A diary is essential. It will allow you to organise your working week around you and your clients’ many varying requirements. Your diary is also part of your accounts and should be kept up to date and available for inspection by the Inland Revenue. Diaries and other records should be kept safe for at least seven years. The main ways of keeping such records are either by an A4/A5 diary or by electronic means. For example by using: a hand held computer/organiser; a mobile telephone; or using Microsoft Office Outlook by which you can print off daily, weekly or monthly schedules as required. We use both systems. Paul uses the paper method and is perfectly happy with it, and Colin records data electronically and is again quite happy with this system. Below you will find why and how each system is used. Then you will be able to decide which one is for you. There are pros and cons for all these methods. In the end it comes down to your personal choice.
Keep your finances in order as you go, recording and filing monthly if not weekly. It is not too much of a chore to enter your income and expenditure into a spreadsheet like Excel on a daily basis. If you do not keep up with it you will find that you cannot remember important events to the degree required. Your accountant will not be amused as they try to find out what has been happening to your money, and this lack of humour may be reflected in larger accountant’s bills. If you do not want to use Excel you can purchase a dedicated financial software package instead. This financial software will prompt you to enter the data and then lay it out on the screen in an easy-to-read format. It will also supply software tools that will enable you to display your data in graph and pie-chart form. Our office has used Quicken software for several years, but unfortunately this is now no longer available in the UK. Look at the accounting software at Amazon.com and read the customers’ reviews. Whatever methods you use, remember never to trust your PC. Back up your data to other media (e.g. external hard drive) on a regular basis.
Having a separate bank account for your business is essential. Do not let your personal and business money get mixed up. Try to bank your money regularly. You can always transfer money from your business to your private account very easily either by cheque or online. Some banks/building societies now provide very good deals and free banking services – well almost. Scout around before deciding.
Retain every receipt and always fill in your cheque stubs. When you record your business transactions, give each transaction a number and put that number on the receipt and the cheque stub. Purchase a box file with a spring clip. Place your receipts in numerical/date order under the clip. Do not forget to claim for everything that may help your business (e.g. Internet service provider, telephone, office supplies, PC upgrades and software, cleaning materials for the car and anything else that is used fully or partially by your business).
Organising your own records will save you a great deal in accountancy fees. Do not give your accountant a box of bits of paper, cheques and your diary to sort out. It will cost you a fortune. Ask your accountant in what format they would like to receive your accounts (e.g. on an Excel spreadsheet, using Sage, etc.) and provide this on a CD or disc compatible with Microsoft or Apple Mac.). Your accountant may not require paperwork but you should keep this together in a file that shows which financial year it refers to. You may also consider completing your annual return online directly with the Inland Revenue as this will save you even more money. As for income tax and National Insurance contributions, you will receive a demand periodically. You can now pay your National Insurance contributions by direct debit. Being self-employed demands a great deal of self-discipline. After all, you are now your own boss with no one to nag you. Keep up to date with your work and it will not get on top of you.
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