The world of numbers and accounting may not be everyone’s cup of tea. As many as 1 in 6 business owners say they don’t know what’s going in and out of their account! It’s easy to be intimidated by the unfamiliar jargon and processes but, with self-assessment looming, putting it off now means you’ll only be looking at it all again in the 2024.
For small businesses, having a good grip on your accounts is crucial, and should actually help relieve some of the financial stress. Checking on things every day makes it manageable, rather than putting it off and allowing your anxiety to snowball.
And, as we wind down to the end of the year, you can take advantage of the quieter moments and get your books in order, ready to hit the ground running in the New Year. After all, with the storms recently, it’s likely your phone will be ringing with urgent repairs needed!
Let’s take a look at what you need to tie up for the end of the year and set yourself up for success in January.
Check your bills (with boughs of holly)
Before you close up shop for the season, make sure your records are accurate and up to date. It’s a good habit to get into if you can do this regularly, recording each time you get paid and when you make a purchase, and the costs.
By law, sole traders must keep accurate financial records, and you must retain records for six years if you are running a limited company. Cloud accounting software can keep track of this for you, to make it manageable.
With detailed incomings and outcomings, you can reconcile every month, to get an accurate view of your business’ financial health. It can help you spot double payments, unexplained spending and other issues.
Tis’ the season to pay taxes
If you’re a sole trader, you’ll need to register with HMRC to file your taxes, either as soon as possible, or by the 5th October deadline. If you don’t, you could face fines!
The deadline to file your tax return is 31st January following the end of the relevant tax year. You need to pay your tax bill too, and there’s also payment on account to be aware of. If you need help with your tax return, speak to an accountant or HMRC before the filing deadline.
If you run a limited company, you are responsible for calculating and reporting your corporation tax. Companies with profits below £50,000 are taxed at a rate of 19%, while companies with profits between £50,000 and £250,000, need to pay tax at a reduced main rate. Again, this is something an accountant, tax advisor or HMRC can help with.
It can be worth paying the extra to use an accountant as opposed to trying to calculate and submit it all yourself, and this could also support you if HMRC ever choose to audit your accounts. It can also help when it comes to things like mortgages, as lenders like to see small business owners using an accountant.
Granting Christmas wishes
You may not know it, but there’s an enormous amount of help that you could be able to access, including low-cost government grants, loans, tax break, and support for investments.
Keep an eye out and apply for any support your business is eligible for. You’d be surprised what’s available, from location, to industry, to innovation. Take a look at the types of funding available on the government website. It could work out as a tidy present for your business!
You might need to be a bit of a Scrooge
Let’s face it, no one likes being a miser, especially over the festive period. But December is a good opportunity to chase any outstanding payments. It might feel awkward, but you don’t want them dragging on to the next year. If emails are going unnoticed, then it’s time for a polite phone call explaining that you’re still waiting for payment.
What are your New Year’s resolutions?
With all your day-to-day finances in order, it’s time to reflect on what worked well this year, and look ahead to the next year to see what you can do differently. And you probably know more than you realise – you might not be an accounting expert, you’re an expert in your trade!
You can work out what has sold well, and what supplies you won’t need to order again. Is there a particular job you’ve been called out to more than others, or do you need to work on your marketing? Perhaps some costs could be changed to direct debits to ease the pressure of paying in one lump sum, and this could include your insurance.
You can also use your monthly records to prepare for cash-flow peaks and troughs and work out your projections for next year. Remember, it’s better to err on the side of caution than be overly optimistic, else you could end up over-spending.
Finally, have a look at what you’re covered for, and when your van or business insurance is due for renewal. It’s a good idea to keep on top of your policy, and speak to your insurer about any changes that need to be made. Remember, a broker can help you find the right cover for you, and does the hard work of shopping around to find the best rates.
Spreading Christmas cheer
Finally, get in the spirit with you staff and clients! Your team will appreciate recognition for their hard work, whether that’s in the form of Secret Santa, a group meal, or even an end of year bonus. It all depends on your budget and your team, but a hearty, tangible thank you goes a long way, and puts everyone in a good mood to celebrate the festive season and hit the ground running in January.
And to your clients and customers, a Christmas card or some mince pies are sure to put a smile on their faces. Personal touches like this make your business stand out and be front of mind next time someone needs your services.
Merry Christmas – on us!
Our branches are also hosting hamper giveaways, Christmas canapes, and family portraits or pet pawtraits, as well as a range of charity donation points this December, to celebrate the festive season with your community.
PLUS, take part in our Christmas On Us campaign, where you could win a 50” TV, Salter air fryer, Nintendo Switch OLED and Mario game, a board game plus supermarket vouchers – just pop along to your local branch and scan the poster to win!
We’ll also be giving away daily prizes on our social media, including heated throws, a hamper, children’s bike, board games, a Kindle, Lego, Prosecco and so much more!
Sources: Sage, The Mirror, Huffington Post, Gov.UK