Updated: Jan 24
Leah, LC Bookkeeping Services
Basic Bookkeeping Tips
Bringing a Bookkeeper into your business can be a big decision.
The monthly commitment, and essentially having a look through your business underwear draw can be daunting.
That’s why I thought I would give you a few tips on what you can do to help yourself in your business until you are ready to bring someone in to help.
What do I need to keep on top of my own Bookkeeping?
1. Separate Business Bank Account
2. Accounting/Bookkeeping Software
3. An idea of how much money you need to make to cover your costs
Profit and Loss Account
Example Profit & Loss Account
Sales = This is simply the number of sales you have made within a month.
Variable Costs = These are the costs in your business that change depending on your level of sales.
Fixed Costs = These are the costs you have that you have to pay regardless of whether you have sold anything or not. E.G. Rent, Rates & Utilities.
Profit = Sales less Variable & Fixed Costs.
Income Tax, Corporation Tax and VAT
Your profit is the amount that you will need to pay your tax on.
Ideally, you want to be putting aside money for tax every month.
The last thing you want is to be hit with a tax bill at the end of the year that you can’t afford.
As a general rule of thumb, if you are paying income tax on self-employment you want to put 30% of your profit aside each month being 20% Income Tax and 9% Class 4 NI.
If you are paying Corporation Tax, you want to be putting at least 19% of your profit aside each month.
If you are VAT Registered, you will also want to make sure you are putting aside any VAT Payment you will need to make.
Sales VAT less Purchase VAT.
If you manage to put all these things in place then you will be in good stead to be able to keep on top of things.
If you feel like this may be a bit much please give contact me
⭐️ Announcement ⭐️
P.S. Launching 1st March 2021!
Sole Trader Membership!
Learn how to keep on top of your business finances