The cost-saving benefits of an either/or approach needs no clarification – only having to pay for one resource reduces your outgoings. It’s that simple, and it’s easy to see why this might seem like an attractive solution. But to make a good decision for your business, it’s useful to understand how bookkeeping and accounting are different, and what purpose each serves.

What is the difference between accountancy and bookkeeping?

Although bookkeeping and accounting both deal with a business’s finances, they do so in different ways. A simple way to look at it is like this: bookkeeping is just that – keeping the books up to date. Accountancy is about analysing, understanding, and reporting on this data.

What a bookkeeper does

Bookkeeping is the process of recording financial transactions and maintaining accurate business accounts. These are the cold, hard, numerical facts about what comes in and goes out of your business. It’s essentially the preliminary admin necessary for an accountant to do their job.

What an accountant does

An accountant will use the information which the bookkeeper records to improve the tax-efficiency of a business and support its financial health. They can help business owners make more money-savvy decisions, whilst ensuring everything is compliant for HMRC.

Can bookkeeping software replace an accountant?

The answer to this question largely depends on what you rely on your accountant to do for you. If you only enlist them to carry out financial admin and prepare your annual tax return then yes, in theory, you could do it all yourself using bookkeeping software.

However, if you were to really wring all possible potential out of your accountant’s expertise, you might find the answer to this question is a hard no.

Make no mistake, using bookkeeping software has an enormous number of benefits, including:

• Keeping all of your financial information in one place, improving access and organisation
• Remote access for multiple users when you choose a cloud-based bookkeeping software
• Using software that includes active error detection reduces the risk of mistakes in your records
• Save time on data-entry by connecting payment feeds directly to the software
• Automated reminders so you’re less likely to miss a deadline
• Minimising the risk of omission and human error

But bookkeeping software doesn’t have an accountant’s ability to spot areas where you can become more efficient in the way you run your business, or in the way that you pay tax. If you were truly working effectively with your accountant, you wouldn’t even consider sidestepping them for software alone.

If you can afford it, tapping into both resources simultaneously can help you more effectively as a business owner.

The benefits of having an accountant and bookkeeping software

We’ve touched on a few of the most common benefits of investing in great bookkeeping software above. But why do we recommend you still consider using an accountant as well? Ideally, the bookkeeping software you use will complement the work an accountant does for you.

Professional data analysis and insights

With access to accurate financial records (courtesy of excellent bookkeeping), an accountant will be able to dig into the data of your business accounts and offer insights accordingly.

Good bookkeeping software will have a range of comprehensive reports included, but if you’re not very experienced then you might find an accountant can help make sense of it all. These types of insights could be the difference between making your first million or operating at a loss for the next five years.

Better business decisions

An accountant will be able to provide you with valuable decision-making guidance by applying their expert risk analysis, financial forecasting and budget advice. Remember too, they see behind the scenes of a lot of other businesses!

Improved cash flow health

When you have professional data analysis, audits, risk analysis, and forecasting on your side, it stands your cash flow in great stead. Not only will this positively impact your current cash flow situation, you can also work with your accountant to plan ahead, mitigate pitfalls, and grow stronger as a business.

A buffer between you and HMRC

As well as insight into your financial profile, a good accountant will also offer representation in front of HM Revenue & Customs, if and when you might require it. It helps reduce some of the stress!

Our verdict?

When used in conjunction, bookkeeping software and the services of a terrific accountant are a force to reckoned with.

Without robust bookkeeping down to the decimal point, an accountant can’t possibly do their best work. Without an accountant on the receiving end of the information, there’s a ceiling on how useful even the most meticulous bookkeeping can be if you really want to maximise efficiency in your business.

 
Looking for some more support with your business finances? Compare accountants and learn more about bookkeeping software.

The post Do I Still Need an Accountant if I Use Bookkeeping Software? appeared first on The Cheap Accountants.

There’s also some (understandable) confusion around the difference between bookkeeping and accounting, and it’s important to know the exact function of each when it comes to organising your finances.

We’re here to clear everything up for you – starting with the most basic question of all.

What is bookkeeping?

In a nutshell, bookkeeping is the process of recording the daily transactions which take place in a business.

This information will help you keep track of your income and spending, giving a clear picture of your business’s financial situation. Using this data also makes it much easier to predict what this might look like in the future.

The role of the bookkeeper

A bookkeeper’s job is to ensure transactions are correctly recorded and categorised. This generally involves taking quality control steps to verify the data, such as bank reconciliation.

