Tel: 020 7886 9534

What is small business accounting?

What is small business accounting?

When you start a small business you will defiantly come across the term called accounting. Business accounting is very crucial when you start your business. Doing excellent business accounting for your small business will be resulting in a great performance. It is a practice that analyzes the information recorded in the ledgers and develops better insights into your financial decisions.

There are multiple reasons available for why business accounting is important for a small business. Organizing your liabilities, expenses, assets, and other important records will help you in many ways. You will be able to keep your investors satisfied with your meeting ready records and documents. Also, you can protect your assets from theft if you have the correct information about them. When these tasks are done accurately, you will see the exponential growth of your small business. The initial responsibilities of a small business accounting are, arranging and filling the tax returns, preparing financial statements, and bookkeeping.

Accounting helps business or company owners to get the correct information about their finances, business resources, and the results that the business achieves through the use of it. Accounting helps to prepare the financial affairs of a company or business. It helps to understand the financial health of a business. Accounting also can be used to prepare tax returns as well.

If you require the best and professional bookkeeping accountants in London (or near by London) please contact us Tel: 020 7886 9533  or send an email to [email protected] or submit your details or WhatsApp us

small business accounting software accountant

Here is a list of necessary things to do small business accounting:

  • > Keeping the cash flow on track
  • > Creating invoices
  • > Regular bookkeeping
  • > Keeping an eye on the incomes and expenses
  • > Organizing the financial records and statements
  • > Preparing your tax returns

How to do small business accounting?

Small business accounting is necessary for any business. With the basic knowledge of small business accounting, you will be able to keep an eye on the financial statement and information of your business or company. Small business accounting will record all the information about your income and expenses. That information can be used to generate invoices, forecasts, payments,  submit tax returns, and complete payrolls.  Small business accounting is all about keeping your finances on track.

Here is how to set up a small business accounting:

  1. 1. Choosing an accounting method:

There are three methods available for doing small business accounting. It depends on you and your business which one is preferable.

  • > Cash-basis:

The cash-basis method is very simple. This method is all about recording your financial actions in the most manageable way. You record every transaction whenever you pay something or you receive something. You will record all the details when you buy goods or services from somewhere or you sell something to any customer.

This method is very useful for small businesses or companies. It is easy to understand and consumes less time.

Accrual:

The Accrual method is different than the Cash-basis method. You record everything before the cash changes hands. So, you record the expected money when you sell something to any customer without him paying you. And the same goes for the expenses, you record everything whenever you buy something without paying any vendor.

This method can be complicated for small businesses. It consumes a lot of time. It is mostly used by corporate companies or businesses.

  • > Modified cash-basis:

Modified cash-basis is the mixture of both cash-basis and accrual accounting methods. In some cases, you will record all the details of your business transactions like expenses and incomes, just like the cash-basis method and in some cases, you will follow the accrual accounting method.

  1. 2. Creating a business account:

Mixing your business account and a personal account can cause a lot of confusion. Creating a separate business account will help you in many ways. Also, having online features is a must these days. You will be able to manage your bank accounts from anywhere. Organizing your expenses and incomes will become easier than ever. You can pay and receive any amount you want. Creating a business account will help you to keep your financial records clear.

 

If you require the best and professional bookkeeper accountants in London (or near by London) please contact us Tel: 020 7886 9533  or send an email to [email protected] or submit your details or WhatsApp us

 

best accountants for small business

Here is what you need for creating a business account:

  • > Proof of Identification (Passport, Driving License, National ID proof)
  • > Address Proof (Utility Bills, Tax Statements, Bank Statement)
  • > Full Address of your Business
  • > Contact details
  • > Companie’s house registration number
  • > Annual turnover
  • > NI number
  • > Employer Identification Number
  • > Business License

The documentations vary from bank to bank. Please contact the bank authorities for their requirements.

  1. 3. Setting up an accounting chart:

An accounting chart is the core of every account. It lists all the reports of your financial statements and organizes them into different categories. It is the best way of organizing the cash as well.

When you have all your financial reports organized, it will be easier for you to access your cash. You will be able you receive and pay money a lot faster. You can even find out the small mistakes in your financial reports easily.

We have created these sections for accounting charts:

  • > Liabilities
  • > Assets
  • > Valuation
  • > Turnover
  • > Income
  • > Expenses
  1. 4. Keeping a record of your expenses:

Keeping an accurate record of your expenses is crucial for accounting. Keeping an accurate record of your expenses will help you in your tax returns. Since you have all the records, it will be easier for you to claim your vat returns as well. As a business owner, you will have to spend a lot of money. You may also spend money on unnecessary things as well. But when you have accurate records of your past expenses you won’t repeat the mistakes you did before. You can increase your profits by reducing the expenses.

