology:
Take advantage of accounting software and apps that automate certain aspects of bookkeeping. Many tools can link directly to your bank accounts and credit cards, automatically categorising transactions. Use things like Xero or FreeAgent to send all your bank transactions to for you to sort out, and Hubdoc or Dext to take pictures of your receipts and feed them into your accounting software. This not only saves time but also minimises manual data entry and reduces the risk of errors.
If you really do not have enough transactions to justify the use of technology simply download a bank statement every month and note what all the income and expenses are on the statement download.
Colour code your categories:
If you are a visual person and lists of numbers makes you want to jump out of the window, assign a specific colour to each category or type of expense in your bookkeeping system. For example, use green for income, blue for office supplies, red for utilities, etc. This visual cue can make it easier to identify and categorise transactions at a glance, reducing the chance of errors.
Separate business and personal finances:
Maintain separate bank accounts and credit cards for your business and personal expenses. Even if you are a sole trader and not a limited company! This not only helps in keeping your financial records organized but also simplifies the bookkeeping process. Mixing personal and business transactions can lead to confusion and make it harder to track your business’s financial health. Also if HMRC decide to come and have a look through your records you wont be having to explain all your personal spending!
Snap and save receipts:
HMRC insist on your keeping proof of expenses for 7 years, that could be a lot of paper to keep hold off and manage! Take advantage of mobile apps that allow you to snap pictures of your receipts (as mentioned about Hubdoc and Dext are examples). Many accounting applications have features that let you attach receipt images to specific transactions. This not only reduces paper clutter but also makes things much easier if you need to find the receipt for something.
Automate Recurring Transactions:
For regular bills and expenses that remain constant each month, set up automatic transactions in your accounting software. This ensures that you don’t overlook recurring payments, and it reduces the manual effort required for data entry.
Reward yourself:
Celebrate small milestones in your bookkeeping routine. Whether it’s completing a week of consistent record-keeping or successfully reconciling accounts for the month, treat yourself to a small reward. You may feel a lot more willing to complete the bookkeeping if you get to go and get a Costa after the boring stuff is done.
Remember, the key to making bookkeeping easy is to establish good habits, stay organised, and use tools and strategies that work best for you and your business.
If you get into good habits you may find you stop feeling the dread at having to complete the bookkeeping and year end stops being such a drama!
Of course if you would like help with your bookkeeping we are always here to take it of your hands, just get you back up to date or to offer guidance
