Bookkeeping may seem like a chore to some, but really it’s your best friend. If you keep your bookkeeping up to date, it means that you have the latest information about your business finances at your fingertips. When you have to make important business decisions, you’ll be very glad to have that information to hand.
The best way to do your bookkeeping is little and often, and accounting software such as the Starling Business Toolkit is designed to help you do just that.
1. Invoice everything you’ve sold asap
This is the first step to getting paid. It makes sense to send your sales invoices, notifying your customers of their obligation to pay you, as soon as possible. Don’t forget to make sure your payment details are correct and included. If you do it right away, you won’t forget. Depending on the volume of invoices, you can do this after the transaction, or at the end of the day.
You might choose to invoice at the end of each week but don’t leave it any longer. In fact, a good proportion of people pay as soon as they receive an invoice, so the sooner you ask, the sooner you’re likely to be paid.
Providing a set date can be crucial to getting paid on time. The UK average is 30 days to pay but you can ask for payment sooner, or even later.
To learn more, read our guide on how to write an invoice.
2. Handle your bills as they arrive
You may receive bills, invoices or receipts through the post, email or from a till and it’s good practice to upload them into your bookkeeping system immediately. Ideally and to remember, with a note saying what the bill was for, if it’s not already clear. You will need these records as proof of business costs for tax purposes.
With the Bills to Pay feature of the Business Toolkit you can upload your bill directly to your bookkeeping and schedule the payment right away - so you manage your cash flow and your bookkeeping all in one go.
If you have an electronic copy of a receipt you no longer need to keep the paper version.
3. Pay your bills on time
You may pay your bills immediately to reduce your admin time or you may sit down once a week to settle everything that is due. Do pay promptly, especially if dealing with small businesses, as the owner may be waiting on the cash to pay their mortgage or for that promised treat for their child.
Make sure to check if there are any early payment discounts you can take advantage of.
As mentioned in tip two, if you use Starling’s Toolkit and the Bills to Pay feature, the invoice upload and invoice scheduling is streamlined to work as one process.
4. Reconcile your bank
Reconciliation involves checking that all financial transactions have gone through your bank account correctly. There may be timing differences if you are waiting for cheques to clear (although these can be paid in faster through the Cheque Deposit function in the Starling app).
If you’re not using the Business Toolkit you’ll need to make sure that all your bank transactions are reflected in your bookkeeping system. Match the transactions to the necessary invoices, bills and receipts (the Toolkit does this automatically).
You could also add a reference note - so you know what the payments were for. It will probably be obvious based on date and/or supplier/client but it helps when glancing back.
5. Chase money due to you
Stay on top of chasing any money that is owed to you. You don’t need to be rude but do be persistent. See our tips on how you can chase unpaid invoices.
6. Manage your payroll
Payroll can be complex so this may need to be done without distractions. Most payrolls are done monthly and will involve not only paying employees, but also the associated pension, tax and National Insurance liabilities.
7. Stay on top of VAT returns
Most VAT returns are done quarterly. If you’ve kept on top of everything the actual VAT return should be simple. Make sure that you have a bill (best kept digitally) for every item claimed. A common mistake is treating the IPT (Insurance Premium Tax) on insurance as VAT so make sure that you haven’t done this by mistake. The Business Toolkit can also also help you to calculate and pay your VAT bill.
Little and often is the key
Remember, by keeping on top of your bookkeeping as you go along, it should never feel too overwhelming. Software such as Starling’s Business Toolkit is designed to make the job easy - a little bit and often while enjoying a relaxing cup of tea or coffee.
This article is intended as general information only and does not constitute advice in any way. For any specific questions, you may want to consult your legal advisor or accountant.