Accounting is an unavoidable part of self-employment and running your own business. Not only is it a mandatory requirement by law, it is also important for helping you to stay in control of your business’ finances. Many business owners and self-employed people decide to go it alone when it comes to accountancy, rather than hire a professional accountant as a way of saving money and keeping their business costs low. If you are considering going it alone, it can be a prospect which seems quite daunting. We’ve put together some top tips to help business owners and self-employed individuals handle their newfound financial responsibilities.
Get Accountancy Training
If you are planning to handle your own accounts, the first thing that you should do is make sure that you have the knowledge and skill required to carry it out effectively. When starting your own business or becoming self-employed, it’s a good idea to enrol on an accountancy or financial course, such as courses for IFRS in Africa, which will give you the opportunity to learn not only the basics of doing your own accountancy but also other essential knowledge and skills which you will need.
Set Up a Business Account
Using a personal bank account for your business is a sure-fire way to end up confused. Instead, it is important that you create an entirely separate bank account for business use only, which is dedicated to your professional income. This way, you will be able to easily keep track of exactly what you are making, and be able to easily see your business expenses. More importantly, having a separate business account also makes it easier when it comes to doing your tax return. You should do this immediately when setting up your own business or becoming self-employed, as doing so further down the line could cause unnecessary problems.
Storing Financial Records
Before you even make your first ever business transaction, it is vital that you have a place set aside for storing your financial records. You could store these digitally, for example in cloud storage for extra security, or you could decide to go old-school and use scanned digital copies of receipts and other transactions which you’ll keep in a filing cabinet. No matter how you decide to store your financial records, it is important to stick with it and make sure that all records are kept in the same place and up-to-date.
Budgeting for Tax
Depending on how much you expect to earn, it is important to ensure that you budget for when you will have to pay your tax each tax year. Whilst in employment, tax isn’t something that you really need to think about as it comes out of your wage automatically each month. However, entrepreneurs and self-employed people need to pay their tax annually, and this could be a huge bill depending on how much income you have coming in. At the beginning of the tax year, start setting aside a certain amount each month in order to ensure that your tax bill is covered.
Doing your own accounting is not always easy, but it’s possible when you’re fully prepared!