Learning some UK Tax Tips can never go wrong! This blog will give you some tips that might help you out. Read more to learn more.
UK TAX: Tax Tips you Should Know to Run your Business Accounting
As your firm’s revenues grow, it is good to effectively record and monitor your expenses and accounts. UK Tax Tips to run your business accounting will enable you to make good management decisions based on reliable, timely data. It will equally ensure you avoid any late payment fines resulting from irregular records.
Unfortunately, the time-consuming and tedious admin of bookkeeping, tax, and accounting that comes with running a business is unavoidable.
This can be equally aggravating for new entrepreneurs. Whatever you choose to do, you should make a choice as soon as possible and stick to it. In this article, we will look at ten tips for running your own accounting.
UK Tax Tips: Get the basics of accounting right
Even if you do not have an accounting background, it is essential to have a solid understanding of your finances. It is important to keep records from the start, and making this process straightforward could save you time and boost efficiency.
You should set up a verifiable record-keeping system and register your firm with HMRC before or after you open a bank account.
This will ensure that your revenue and VAT are operated digitally.
Worry about your cash flow
Cash flow is the lifeblood of a company as it ensures you can pay your financial obligations on time and prevent any late fines. It is important to have a regular source of income while managing your expenses in a manner that supports your regular payments, not least VAT.
Maintain a close eye on your cash flow and keep note of your credits and debts. Always plan for how much money you will be making and how much you will be spending in order to ensure that your financial affairs are in order at all times.
Comply with HMRC legislation
Complying with complex tax legislation is not easy. However, you must have a solid understanding of your responsibilities with HMRC and you must design a system that works effectively to ensure that you pay your taxes on time and get your returns in line with the legislation.
Register for a VAT number if your VAT exceeds the £85,000 threshold and stays up to date with the relevant business legislation in the budget.
Registering for VAT number with HMRC
Do not wait too long to register for your VAT number, as this will prevent you from paying late fines. You can apply for a VAT number to ensure you pay your taxes on time and get your tax returns as needed.
Even if you are unsure whether you may breach the threshold, it’s better to register for a VAT number.
Set key performance indicators (KPIs) and stick to them
Set KPIs to determine whether you are making any operational or efficiency gains. This will enable you to better understand your expenditures and whether you are paying the right amount of taxes.
It is important to set clear goals that are Specific, Measurable, Achievable, Realistic, and Time-bound.
Understand your customer base
Knowing our consumers inside out is important. It should be an integral part of any business or entrepreneur. Your business wouldn’t exist without your customers, which is why you should make an effort to get to know them and how they consume.
This will improve your record-keeping over time and enable you to adjust faster to changes.
Get organised & stay organised
Businesses with solid accounting records can perform better over time by deciding what to spend and how to spend their revenues. Being effective can equally enable you to pay taxes more effectively. It might allow you to quickly identify opportunities to generate returns.
Being organised could save you money and prevent additional accounting fees, possibly bank fines for late payments, or unexpected tax payments later on.
Get the right accounting software
It is important to get the right accounting software, which comes with a variety of tools and features to assist you in keeping track of your accounts.
Accounting software that is simple to use and has time-saving features might assist you in meeting your business objectives and ensuring that you record transactions properly.
Choosing the correct accounting software is critical for small business owners. This can be accomplished by taking into account usability criteria such as the following:
- Access for multiple users: Look for accounting software that allows you to invite your team or other users, providing them access to data and allowing them to perform certain duties remotely. There is a useful software that allows you to share and work with employees from different locations.
- Multi-Business Assistance: You may require accounting software that can give you extensive support and eliminate the need to set up accounts or get add-on services at higher costs.
- Cloud-Based Software: Cloud-based software is used by the majority of top accounting systems for all types of enterprises. As a result, you will be able to manage your account from any internet-connected computer from any location. This is ideal for SMEs operating from many locations.
- Mobile Access: Some accounting software equally has mobile apps that allow you to monitor and complete basic duties. It is useful to have accounting software that is accessible on your mobile.
Think of Add-on Services
Tax Preparation: Accounting software is useful as it assists you in managing your revenues and expenses as well as benefiting from features such as automatic tax computations.
Add-on Services: You might want to consider adding some other services, such as payroll and payment processing. Doing this will make it easier to collect payments and pay staff.
Frequently Asked Questions
What is the VAT Flat Rate
VAT is still charged at 20%, but it is paid to HMRC at a reduced rate (depending on your profession or trade), leaving a discrepancy that the business can profit from.
When to use VAT Cash Accounting?
This option is open to any company with an annual turnover of less than the current limit of £85,000. It is different from the regular plan in that VAT is not calculated until an invoice is paid.
How can I save time using software automation?
It’s best to use accounting software that can deliver past-due notices and invoices to your clients automatically. This will improve efficiency on invoicing and accounts receivable, which will equally save you time.
Cash flow management, VAT, understanding what products and services generate the best returns, and management of who owes you money may seem like common sense. Even so, many businesses overlook them. This article provides a checklist of tips to help manage your accounts. If you need further help, Sterlinx Global is here to help.