Receipts, Tax Returns, HMRC, Financials, Book keeping…. are these all words that make you SHUDDER?!
If the financial side of your business does make your heart rate rise for the WRONG reasons here are a few simple tips to help you focus on nailing your tax return and feeling on top of your financials this tax year.
The main tax relief to keep your eye on is the Personal Allowance Rate (PA) which at the time of writing is £10,000. You will pay 20% tax on all money earned between £10,000 and £31,865. Over £31,865 the tax payable rises to 40%.
Keeping on Track with your Business Financials
You need to have a file of where you put any expenditure that you might incur. Keep all your receipts for anything related to your business, your car or your phone.
Open a Business Bank Account
If you haven’t already got a separate business account you must take action now. It’s not difficult to open a bank account, Santander for instance have a no fee business account.
Set up an invoicing system
If you haven’t already done so, you must to set up an invoice system so you can track your earnings. There are lots of templates on the web. Make sure that your invoice includes the following:
- Date of invoice
- Invoice number
- Description of services
- Payment details
If you are meeting a client for the first time, create an invoice – it shows them that you are organised, successful and will do the same in their wardrobe, plus giving them the paperwork will avoid any awkwardness about your payment terms. It might be that long standing customers don’t want an invoice, BUT you still need to produce one to track your earnings. Find a system that works for you. Whatever you do, keep a trail and don’t just pop the money (cash) in your pocket!
Review your income and outgoings on a monthly basis
Having a simple spreadsheet of what money is coming in and what is going out – this will focus your mind on what is happening to the money that you are earning.
Give yourself earning targets to help you focus and extend your client reach
If you know the amount of money you would like to earn in a year and then split it into monthly, weekly or even daily totals it makes it all seem much more achievable, plus you can adjust your marketing to earn more or push back if you’re too busy.
Remember the HMRC have a brilliant website and brilliant advisers on hand to help you with any questions that you might have.
If it’s all too much find a good bookkeeper and INVEST in this element of your business. While you might be a wiz at sorting out a wardrobe, perhaps sorting out your banking isn’t the bit that you enjoy and someone else will be far more effective. You might want to think about bartering services!
Let me know how you get on…..