Bank reconciliation involves cross-referencing your bookkeeping records with bank transactions to make sure they match up. Good accounting software should do this for you automatically, in real time.

A bookkeeper can also use your daily transactions to produce monthly reports, turning the raw numbers into something easier to read and comprehend. Some will even take on other technical tasks like running payroll.

The role is evolving, though, with many bookkeepers now offering a wide range of services. It’s why the line between bookkeeping and accounting is becoming increasingly blurred.

What’s the difference between bookkeeping and accounting?

Bookkeeping deals with the recording and organisation of day-to-day financial activity in a business, whereas accounting is more about long-term financial analysis and strategising.

Accountants are specially qualified to analyse financial reports and use them to help businesses improve moving forwards. Their responsibilities also include preparing official end-of-year reports (e.g. income and cash flow statements).

The reality is that both bookkeeping and accounting are vitally important to the continued financial health of a business, allowing the business owner to understand what’s working and what’s not.

Is bookkeeping a legal requirement?

Whether you’re a sole trader, a limited company, a freelancer, or in a partnership, HMRC expect you to maintain good bookkeeping records. These must accurately show what’s happening in your business, and include things like:

• All goods bought and sold
• Who you bought and sold them to and from
• Money spent by the business (e.g. receipts)
• Money received (e.g. invoices, loans, grants)
• Debts

Accurate and up-to-date bookkeeping helps keep you in HMRC’s good books, but there are other benefits too. For instance, recording all of your expenses properly means you’ll be able to claim them as tax relief against your tax bill. So don’t miss out on what you’re entitled to!

Should I hire a bookkeeper or an accountant?

Well, there are technically no rules stating that you have to use either! You can outsource your bookkeeping, or you can try and do it yourself if you so choose. This will obviously save you money, but you’ll have to set aside the time (and make sure you don’t make any errors!).

It’s also important to be realistic about your ability to handle everything on your own.

If you don’t feel confident doing it yourself (or you simply don’t have the time), then outsourcing to a bookkeeper and/or accountant is the way to go.

When it comes to choosing between a bookkeeper and an accountant, weigh up the pros and cons of each, and think about what kind of assistance your business would most benefit from. If you can find someone who offers both services, then great! Read our guide to comparing different accounting packages.

Do I need bookkeeping software?

You’ll obviously need some method of recording your expenses and cash flow, and bookkeeping software is one of the safest options available, enabling you to store your data on an ultra-secure server that you can access from anywhere.

Making Tax Digital and bookkeeping

As for whether or not bookkeeping software is essential, the answer depends on your circumstances. However, HMRC have begun rolling out a scheme called Making Tax Digital (MTD), which will presumably be a requirement for everyone in the future.

MTD is part of the government’s plan to bring the tax system into the 21st century by gradually digitising all records.

As of now, anyone who earns more than £50,000 of sole trader and/or property income in the 2024/25 tax year will have to comply with MTD Income Tax rules from April 2026. This threshold will then reduce to £30,000 the following April (2027) – and to £20,000 in April 2028.

While it may only impact some business types at the moment, you can choose to enrol voluntarily if you want to be ready for MTD and avoid any potential stress down the line.

Choosing bookkeeping software

Again, cloud-based software is the safest way to store your business’s financial information, and this is because data kept on the cloud is actually hosted on a number of different servers, all in different locations.

It’s also great for collaboration, as every change is universal and applies across all devices.

What’s more, real-time data can be accessed by any user, at any time, meaning everyone is able to stay in the loop. Handy if you’re working with an accountant or have a business partner!

 
Find more help in our online accounting hub, and learn more about how to find the right accountant for your business.

The post Basic Bookkeeping for Beginners appeared first on The Cheap Accountants.

• Your current software is holding you back or stunting your growth
• You don’t like the user interface of your current software and want something simpler or just different
• You want to reduce the amount you’re spending on bookkeeping software or you’re willing to start spending more to unlock additional tools and features
• You need to move to a bookkeeping software that is compliant with Making Tax Digital (MTD)

Although sometimes necessary, switching bookkeeping software can be daunting or stressful, but we’re here to help. We’ll explore when the best time to change bookkeeping software might be, focusing on the pros and cons of different times of the year.

We’ll also share our tips on how to make the transition as smooth as possible and how you could benefit from the support of an accountant.

When is the best time to switch bookkeeping software?

Annoyingly, there isn’t one simple answer to this question. It’s just about finding the right time for your business and when it makes the most sense for you based on what you’ve got going on.

