Managing the cash flow of a small business can be extremely stressful when you’re trying to run a business as well. The work is one of maintaining balance, between keeping money coming in and paying what you owe to staff and suppliers; it’s also about forecasting and reducing overheads. Managing cash flow also depends on not making errors or filing late with HMRC; or worse still, finding yourself without enough money in reserve to pay the tax you owe. Managing the cash flow of a small business can be tricky, but it’s a task made much more manageable if you hire an expert accountant that uses technology to its full advantage.
Knowing which expenses you can claim
A business expense is defined as a cost incurred in the organisation’s efforts to generate income. Knowing which expenses are which and which you can claim is crucial: for example, some expenses are cash expenses, wages/fees, stationery, but some are depreciation of assets, a new computer for example. Expenses can be deducted from turnover providing they’re allowable. some typical expenses for an incorporated company; a sole trader can claim more or less the same expenses, but will lose out on certain expenses such as pension contributions, annual party/work events allowance and childcare costs. Expenses is something that technology can simplify by prompting you as you key in the data. Your accountant should be double checking and making sure you’re claiming all the expenses that you should while making sure that you’re not claiming anything you shouldn’t be
Running a business bank account
Running a business bank account costs money, though the fees for running it are an allowable expense against profits (as are accountancy fees, business insurances, etc.). Many banks offer a business bank account free for the first year, 18 months, or two years after you open the account, but then each transaction can raise a charge. It’s definitely better to run a business through a business bank account, though it’s not illegal to run a business through a personal account. However, HMRC frown somewhat at people running a business through a personal bank account, and doing so might well put you in breach of the contract you hold with your bank for your current account.
As the UK gets stricter on immigration policy, know you customer, and money laundering legislation, so the ability for the tax authorities to snoop into your affairs has grown. It is vital that your bank account and business accounts tie up and that both are up to scrutiny. Remember as well that if you are running a limited company the money in the business bank account does not belong to you. The money in the business account belongs to the business and you are taking payment from the business as salary for the work you do for the business. In other words you are an expense of the business.
Keeping accurate records and accounts is critical
At any time, HMRC could announce that it’s going to investigate the accounts of your business. Every year a random selection of businesses undergo investigation by HMRC; but the tax authorities also use benchmarking, alongside other methods, to estimate what you should be earning against similar workers in your sector.
Furthermore, without accurate records and accounts, it is impossible to run a successful business. If your accounts aren’t up to date and accurate how can you plan ahead? You won’t be able to register for tax incentives such as seed investment opportunities, e.g. SEIS, and you won’t be able to get a loan or attract funding. An accountant providing cloud accounting software will make paying attention to cash flow such an integral and yet hassle-free part of your business that there will come a point when you will not be able to imagine the time when your records and accounts were in disorder, late, or out of date.
Make late filing a thing of the past
Filing and submitting your Self-Assessment Tax Return and/or company accounts to Companies House / HRMC on time is critical. Wasting money on fines and penalties for late filing is a ridiculous and wasteful error. It shouldn’t happen. An accountant with cloud technology will make sure this never happens, there is no excuse whatsoever for late or inaccurate filing of accounts!
Managing Small Business Cash Flow with Cutting edge technology
Cloud Based Bookkeeping and Accounting software is provided free to all clients by some accountancy firms. An expert accountant and cloud accounting will revolutionise your business. It will mean that you can communicate in real-time at all times with your accountant; and this in itself will reduce overheads, improve compliance, and protect your security.
Managing small business cash flow need not be stressful. While you run the business, let an award winning technology enhanced accountancy practice help you find the balance between keeping money coming in and paying what you owe. Make filing errors or filing late with HMRC or Companies House a thing of the past. Managing the cash flow of a small business is something an expert accountant which uses technology to its full advantage will turn into an art.