30 Mar 4 accountancy mistakes to avoid if you’re self-employed
Accounting is a key part of being self-employed. If you get it right you will save money, ensure you meet your tax obligations, and save time. To help you achieve this, here are four accountancy mistakes to avoid if you’re self-employed.
1. Mixing personal and business finances
Mixing your personal and business finances is easy to do, but it can get you into difficulties. This includes taking longer to do your accounts and making it more likely you will make a mistake. It can also make it more difficult when dealing with HMRC, particularly in regard to proving an expense was for business and not personal use.
2. Not keeping good records
Keeping proper records will help when it comes to completing your tax return as it will be quicker to do and you will make fewer mistakes. It is also easier to manage your business when you keep good records as you will know where you currently stand and can plan for the future.
3. Ignoring cash flow
Cash flow can be a significant drain on your time, finances, and energy. Problems occur, for example, when you have bills that must be paid but your money is tied up in unpaid invoices. Problems can also occur during holiday periods or when business is slow and your level of income drops. You have to plan for these situations well in advance. It is also important to keep credit terms as short as possible and follow up quickly with clients who do not pay on time.
4. Trying to do it all yourself
Getting an accountancy company to look after your accounts is important for several reasons. Firstly, it frees up your time to focus on servicing your customers, finding new work, and generally running your business. In addition, accountancy is a specialist field that has a lot of rules and regulations. Most people struggle to stay up-to-date with everything you need to know to keep efficient accounts while also running a self-employed business. An accountant will give you this expertise with tax advice, VAT advice, help with financial planning, and more.
Finally, here is a bonus tip – never ignore your accounts or leave them until the last minute. Accounting should be a daily task if you’re self-employed.