With the new financial year fast approaching, whilst it might just seem like another day in general for many small businesses, it actually provides the perfect opportunity to start afresh with your finances and financial recording procedure.
You’ll have hopefully seen an increase in your business’s finances over the last 12 months and it’s always hoped that your business has grown and developed year-on-year, generally meaning that processes – including your financial ones – need to be amended to reflect this development and ensure that you’re doing your utmost to keep your records in order.
And the start of the new financial year provides the perfect opportunity to do this, with the following information giving you some useful tips on how you can ensure that your small business is ready for the new financial year.
1. Hire an accountant
When you’re running a small business, it’s a natural habit to try and keep any outgoings to a minimum, carrying out a lot of the processes that you could otherwise pay someone else to do yourself.
However, whilst this does save money initially, hiring someone to carry out certain tasks – such as by hiring an accountant – can in fact save you money in the long run.
For example, should you hire an accountant (with the new financial year being a great time to start your relationship with one), it will not only mean you no longer have to spend the time completing all of your own financial records and paperwork, but there’s a very good chance that they’ll be able to save you money on your tax returns in ways that you don’t know about.
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2. Tie up your 2010-11 finances immediately
In the UK, businesses have until the following January after the financial year has ended to submit their tax return (October if they’re doing it by paper) and whilst this is great for some, as it means they don’t have to dedicate hours to the cause in one go which could be spent developing their business, it is strongly advised that you tie up last year’s finances as soon as possible.
With everything still fresh in your mind, you’ll generally find it to be less of a chore if you do it immediately rather than waiting what could be 10 months.
What’s more, by working out your annual turnover for the last year, along with your profits, you’ll be able to see just what you should be aiming to exceed – or at least maintain – for the coming 12 months and ensure that you’re on track from the start.
3. Ensure you have a simple but in-depth financial recording system in place
Whether you have – or are planning to hire – an accountant or not, you still need to keep on top of your business’s financial records yourself and the easiest way to do this is to do it as you go along.
Rather than leaving it until the end of the week or even month, when it gets to the end of the day, have a look at any incomings and outgoings that your business has seen and record them in a suitable way, with an in-depth financial spreadsheet often being the most appropriate for small businesses.
Detailing everything that’s come in and out of the business’s account, including the date of the transaction, it’s value, what it related to and any additional information, such as an invoice number, it might take a little getting used to if you’re not used to recording your finances on such a regular basis, but it is without doubt the best way to ensure that you stay on top of your finances and that they’re as organized as they can possibly be.
Everyone will have their own way to stay on top of their finances, but this doesn’t mean that it’s the most effective and if you’re looking to implement a new process for the financial side of your business, the start of a new financial year is a fantastic time to begin.