For example, if a business is going through any major changes, this could be the ideal time to make the transition to new bookkeeping software. Examples of major changes include:

• Merger or acquisition
• Restructuring
• Rebranding
• Entering a new phase of growth
• Preparing for rule changes such as Making Tax Digital

Kickstarting the new period of change with brand-new bookkeeping software could be the way to go, but the decision is yours.

That said, there are some important considerations to keep in mind for specific times in the tax year.

Year-end

Kickstarting a new bookkeeping software system in time for the start of a new financial year is a popular option for a lot of businesses because it means everything for the year is in one place.

Making the transition ahead of a new year starting in your books means you can have more of a ‘clean break’, rather than trying to carry the details over into your new system.

A mid-year transition will require you to figure out if recreating your existing accounts in the new system is the best option, or if it would make more sense to enter the ‘closing balance’ (literally the balance of your accounts when you close the old system) as the opening balance in your new system at the point you decide to move over.

That said, whilst the end of the tax year will be the easiest option for many businesses, it won’t be for everyone. If your business has a spike of activity towards year-end, for example, this time would be best avoided so you can just focus on managing the peak period.

Just like you can swap your accountant any time, you can move your bookkeeping to a new provider whenever you need to.

End of a quarter

If switching software at year-end isn’t the most convenient option for you, you could consider transitioning by the close of a quarter instead. This means you can start the next quarter afresh with your new bookkeeping software up and running.

This might be particularly useful if your business is VAT-registered. Transitioning at the change of VAT quarters could help to minimise the risk of errors in your VAT return, or disruption to workflow.

During quiet business periods

The other option is to wait until you know your business will go through a quieter period – if it has one!

If business slows down during the festive period, for example, you could start the process and be ready to hit the ground running with a new bookkeeping system in the new year.

Making the switch during quieter periods means there will be less chance of disrupting your regular services, which is good news for you and your customers.

How long will it take to switch bookkeeping software?

Setting up an account with a new software provider shouldn’t take long at all. In fact, you can normally set up an account in a matter of minutes. The process of actually moving any existing data over from one system to another can take longer, although this depends on what you’re moving from, and to.

Most bookkeeping software includes export tools so you can download your existing records, as well as import tools so you can upload it all into your new provider. Just be aware that some providers will paywall your data (even though it’s yours!), so make sure that you export everything you need before you stop paying the bill.

Don’t forget, you’ll also need to leave plenty of time to train yourself and any other employees on how to use the new system and its features.

Other ways to ensure a smooth transition

• Running both bookkeeping software systems – the old one and the new one – at the same time for a while to take the pressure off
• Make sure you have a point of contact or support from the software provider you’re moving over to
• Ask a professional accountant or bookkeeper to help you

Do I need an accountant to help me switch bookkeeping software?

If you’ve got the time, the know-how and the confidence, it’s entirely possible to change bookkeeping software yourself. Doing it yourself will also save you the cost of getting a professional to help.

However, there are many benefits worth considering to having an accountant help you with the transition, including:

• Reduced risk of error: An accountant will help make sure all your financial information is transferred correctly to limit the risk of any mistakes being made with your accounts.
• Troubleshooting and training: Finding your way around new software and learning how to use all of its features can take time and effort. An accountant can show you the ropes and help you solve any issues along the way.
• Compliance: While getting used to your new bookkeeping software, an accountant can keep a close eye on ensuring your record keeping stays in line with the various rules and regulations.

Looking for more support with your business finances? Compare accountants, learn more about bookkeeping software, or ask an accountant a tax question.

The post When is the Right Time to Switch Bookkeeping Software? appeared first on The Cheap Accountants.

Keeping your cash flow as fluid as possible is critical, giving you enough space to pay your bills on time without incurring additional costs – such as interest on overdrafts or supplier penalties.

So, whether you’re currently dealing with financial issues or simply looking to put precautionary measures in place, let’s explore some of the most effective ways to monitor your cash flow forecast, and keep it flowing.

What is a cash flow forecast?

Also known as a cash flow projection, this is a financial report which makes a reasonable estimation of your future cash flow over a period of time. The more information you put into it, the more accurate it’s likely to be, so include the details of all your income and outgoings.

Some of this data will be easier to predict, such as ongoing employee costs, whilst other areas might be more difficult – such as analysing current sales trends and predicting how they’re likely to continue.

What can I do to make cash flow forecasting more robust?

Improving data quality can make forecasting far more reliable, so it’s often useful to keep your records as up-to-date as possible. For instance, by entering transactions into your bookkeeping more frequently, updating salary changes in your records, and regularly reviewing your spending. We’ll go over a few techniques for this.

