When you first head into business and start running your own startup, you may believe that finances are pretty simple. You spend a certain amount investing in your business, you make a profit from selling your products and services, and you reinvest. Simple, right? Well, you’d actually be surprised how many ins and outs you’ll find yourself dealing with as time goes on. Perhaps you offer goods on finance or invoice. Maybe you forgot to put your tax and national insurance contributions aside, as you’re so used to having an employer do this on your behalf. Believe it or not, there are various ways that being lax with your business’ finances can negatively affect you without necessarily dragging your company into debt. So, it’s time to get organised! Here are just a couple of reasons that you might want to be a little more organised with your business’ finances!
HMRC Visits
When most business owners hear the letters “HMRC”, they simply think of sorting their taxes out at the end of the tax year. However, nowadays, HMRC can visit your business on both an announced basis and an unannounced basis. They can quite literally just turn up, ask for your records and they can also speak to your staff. If this does happen, you can feel free to ask for proof of identity and the visitors will provide you with a letter explaining that their checks are entirely legal. Generally speaking, this occurrence may put on the guise of being a standard visit, but HMRC doesn’t waste their time visiting businesses out of the blue. If visitors do turn up as part of HMRC Visits, it’s because they believe that something is wrong or doesn’t add up. If you already have your finances and accounts in check, you’re unlikely to receive this visitors in the first place. It is essentially a tax investigation. Thus, it’s good to have all of your proof at hand just in case. Remember that even once the letter has been handed to you, you do have the right to refuse the visitors entry. However, they will want a reason and will try to establish why their entry is being refused if nothing is wrong. It’s better for your image and any further cases that you simply have your affairs in check and can receive visitors as and when they turn up.
Simplifying the End of the Tax Year
The end of the tax year is a stressful time in general for many business owners. Why? Because the self-assessment deadline always seems to approach out of the blue, despite being around the same time every year. If you don’t use an accountant and opt to complete your assessment yourself, you’re going to have to have access to a whole lot of documentation in order to work out all of the figures correctly. This is difficult enough in itself, never mind if you’re rummaging around piles of paperwork trying to find the right statements and pieces of proof of expenditure. Make life easier for yourself by saving all of your financial documents and receipts in monthly folders. Label them clearly so that you can find everything in good time. Also, try to start your returns sooner rather than later. This removes the stress of being rushed. Remember that if you submit your return even a day late, you’ll be subject to all sorts of fees, fines, and penalty charges, plus interest! Being organised with your finances will also mean that you have sufficient cash put aside ready to pay any tax bill or national insurance contributions that you may owe, which will mean that you don’t have to find large sums of money out of the blue to pay for your tax return.
As you can see, a little organisation can take you a long way (and save you a whole lot of stress down the line). So, it’s time to get your professional finances in check! Remember that you don’t have to be entirely alone in this organisation process, which can often be daunting. You may notice that as your business expands, it may be difficult to keep on top of your money matters at the same time as all of your other responsibilities. So consider taking on a receptionist to help with your filing and accountant to crunch the numbers. Just these two additional members of staff can make all of the difference. Even if you only take them on as freelance workers or on a part-time basis.
Image: Pixabay