To record your expenses you should follow these steps:

  • > Keep your business account separate from your personal account
  • > Use different credit and debit cards for your expenses
  • > Collect all the documentation of your expenses
  • > Previous tax returns
  • > Medical bills, electricity bills, canteen bills, etc
  • > Organize all the invoices and receipts
  • > Canceled checks
  • > Proof of Payments
  1. 5. Setting up a system to collect Payments:

There is nothing more important than keeping your payment records accurately. Your business won’t grow until your buyers don’t pay you correctly. You must come up with methods to get paid by your customers. Also, your methods should be comfortable for your customers as well. Clear all their doubts and create an effective and easy payment policy.

Here are some of the most used payment methods:

  • > Cash payments
  • > Checks payment
  • > Credit and debit card payments
  • > Online payments (PayPal, mobile wallet, etc)

Accounting software for small business:

Using accounting software for small business has a lot of benefits. Using accounting software for your small business is way better than spreadsheets and paperwork. When you use software for accounting, you will be able to deal with your financial reports easily. Also, it will be easier for you to submit your tax and vat returns.

Accounting software is used by small, medium, and big companies and businesses. It’s UI (User Interface) is very easy to use and saves a lot of time. It calculates all the huge numbers accurately in seconds. You will be able to easily manage your expenses and incomes, send invoices, and create financial reports. There are also multiple features available in accounting software.

If you require the best and professional bookkeeping accountants in London (or near by London) please contact us Tel: 020 7886 9533  or send an email to [email protected] or submit your details or WhatsApp us

accounting softwares xero freeagent quickbooks

Best small business accounting software:

There is multiple business accounting software available for you to choose from. They come with their specific features and packages. It depends on you and your business which software is suitable for your business.

Here is a list of best accounting packages for small business:

  1. 1. FreeAgent:

It is mostly used by freelancers and small business owners. You can upload the image files of your receipts, financial statements, and other reports. It is cloud-based accounting software. It is mostly used to record daily tasks, expense management, time tracking, and invoices.

Pricing: Its pricing starts from £19 a month. You can get a 50% discount for the first six months. (Making Tax Digital compatible)

  1. 2. QuickBooks:

QuickBooks is one of the first business accounting software launched in the market. It is also a cloud-based business accounting software. Freelancers can use this software to track their income and small businesses can use it for their vat returns and payroll. There are over 700 applications available in the QuickBooks App Store. You can use them for multiple business accounting purposes.

Pricing: The pricing starts from £8 a month for the Self Assessment package and the vat returns package starts from £12 a month. (Making Tax Digital compatible)

  1. 3. FreshBooks:

FreshBooks is also a cloud-based accounting software. It is a very simple business accounting software. It mostly focuses on simple business accounting tasks like invoicing and expense tracking. So, if you are a freelancer, small business, or company owner this can be very useful for you.

Pricing: The Lite Package starts from £11 a month. (Making Tax Digital compatible)

  1. 4. Sage Business Cloud Accounting:

Sage Business Cloud Accounting software is a product of Sage enterprise. Sage is one of the most famous software companies. It provides business accounting services to small businesses. You can find all the features of your need like invoicing, tracking the cash flow, and payroll.

Pricing: Its pricing starts from £12 a month. (Making Tax Digital compatible)

  1. 5. Zoho Books:

Zoho Books is also a cloud-based business accounting software. It provides invoicing, cash flow tracking, and expense statement recording services to small businesses. It comes with multiple third-party apps that provide extra features. The only downfall is, it currently does not support the payroll system.

Pricing: Its pricing starts at £6 a month. (Making Tax Digital compatible)

All the accounting packages for small business in this list are cloud-based accounting software. They are all Making Tax Digital compatible. The price may depend on the companies personal choices of pricing. The pricing can change anytime. So, you should ask your accountant or these software companies for the latest updates on accounting packages for small businesses.

Small Business Accountant:

If you don’t have any experience in business accounting you should consider yourself a small business accountant. Doing your business accounting can be stressful because there are lots of aspects of business accounting. Covering them all will take a lot of time and effort. Managing your accounting incorrectly will cost you a lot, not only in the present time but in the future as well.

Hiring a small business accountant will be beneficial for your business. They will save a lot of your valuable time. They will also help you with your self-assessment. They will make sure that you don’t pay extra tax and you can make profits from your tax returns.

Here is a list of services that a Small Business Accountant provides:

  • > Analyzing your financial reports
  • > Dealing with tax returns
  • > Improving the cash flow
  • > Assisting during audits
  • > Reducing your workload and saving time
  • > Saving your tax by paying the right amount of tax
  • > Business advice
  • > Advising you with business accounting software
  • > Payroll processing
  • > Keeping an eye on regular business operations

We are a team of small business accountants from GoRings Accountants in the UK. We are here to provide you all the important services required for Small Business Accounting. We are qualified professionals with all the knowledge of business accounting, accounting software, and accounting packages.  We will save you money by choosing the best accounting packages for small businesses. We will assist you with your business accounting software and give you all the accurate financial reports of your business or company.

 

 


If you require the best and professional bookkeeping accountants in London (or near by London) please contact us Tel: 020 7886 9533  or send an email to [email protected] or submit your details or WhatsApp us.

website marketing by webxico.com