Stay on top of invoices and late payments

Unpaid invoices can put significant strain on a business, and cost many organisations a great deal of money each year. Making sure you are paid by customers on time (within your stipulated payment terms) is essential for cash flow, helping you to pay your own bills on time.

Customers who are consistently late making payments can also make forecasting and budgeting extremely difficult, because you can’t plan ahead properly.

Review your invoicing regularly, and send payment reminders before the deadline. You could even consider offering incentives for early payment or implementing late payment penalties to put a robust process in place.

Create and review financial reports

Using your accounts data to create financial reports is invaluable when it comes to improving cash flow and stabilising your finances, helping you optimise how you manage operations. It will also help you spot ways to reduce costs, capitalise on tax relief, budget better and head off potential cash flow issues before they become a real problem.

Financial reports allow you to see the bigger picture of your business’s performance, which you can use as a navigating tool to steer you in the right direction. Using fact-based data as a guide is a far better way to bolster your cash flow than operating on guesswork or reactive responses.

Be realistic about costs, overheads and expenses

It’s easy to underestimate how much it costs to run a business – it very rarely ever ends up being the case that you spend less than you expected, unfortunately.

This can lead to running out of funds faster than you’d like, which can put a serious dent in your cash flow.

Along with a realistic approach to your outgoings, it’s also important to review them regularly. Look for ways to reduce costs like rent, utilities, and employee salaries without compromising your business.

Some things you could consider as a way of keeping costs down:

• Outsourcing to contractors or freelancers instead of employing full-time staff
• Downsizing your workspace
• Implementing a remote or hybrid work model to lower overheads
• Switching utility providers for more cost-effective options
• Avoid overstocking inventory as it will tie up cash in stock and storage costs

Also make sure you’re assessing your allowable expenses on a regular basis to ensure you’re taking advantage of all tax relief available to you. An accountant will be able to help with this too.

Assess your pricing regularly

Getting your pricing right is one of the trickiest parts of starting and scaling a business. Once you have a pricing strategy set up, you should review it regularly to make sure it aligns with market conditions and competitor analysis.

This will help you maximise your profitability and support your cash flow. Keep a close eye on your financial reports and cash flow forecasts to carefully monitor your profit margins and ensure you’re earning more than you’re spending.

Many business owners are, understandably, nervous about increasing what they charge but when managed well, incremental price adjustments can be successfully implemented without alienating customers.

You just need to make sure you’re giving your customers value for money and not overcharging for what you offer.

Offer customers multiple ways to pay

Providing customers with multiple ways to pay for your product or service is a great way to support your cash flow – but not a benefit all business owners are aware of.

More ways to pay means more sales, or more payments made on time – resulting in healthier cash flow.

Practice good bookkeeping habits

Meticulous bookkeeping is one of the key cornerstones of business success and financial stability.

Accurate accounts, tax efficiency and a healthy cash flow all start with good bookkeeping practices. Establishing and upholding this will help your business in a whole host of ways, including:

• Staying on top of payments that are owed to you
• Making it easier to spot opportunities to cut costs or claim tax relief
• Forming accurate financial reports and forecasts
• Better budgeting
• Detection of errors, missing information or fraud
• Well-informed business decision-making

Hire an experienced accountant

The good news is that even though it’s your business, you don’t have to try and do everything yourself. A good accountant will help you understand your finances and keep your cash flow in check, as well as:

• Taking advantage of as much tax relief as possible to help reduce your tax bill
• Reducing expenses and wasted money to lower your outgoings
• Capitalising on the best funding opportunities (if this is a route you want to go down)
• Practising good bookkeeping habits

Often, it takes the perspective of a professional to steer you toward the most strategic and sustainable business decisions.

Find more tips and advice for your business on our website, or explore our guide on hiring the right accountant.

The post How Can I Improve My Cash Flow Forecast? appeared first on The Cheap Accountants.

Some business owners choose to undertake their tax return in-house by themselves or with an employee, whereas others will leave it in the capable hands of a qualified accountant. Whichever route you choose, it’s essential that your bookkeeping is accurate and up to date so that the tax return can be filed correctly.

Bad bookkeeping habits lead to errors and omissions which can, in turn, lead to penalties from HM Revenue & Customs (HMRC). The moral of the story here is to ensure that your bookkeeping is up to scratch so that you can submit your Company Tax Return on time with maximum precision and minimum stress.

