How You Can Properly Manage and Deal with Your Business Accounts in the Early Stages

If you have recently started a business and are in the process of preparing and finalising everything, then you will surely have a lot on your plate. The management of your business not only includes daily tasks and operations but also your business accounting and bookkeeping system. Bookkeeping is not everyone's cup of tea, that's for sure, but if you want to run your business in the right way, you need at least a basic system for accounting and bookkeeping so you can keep track of all your financials and know if you are making a profit, apart from other things. But if you're a beginner, creating a proper system and process can be quite daunting. Here, then, is how you can properly manage and deal with your business accounts in the early stages.

• The importance of proper bookkeeping

When it comes to proper bookkeeping, you have two basic options: you can do it manually, or you can do it with the use of accounting software. Either way, it's essential that you keep records of all your financial transactions, incoming and outgoing, so you know where your business is going right from the beginning. This helps you avoid any unpleasant financial surprises later on, but it also helps you know if your business is making money in the first place. But you have to know this as well: bookkeeping can take up a lot of your time because you have to deal with invoices, expense recording, the monitoring of your outgoing expenses, and the task of paying your staff as well. If you think you don't have the necessary time to handle all this, you can turn to a professional accountant and bookkeeper, such as the accountants in central London from GSM Accountants. This can save you a lot of time and headache later on.

• Take note of annual accounting

You must also remember to present your business' yearly or annual financial performance in a formal report or record, and in the proper format as well. The information should include sales, assets, costs, and amounts owed. Your due date or deadline for submitting your accounts will depend on whether you are a limited company or a sole trader, although you can choose when you want your accounting year to finish. But because taxable income for a sole trader is from the 6^th of April to the 5^th of April of the next year, it makes sense (if you are a sole trader or a partnership) to run your accounting year from the 1^st of April to the 31^st of March. If you are a limited company, you can select the accounting year which is suitable for you, but you would still have to complete as well as file your accounts yearly with Companies House.

• Know your taxes

Of course, taxes are part and parcel of having a business, so you have to be aware of all the taxes you have to settle. This includes corporation tax, self-assessment income tax, and VAT. If you are a limited company in the UK, you have to pay corporation tax, and you have to complete your tax return withi 9 months of the total accounting period. Another form is required for your self-assessment income tax, and you have to file this on or before the 31^st of January after the previous 5^th of April tax year.

No matter what structure you have for your business, you also have to register for VAT if your yearly turnover is over £85,000. This means you should charge customers a 20% VAT rate, which you can add to your sales prices. You should then be able to reclaim whatever VAT you have also paid on business purchases as well as expenses. Remember that VAT payments and returns are due to HMRC every quarter as well.