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Six Ways To Spring Clean And Better Manage Your Business Finances And Tax Admin

With the weather getting slightly warmer and the world outside starting to look much greener, spring has most definitely sprung. It’s the time of year when many of us decide to spring clean our homes, an end-of-winter custom that’s thousands of years old. Thorough spring cleaning can transform our living spaces, leaving us feeling revitalised, healthier and happier. You can also spring clean your business finances and tax matters and introduce changes that can also bring many benefits. Even seemingly small changes can make a big difference. So, where should you start?  

Written for Expat Network by GoSimpleTax

1 Tidy up your financial records

Make sure that your financial records are up to date, because that way they’re much more useful to you. To ensure they stay that way, set aside time to regularly update your financial records (once a week is advised). Make sure that your financial records are always as accurate and current as possible, because that way they can help you to judge how well your business is actually performing.

Consider whether there are any other bookkeeping bad habits you need to address. Could your system be better organised? Could your costs and expenses be better categorised? Do you need a better system for retaining and organising receipts or logging your business miles? Should you replace your current bookkeeping system with something that’s easier and more beneficial? When was the last time you researched your bookkeeping options?

Top tip! Although sole traders aren’t required by law to have a separate business bank account, doing so can enable you to better track your business transactions and ensure that you claim for all of your business costs.     

2 Reassess your business costs

This should always be a key priority, but it’s especially true at the moment with the eye-watering price rises that business owners are having to battle. Minimising your costs is vital if you want to keep your cash flow healthy, survive and grow your business.

Carefully assess your current spending in all areas. What do you buy and how much are you paying? Are you happy with the value and service you receive from your suppliers? Overall, how much has your spending increased in the past year or two? Are you wasting money anywhere? Be honest. Commit to eliminating waste from all areas. Try to find cost-savings wherever possible. Try to negotiate better deals with your suppliers. Set new tighter monthly spending budgets and stick to them. Never spend beyond your means.

Top tip! You must be prepared to make difficult decisions when controlling your costs, but caution is advised. Overzealous cost-cutting can damage your business.   

3 Reconsider your prices

There can be serious cash flow consequences if you do not increase your prices to cover your increased costs. You may be nervous about losing sales or customers if you increase your prices, but if you don’t reset your prices, your small business becomes less profitable. If justifiable and well communicated, price increases need not lead to a customer exodus. Good customers will appreciate that your costs are increasing, because theirs are, too. Even putting up your prices by a relatively small amount will help to cover your increased costs.

Top tip! Get into the habit of regularly reviewing your prices. Every quarter or six months is advised for most small businesses.     

4 Make better use of digital tools

Harnessing the power of digital tools, apps and software can enable you to be more effective and save lots of time and money when managing your small business finances and tax affairs. If you’re using basic spreadsheets to keep financial business records, upgrading to accounting software could be a game-changer. If you’re already using accounting software, could you upgrade to save more time and gain in other ways?

Digital tools can also take the hard work out of many other business tasks, including completing and filing your Self Assessment tax return, saving you time and possibly money, while making mistakes less likely. Tax return software can be integrated with your bookkeeping software, which can be linked to your business bank account, saving you time and making your life even easier.

Top tip! Invest time in finding out about digital tools that can save you time and money and help you to make your business more successful.

5 Start working with cash flow forecasts

Cash is the lifeblood of all businesses. Businesses fail because they can’t access enough cash to cover their outgoings when required. Even seemingly profitable businesses have found that out the hard way. Keeping your cash flow healthy must remain a key priority at all times.

The best way to try to avoid a serious cash flow crisis is to produce cash flow forecasts based on likely future sales and costs, which you’ll need to estimate. Comparing the two enables you to predict when your business risks running out of cash, then you can take steps now to avoid serious cash flow problems down the line.

Top tip! Invoice finance can provide a cash flow solution. Basically, a bank or other provider buys your unpaid invoices for a fee or percentage of the amount due and either you or they chase payment. Although you get less cash, you get it sooner, which can ease your cash flow worries.

6 File your Self Assessment tax return sooner

You don’t have to wait until hours, days or even weeks before the deadline (31 January) to file your Self Assessment tax return online. In fact, you can file your Self Assessment tax return any day after the UK tax year ends on 5 April. So, springtime can be the ideal time to begin gathering the information you need to complete your Self Assessment tax return, so you can get the job done and dusted in April or May.

Filing earlier doesn’t mean you have to pay your tax bill any sooner. But it will mean you will get to know how much tax you owe far sooner, so you can budget and save to pay your bill on time.

Top tip! Get into the habit of putting money away each month to cover your tax bill. About 20% of your gross income should be enough. Put it into a separate bank account and don’t touch it until you need to pay your tax bill.    

About GoSimpleTax

Record Income, Expenses and tax submission all in one. It is the solution for non-residency returns, the self-employed, sole traders, freelancers and anyone with income outside of PAYE.