In this article, we share the good bookkeeping habits you need to ensure your tax return runs smoothly each year, regardless of who is submitting on behalf of your business.

Keep a checklist of everything you need to cover

To file your Company Tax Return and pay your Corporation Tax, you’ll need to fill out and submit a CT600 form. The CT600 is notoriously complicated in parts and there’s a list of strict criteria that must be covered for compliance, including (but not exclusive to):

• Income and turnover
• Profit and loss for the financial year
• Tax reconciliation
• Tax deductions
• Any tax relief you’re claiming

Keeping a full checklist of everything you need to cover means you’ll be able to tick all the necessary boxes in your bookkeeping throughout the year. It goes a long way towards ensuring all the information you need is to hand when it comes to submitting your return. If you fail to comply, you could find yourself facing a penalty from HMRC.

Don’t worry, this isn’t something you’re expected to rattle off the top of your head each time the deadline looms. HMRC has actually put together a comprehensive guide to CT600 to support you through the process. It includes what you must do to comply, and how to carry out some of the more complex calculations. Or alternatively, you could pass the responsibility onto a qualified accountant – but more on that later.

Understand (and complete) your statutory accounts

Your statutory accounts are the accounts you produce at the end of the financial year. These must be sent to HMRC as part of your Company Tax Return, so you need to ensure that all of the relevant information is present and correct – this starts with good bookkeeping.

Guidance from HMRC stipulates that your statutory accounts must include:

• A balance sheet – this documents the value of “everything the company owns, owes and is owed” on the final day of the tax year.
• Profit and loss account – this records your sales, running costs and the profit or loss you have made over the financial year.
• Director’s report, unless you qualify as a ‘micro-entity’ (a company with a turnover of £632,000 or less, 10 employees or less, or £316,000 or less on its balance sheet).
• Any additional notes about your accounts that might be relevant.

Good bookkeeping habits throughout the year will make preparing your statutory accounts significantly easier than if you’re having to scrabble them together at the last minute.

Invest in cloud-based bookkeeping software

Bookkeeping is like anything else – you need to have the right tools, skills, and resource to hand if you’re going to do it well.

One of the most effective things you can do to bolster your bookkeeping and streamline the Company Tax Return process is to invest in good cloud-based bookkeeping software. This will allow you to take advantage of features and applications that simplify and automate so many of the processes where it’s easy to go wrong.

Here are just a few of the many benefits of using cloud-based bookkeeping software:

• Access your accounts at any time, from anywhere with an internet connection so you can do your bookkeeping on the move.
• Integrate with applications like PayPal, as well as your personal and business bank accounts.
• Take advantage of multi-user access so that more than one person can work on your accounts at any given time.
• You can automate processes (e.g., invoices and payroll) and set up automated reminders.
• Data will be stored on a secure cloud server and backed up regularly.

Enlist the expertise of a professional bookkeeper

Great bookkeeping is no mean feat, especially for business owners who are often spinning multiple plates at any one time. That’s why, if you can, we’d recommend enlisting the skills of an experienced bookkeeper who can save you valuable time. They’ll also have a good understanding of what the data should look like, helping to further reduce the risk of errors.

A professional bookkeeper has insight into the accounting industry and will also be able to support you with using your bookkeeping software. Working with a bookkeeper is another way to protect yourself against stress headaches and any trouble with HMRC.

Hire the skills of a good accountant

As we mentioned earlier, the Company Tax Return process can be pretty complex. For example, you’re required to make sure that all information in your CT600 is reported in Inline eXtensible Business Reporting Language (iXBRL).

Understanding and submitting your information can be super time-consuming and stressful, which is why we’d always recommend hiring an accountant to help you out. An accountant will also be able to help out in other areas. For instance, suggesting a budgeting strategy that ensures you’ve got a cash cushion to pay your Corporation Tax bill, and helping you claim for all your allowable expenses.

If you don’t want to hire two separate services for bookkeeping and accounting, look for an accountant that can take on both tasks. That way, you’ve got ultimate peace of mind when it comes to Company Tax Return time.

Need more help? Get an instant quote for accounting services, or get more information on comparing accountants.

The post Bookkeeping for Your Company Tax Return appeared first on The Cheap Accountants.

Healthy cashflow should never – and we repeat, never – be an afterthought. Nurturing it consistently will help your business survive, and even thrive.

The thing is though, not all cashflow problems are created equal. In the interest of your valuable time, we’ll use this article to focus on common cashflow problems in small businesses and startups specifically.

