All the things you need to know about keeping your accounts in check! From where to set up your business bank account, to keeping track of your invoices. I am about to provide you with a complete guide to business banking and keeping your accounts, so the tax man doesn’t shout at you in April.
Firstly, congratulations! Deciding to go freelance, or running your own business is a huge step. Now you’ve registered your business as a Limited Company, or just registered as a freelancer, it’s time to start thinking about something else. Business banking.
Many people see those two words as the stuff of nightmares, me included, but as long as you do your research, and you are happy with your decisions, it’s really not that scary. Promise.
First things first, why do you need a business bank account? Well, a business bank account is useful to any entrepreneur or freelancer, as it keeps business purchases separate from non-business purchases. It is a lot of work to put on yourself every month to sift through your statement, and separate business and non-business purchases. Having two separate accounts makes the numbers easier to tackle in April when the tax man calls.
When deciding on what bank to choose, you need to be smart with your decisions. Consider all the different factors surrounding your business accounts. For instance:
- What do you need the account for? (Be specific)
- Which currencies will it encounter?
- Do you have an online shop that you want to connect to your account?
- What kind of payment methods are you expecting?
There are many banks to choose from, but once you start to define your specific needs, it will become a lot clearer who to choose. Fees are also a big factor to consider. Many banks offer a period of time fee-free. If you’re just starting out with your business this fee-free time can really help save some money on your expenses. If you are looking for a simple business account that doesn’t need to have all the flashing lights, I suggest Coconut. It’s a free business account, which offers you a debit card, and is an easy way to keep all your business expenditure together.
Now you have your bank account, you may feel like that’s everything all ironed out. Sorry to tell you, but that’s only half the battle. Bookkeeping is a significant element to any business and within your records, you should be keeping track of:
- Business expenditure
- Business Income
- Business Invoices
Even is you keep your records in tip-top shape, when April comes around you may still struggle with that dreaded monster, TAX. For this, I highly recommend considering an accountant. Though it can be expensive at first, they can help you save a lot of money in the long run. They have much more experience in this area, and will be able to keep your tax payments as low as possible. A top tip for anyone just starting out, is to go and have a chat with an accountant first. You should be able to contact someone local and ask for a quick natter and some advice. They can then explain in detail how they’ll help you and your business. Also, though many people criticise the use of accountants, claiming that you have less interactivity with your finances, I find that although I choose this route, I am still heavily involved as I have to keep a clear record of everything, so I am always up to date with how my business is doing.
Records really are essential when it comes to accounts. Though it’s annoying, the law requires that each transaction is traceable and transparent, which means keeping an archive of every business related transaction. Keeping specific records of transactions can relate to another important element, cash management.
If you’re a larger business with staff, or employees able to access a business card/account, make sure they are aware of this traceability and transparency with each transaction. Only authorise staff that you can completely trust to access your accounts.
Though many businesses are pushed into getting a business bank account, really consider your situation. If you are a sole trader, or like me, a freelancer, you are not legally required to have a business account. However, having a business account can allow opportunities that a personal bank account may not. For example, it may allow your business to be granted a loan. Moreover, having a business account gives the impression of professionalism. Even if you are making soaps in your kitchen, having a business account will make your business look professional to clients, rather than them having to pay into a personal bank account.
Some business bank accounts, and the bookkeeping associated with your accounts can seem like an investment into your business. However, if you do your research, and work out the right path that works for you, it will make running your business a whole lot easier.
Remember, only you can decide what’s right for your business. One extremely important takeaway element from this piece is the ‘transactions transparency and traceability’, as it is a legal requirement. In order to run your own business you have to be willing to tackle the numbers, whether that’s by having an accountant or not, nothing will stop the tax man knocking in April. Always remember to consider what will work for your business, as it is unique to any other.