Being self-employed is challenging enough for most people, but trying to keep up with business records while focusing on keeping everything running can be downright difficult. Yet keeping accurate business records is a legal requirement.
Besides, if you can manage to keep track of your bookkeeping, you might also save money. Organized business records make it easier and faster to prepare your end-of-year accounts, so you save money on accounting costs.
Related: Last minute tax tips
When your book-keeping is accurately documented, you also have the advantage of being able to monitor your business’s cash flow at a glance.
The problem many self-employed people face is knowing exactly what to record. Here are some tips for staying on top of your business records.
- Invoices: All the invoices you receive need to be tracked accurately. Include information about the amount, the date the amount was paid, the name of the company or customer and what the invoice was for.
- Receipts: Staying on top of your expenses is the easiest way for your business to remain tax-efficient. Keep track of any receipts that relate to your work in any way. Your accountant can offer some advice about which expenses you can claim as a self-employed person.
- Business Expenses: There are some business expenses that may not receive receipts. For example, if you have a credit card for your business, you might use your bank statements to keep track of some expenses instead of recording receipts.
- Keep Personal Finances Separate: Many self-employed people combine their business and personal finances in the same accounts. However, no matter what size your business might be, it’s important to keep business and personal finances separated. Open a separate bank account to for your business funds and use this account to cover your expenses. You’ll find it much easier to keep track of what’s been spent on business. You also won’t be wasting time trying to break down which expenses related to what entity at tax reporting time. There are plenty of tools to help you with your taxes if you need them, and a lot of them are free too!
- Use the Right Apps: Self-employed people can make their lives much easier by using the right apps to record and track their accounts on the go. If you enter in one or two items every couple of days, you’re staying on top of your records as you go. You’re also saving plenty of time, as you won’t need to spend long hours at the end of the reporting period trying to catch up with all those entries.
- Back-up Regularly: No matter how busy you are, make the time to back up your records on a regular basis. There’s nothing worse than suffering a hard-drive failure or technical disaster and losing your business records in the process.
Staying on top of your business records doesn’t have to be a time-consuming chore. The key is to take financial control and be sure your records are up to date on a regular basis. You’ll end up saving a lot of time and hassle in the long run.
Related: How to be a great landlord