Underestimating the costs of starting a business

As with most things in life, from holidays and house-hunting to starting a new business venture, the budget you allocate never seems to be quite enough to tick all your boxes. There are always additional expenses that crop up along the way, or hidden curveball costs that come right at you out of nowhere.

For this reason, we’d always recommend doing plenty of research or even seeking professional help with estimating your startup running costs. Run out of money earlier than expected and your cashflow will be scuppered from the offset. Taking steps to ensure your predictions are realistic helps keep your cunning plan affordable.

Failing to hit the nail on the head with pricing

As you grow your business, pricing up products and services does become much easier. A common startup problem is figuring out what to charge in the first place, though.

Carry out market research to get a better idea of what your audience is willing to pay for your offering. Even in the future, keeping an eye on what your competitors are doing will help.

As time passes you’ll naturally gather informative data about your business’s ability to make a profit. Use your financial reporting to keep an eye on profit margins, so you know when you’re charging enough or spending too much.

TOP TIP: Make an educated estimate about pricing

You can make some fairly educated decisions when it comes to pricing ready for launch. Consider how much something costs you to produce or execute, and the profit you hope to make on top.

Price too low and you won’t make enough money to sustain healthy cashflow. Price too high and you’ll miss out on vital sales. It’s a tough balance to strike but an important one to master.

Letting late payments fly under the radar

In the hustle and bustle of starting a new business, it can be easy to overlook things that are actually super important. One of those things is chasing late payments and outstanding invoices.

If you want to keep your cashflow in a healthy position though, it’s vital that you stay on top of any money that is owed to you. Good bookkeeping practices will help make sure you’re aware of any outstanding payments so you can follow them up in a timely and efficient manner.

Predicting to make too much profit too soon

Another common pitfall so many new business owners are guilty of is being too ambitious with their profitability pipeline – or should we say, pipe dream.

In your eyes, your business idea is a knockout and everybody is going to be banging down the door to get a slice of the action. Why else would you have started up the venture, right?

While this enthusiasm and ambition should never ever be diluted, it is important to be a little more rational when estimating initial profit-making.

Building up brand awareness, customer loyalty and repeat custom can take a while. Be patient, and try to remain realistic (but a bit of optimism will help too!).

Underestimating overheads

As well as under-calculating startup costs and overestimating initial profit, many new business owners are also blissfully unaware of the overheads coming their way.

If it’s a bricks-and-mortar business, things like rent and business rates can eat into your cash reserves rapidly. If you feel you need a helping hand and employ right away, salaries and employee contributions can fast become a monetary burden.

Working from home? Great, but think about the extra electricity, water, heating, gas, internet… And make sure you claim for every possible allowable expense against your tax bill.

How and why should I protect my cashflow?

Watch out for the most common cashflow issues outlined above, but there’s proactive action you can take, too.

Start as you mean to go on – Prioritising the strength of your cashflow from the get-go is a great way to bolster the financial foundations of your venture. Making cashflow good-practice part of your daily protocol will help you set up healthy habits and avoid hiccups further down the line.

Stay on the right side of HMRC – Good cashflow means you’re less likely to let your accounts go awry and less likely to miss important payment deadlines. Avoiding issues like this at all costs will keep you on HMRC’s good side – a place all business owners want to be.

Grow and scale your empire – With a solid financial profile, you can grow and scale your business with the confidence that you’ve got the cash to back you up. With rocky foundations and sticky cashflow, development is more problematic.

Hopefully these nuggets of advice have spurred you on to make sure you’re not falling into any avoidable traps with your new business cashflow. If not, go right back to the top and digest it all again because as the old adage goes, cash(flow) is king.

Compare accountancy packages, or ask a tax question for free!

The post Common Cashflow Problems and How to Overcome Them appeared first on The Cheap Accountants.

That makes answering the question of how often you should check your finance reports tricky to answer. There’s no golden rule and there’s certainly no one-size-fits-all solution either.

That said, the ideal amount is most probably a great deal more than you’re doing right now.

So, how exactly do you decipher the optimal frequency?

Mostly, it boils down to the growth stage of your business, how much time you have to dedicate to it, and whether or not you’ve got the luxury of a finance specialist (e.g., an accountant) working to your advantage.

At a minimum, checking in to review your reports at least once a month; twice a month would be even better.

In an ideal world, there would be some time scheduled in every single week, dedicated to reviewing and analysing finance reports.

What should I be looking at in my financial reports?

When doing so, remember it’s about more than just scanning all the way down to the bottom to check whether you’re in the green or the red. Particularly for startups and early growth stage small businesses where every decision made is crucial.

