7 Essential bookkeeping tips for small businesses

Managing your finances effectively is crucial for the success and growth of your business. One of the most critical aspects of finance management is bookkeeping. Proper bookkeeping not only ensures compliance with UK tax regulations but also provides valuable insights into your business’s financial health. Below we’ll go over the 7 essential tips for efficient bookkeeping that will help you stay organised, save time and make informed financial decisions.

1. Adopt Cloud-Based Accounting Software

The days of manual bookkeeping on paper spreadsheets are gone. The digital age is in full swing though: cloud-based solutions with triggered actions (aka automations) is the new norm. Cloud accounting enables you to reconcile transactions, generate invoices, and manage expenses — with the end goal of streamlining your bookkeeping processes.

TaxDome offers a Quickbooks integration, which syncs your contacts and invoices from the platform. You can also easily sync data stored inside TaxDome with Quickbooks.

2. Separate Business and Personal Finances

Mixing personal and business finances is a common mistake among business owners. Open a separate bank account for your business to maintain clear financial records. This simplifies bookkeeping and ensures compliance with UK tax laws. Additionally, consider getting a business credit card for expenses — to further distinguish personal and business finances.

TaxDome enables you to create multiple accounts within the same contact. This allows you to separate personal and business affairs, making it easier to be your own — and your company’s — bookkeeper.

One account with multiple contacts inside TaxDome

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3. Keep Track of Income and Expenses

It’s the cornerstone of efficient bookkeeping. Regularly update your records with details of sales, purchases, and other financial transactions. Categorise expenses correctly to help identify tax-deductible items. By staying on top of your financial data, you can gain valuable insights into your cash flow, profitability, and identify areas for improvement.

Request the information you need from clients using TaxDome’s organisers. These customisable questionnaires allow you to gather client information online, through a portal. You can make organisers even more straightforward by relying on conditional logic: it ensures recipients only see relevant questions, based on their previous responses.

Tempted to try TaxDome but not ready to invest? We offer a 14-day free trial. Give us a whirl at no cost.

4. Set Up a Consistent Bookkeeping Schedule

Establish a regular schedule for updating your financial records. Whether it’s weekly, bi-weekly, or monthly, stick to the routine to prevent a backlog of transactions. Consistent bookkeeping helps avoid errors, ensures accuracy, and allows you to identify potential financial issues early on.

Managing deadlines can be tough, especially since every client has their own unique needs. TaxDome enables you to create custom recurrence schedules that will add your clients to workflows based on dates pre-set by you. Forget about missed deadlines or and quit worrying about whether clients have been added to the workflow or not.

What a bookkeeping workflow looks like inside TaxDome

5. Reconcile Bank Statements

Reconciling bank statements with your accounting records is another crucial step. This process helps identify any discrepancies, errors, or missing transactions. Regular bank reconciliation ensures that your financial data remains accurate and up-to-date, reducing the risk of making uninformed financial decisions.

By creating recurring reconciliation tasks on TaxDome, you can ensure you’re always going to be aware of the work that needs to be completed. Include different elements in the task template, such as subtasks to break the larger tasks into more manageable pieces and statuses — to track how the work is coming along.

6. Keep Proper Documentation

In the UK, keeping proper financial records is not only good practice but also a legal requirement. Maintain supporting documentation, such as invoices, receipts, and payment records, for all financial transactions. These documents serve as evidence during tax audits and also help resolve any discrepancies during the reconciliation process.

TaxDome’s document management system will streamline exchange between you and your clients. You’ll be able to create folder structures to suit different clients. Unlimited cloud storage will come in handy too — it’s available on all plans.

7. Monitor Tax Deadlines

Staying compliant with UK tax deadlines is essential — not least because you will face penalties for missing those. Make sure to mark important tax dates on your calendar, such as VAT returns, Self-Assessment, and Corporation Tax deadlines. 

TaxDome’s workflow features give you an insight into which employees are currently working on which clients. In short, you can use TaxDome as a practice management tool, and be in the loop about work status.

Don’t Have the Time to Configure TaxDome?

That’s why we offer white-glove support and free training sessions on our plans. You can also make the process a lot easier by hiring one of our certified consultants. They know TaxDome inside out and will help you configure it just the way you want.

Conclusion

Efficient bookkeeping is the foundation of financial stability and growth for any business. By adopting modern accounting tools, maintaining accurate records, and meeting tax deadlines, you’ll both streamline your bookkeeping processes and gain valuable insights into your business’s financial health. If you invest time and effort into setting up bookkeeping processes, your business will undoubtedly reap the benefits.