One of the main focuses for any business is profit. But in order to find out the amount of profit being made, it’s essential to properly keep track of expenses. By this, we mean the cost of things like supplies, insurance, utilities, and rent, which must be deducted from your overall income to find out the total profit made.
To help you stay on top of your budgets and keep track of your finances, we’ve come up with some of our top tips below.
Set up a bank account for your business
The first thing you should do when keeping track of your finances is open a separate business bank account. Keeping this independent from your personal accounts can make it much simpler to organise finances and pay for company-related expenses.
By identifying these business expenses, you can also lower your taxable income. Of course, HMRC must deem this spending to be necessary from a business perspective. These expenses typically include advertising, transport, and rent.
Outsource your accounting processes
Accurate and tactical accounting can be hugely beneficial for the success of your business, enabling you to optimise resources and make informed decisions about future endeavours.
Consider hiring external professionals for your accounting services, as this will avoid the expense of hiring internally and give you access to a team of highly trained individuals. Not only do you save money but you also get invaluable insight and guidance on financial matters.
Properly store all receipts and documents
A record of all of your expenses is just as important as your bank statement. You must therefore create copies of all your receipts to manage your finances more efficiently. These records are particularly important when providing proof of tax reductions.
You can easily store all of your receipts digitally, either using online software or a mobile application. This ensures that you always have access to your expenses and will know exactly what each receipt refers to.
Regularly review and reconcile transactions
Whether it be weekly, monthly, or quarterly, it’s important to review and reconcile your transactions. This means comparing your business records to bank statements and other sources of income and expenses.
If they match, then great. If not, it’s important to see where errors have been made and put plans in motion to ensure it doesn’t happen again. This is a great way to see if there are issues in your cash flow or trends associated with fraud. Accounting software or a spreadsheet can make this process easier.