Naturally, a lack of time is one of the leading causes of business owners, accounts teams and CFOs reviewing financial reports too infrequently, but a lack of knowledge is also a common culprit.

As a rule, business owners and their employees perhaps don’t have the same breadth of knowledge to apply to reading financial reports that an accountant would, for example.

When they don’t know what they’re looking for, analysing reports slips down the priority list through fear of the unknown, or a lack of awareness about the value this kind of exercise can add.

When reviewing your finance reports, you should be looking out for things like:

• Profit and loss statement.
• If invoices were sent out in a timely manner.
• If all expenses recorded and up to date.
• Where cost savings could be being made.
• If you’re working within budget – and if not, why not?
• Consistency with past reports.
• The status of your balance sheet.

The benefits of checking your finance reports more regularly

While adding yet another task to your to-do list might seem pretty daunting, we can guarantee that making more time for reviewing your finance report will pay off.

To support our argument and to encourage you to make report analysis a more regular and consistent occurrence, here are just some of the main benefits:

• You’ll have the information you need to make more educated decisions.
• The decisions you do make will become more strategic, with more structured direction.
• You’ll have the data you need to back up suggestions for areas of development.
• You’ll be able to nip any unnecessary spending in the bud much earlier on.
• Your cash flow will be better protected as you can be more proactive and reactive.
• You’ll cultivate more confidence in the business decisions you make.
• You’ll be able to spot and fix errors before they have chance to become much bigger issues.

Finance reports are an incredibly valuable and insightful tool that every single team across a company can benefit from in some way. So, it’s time to start tapping in more often.

What if I don’t have time to check my finance reports that often?

We totally get it – you put the busy in business owner (humour us on that one). Lunch hour?! What’s one of those?

You most likely barely have the time to get eight hours sleep a night, never mind comb through your finance reports on a regular basis.

That’s where the beauty of working with a qualified accountant really hits home. A finance specialist like them is literally trained (and paid) to create and monitor your finance reports. It’s still crucial that you review them too (sorry), but having them as a second set of eyes will be a huge step forward.

• It will save you hours and hours of time that you can spend growing your empire in other ways.
• They have the training and acumen required to translate your reports into educated business decisions that will have a positive impact on your bottom line.
• They will also be able to spot any errors or anomalies across your accounts that could end up being problematic if left neglected.

So, if you don’t already have a business accountant on your extended workforce, now might just be the perfect time to invest.

Still not sure? That’s ok! Check our accounting service FAQs!

The post How Often Should I Check My Finance Reports? appeared first on The Cheap Accountants.

If you’re worried about the future of your business we’ve put together a list of top reasons why business go under, and how to avoid becoming the next one.

Overestimating market

Unfortunately, the market is sometimes the last consideration for some entrepreneurs. They consider their desire to own a business and their own opinion of the product or service before questioning whether anyone needs or wants it.

Not thinking of your potential market first and foremost is a huge mistake because after all, the market determines your success or failure. It’s best to always analyse whether there is a current need for your business first before you get up and running.

Losing sight of customer needs

Following on from the previous point, even if you do have a market for your business, the work doesn’t stop there. Customer needs change and develop and to continue delivering what they need you need to keep up to date with them.

Market research isn’t just something you do in the beginning and forget about. Even if you do nail it at first, it’s easy to lose sight of customer needs when you get busier and the company grows.

Regular meetings with customer focused aims will help to keep everyone on track. With every new development you make in the business, the impact on the customer must be top priority.

Make sure market research is an ongoing task so you’re aware of any improvements you need to make to keep customers happy.

Poor financial management

If managing accounts isn’t your area it can quickly become overwhelming and damaging to your progress if you get it wrong. Many people overestimate the profits they’ll make or when they’ll turn a profit. Others underestimate their tax responsibilities or the importance of emergency funds when it comes to cash flow problems.

Always be realistic about what you can afford and have an emergency fund to help soothe cash flow problems when they arise. For financial management, hire an accountant to take some of the strain off you.

Scaling up too quickly

A lot of businesses will have a good few months followed by a naturally quiet period. Those who are unaware that businesses have highs and lows, may focus only on the highs and expect nothing else in the future.

They splash the cash either on themselves or on the business, investing in shiny new equipment, new staff, new offices and so on. When reality hits and the busy period quietens down, they’re left with hollow investments that don’t really add anything except bills and upkeep. This is a slippery slope towards major cash flow problems.

All new investments should be thought out carefully and not just based on last months revenue figures. Always assume revenue will fluctuate and try to get a second opinion on all major changes.

Management skills

Not everyone is manager material. It’s more complicated than simply telling people what to do. Managing people require excellent communication and diplomacy skills as well as the willingness to take responsibility at all levels.

Many people struggle to show strong leadership which can lead to an unfocused workforce. Others are more overbearing, leading to stifled micromanaged staff. Either way, poor leadership can cause poor morale and low productivity which can snowball and damage the business.

Learn to delegate and trust your workforce so they don’t feel micromanaged. If you struggle with giving instructions, consider leadership courses instead to help you build confidence and authority.

What are some reasons you’ve seen businesses fail? How would you ensure success long-term? Please share any thoughts below.

The post Five Top Reasons Businesses Fail and How to Make Sure Yours Isn’t Next appeared first on The Cheap Accountants.

How do small business owners relegate bookkeeping back to the simple administrative function it should be? How do you remove the accounting headache so that you can get on with your main business pursuits?

One word: technology. You get it on your side and you use it to your advantage.

Technology and Bookkeeping for Small Businesses

Not so long ago this meant being a spreadsheet pro. However, spreadsheets for accounting need to go and join the dinosaurs: There’s a much more evolved solution on the scene. That’s not even the accounting software you were convinced into buying, at great expense, when you had a midnight panic in the midst of your start-up phase.

The technological solution for getting on top of your bookkeeping as a small business shouldn’t be costly. It should require complicated, scary, and annoying updates. It shouldn’t require your IT responsible employee to have a degree in accounting himself. Cloud-based bookkeeping solutions are the technology which is accessible, easy-to-use, and puts bookkeeping back in the corner where it belongs.

Why Some Technology is Better Than Others

The problem is that not all cloud-based bookkeeping solutions for small businesses are created equally. A quick search with our pal Google shows that you’re always going to make a compromise: You can have awesome invoicing, but here pull your hair out over payroll; or you can keep tidy accounts but how the heck do you get the information back out in a form you can use? In short, much of the bookkeeping and accounting software out there for small businesses doesn’t cut the mustard, and certainly doesn’t do it all. It comes with the promise that your time and resources will be freed up, but in reality it’s a smoke-screen.

It’s a rare gem to find cloud-based accounting software which actually does more than it says on the tin, and doesn’t cost the earth. That’s why we developed Pandle. The purpose is to provide you with a one-stop portal for your bookkeeping and small business accounting needs without costing you the earth, or your sanity. We looked at where other software didn’t cope, and plugged the gap.

Does it Cost a Fortune to Make Bookkeeping Your Sideline?

You’d be forgiven for thinking such cloud-based bookkeeping software will cost you a fortune. As small business owners you need to keep overheads low, hence the temptation to stay buddies with the spreadsheets and your own accounting skills. However, it really needn’t be like that.

The post How Do Small Business Owners Make Bookkeeping Their Side-Line Once More? appeared first on The Cheap Accountants.

Even once you’ve submitted your tax return, you’ll need to keep hold of your records. HMRC may choose to investigate you randomly or because of Self Assessment errors, so you’ll need to be ready to provide them with well-kept records should they ask for them.

How long do you need to keep records?

You should aim to keep business records for at least 5 years after the 31 January Self Assessment deadline of the relevant tax year.

For example, for records you submit by January 2025, you must keep these until at least January 2030. Though it might be worth keeping details for longer just in case or for your own records.

HMRC may at any point check through your records and investigate from previous years, not just the records from your last submission.

What records do you need to keep?

You must keep all financial records for the past six years including sales and income, details of business expenses, VAT records (if you’re VAT registered) and PAYE records (if you’ve got employees). You’ll also need to keep records of your personal income as it relates to the business.

Examples of records and proof include receipts, bank statements, sales invoices and bank slips.

What happens if our records are destroyed, lost or stolen?

You must always do your best to submit whatever information you have. However, this isn’t always possible.

Your records may be damaged in a fire or flood, lost or even stolen. In cases like these, we’d recommend adopting cloud accounting software as even in the event of damage, your records are kept safe on the cloud, ready for you to access from another device.

In the meantime, if you can’t provide records for whatever reason, you must tell HMRC if the information you’re providing is based on estimated figures (your best guess when you can’t provide actual figures) or provisional figures (temporary estimated figures while you wait for actual figures to become available.) In the case of the latter, you’ll also need to submit the actual figures when they become available.

The post How Long Should Your Business Keep Financial Records? appeared first on The Cheap Accountants.