Accounting can be time-consuming, regardless of whether there is a bookkeeper or is being handled by the business owner. Businesses can overlook the filing of taxes, annual accounts, and confirmation statements or even forget VAT registration when they meet the threshold.
Deadline for filing tax returns in the UK is the 31st of January following the tax year end, failure which can result in penalties imposed by HM Revenue & Customs (HMRC).
Directors or designated members may be fined in a court of law if they fail to file confirmation statements, annual returns, or accounts.
To avoid penalties and fines, businesses can streamline their accounting processes to minimise the hours spent and invest them in other tasks that can make your business grow.
Let your business make significant improvements by putting the following tips into practice:
1: Time management
A day always seems never enough to finish everything on your to-do list. However, to be productive and not overwork your employees, businesses should master time management.
The first thing is to organise your tasks and work on the most important of them first. By recognising the more important accounting works and scheduling specific times for each one of them, you can guarantee that they will be executed properly and in good time.
Time management is important for meeting both monthly and yearly deadlines. The person responsible for accounting should complete what they can ahead of time. For efficient time management, businesses can have reporting templates that can be updated easily and quickly every month. This can go a long way in saving time in preparing schedules at the last minute to keep good records throughout the year.
Time management makes it effective for companies to file accurate confirmation statements, annual accounts, and tax returns and even know when the company meets the threshold for VAT registration.
Keeping company accounts accurate not only ensures compliance but also provides valuable insights into your company’s financial health.
2: Open a separate business bank account
Businesses may overlook opening a business bank account for their company. A sole trader is not legally required to open a business bank account, however, if you set your business up as a limited company then you must use a business bank account to run it.
A separate business bank account saves time in filing tax returns. It avoids the need to check personal bank statements to separate personal expenses from business expenses. If you accidently over-report profits you could end up paying too much tax.
3: Invest in accounting software
Businesses can invest in accounting software that helps to manage and record day-to-day financial transactions.
The VAT-registered businesses (unless exempt) are legally obligated to keep digital records and submit VAT returns online, so they will need HMRC-compatible software to comply with the Making Tax Digital initiative.
Other accounting software that can help businesses simplify their processes include:
· Link My Books helps eCommerce businesses simplify their bookkeeping processes by calculating taxes and exporting financial data to accounting software.
· QuickBooks is best for VAT-registered businesses since it can be used to submit VAT returns. It can also be used to submit corporation tax directly to HMRC.
· Like QuickBooks, Xero calculates your VAT and you can submit your returns online directly through it.
· Sage accounting software is good for small businesses. It has features that business owners need to keep on top of their books and remain MTD-compliant.
· FreshBooks is best for startup businesses to use and scale as they grow.
· Zoho Book is an accounting software that allows businesses to file tax returns to HMRC through the platform and calculates your VAT on your behalf.
· Odoo Accounting covers the needs of a company such as CRM, eCommerce, accounting, inventory, point of sale, project management, and many more.
4: Use task automation tools
Automating tools helps save time on manual tasks so that business owners or employees can work on the high-value ones.
This functionality helps to eliminate tedious tasks including invoicing, reconciliation, reporting, and data management thus saving time.
Through accounting automation, companies have the chance to make faster turnaround, data precision, cost reduction, profound analysis, better security, and fast data recovery.
5: Hire an accountant
An accountant can be hired depending on the complexity of a company. It may be difficult for large companies to deal with accounting processes since they generate high revenue.
There may be areas in accounting that will need a qualified accountant to help steer and manage your business’s financials.
There are also accountancy services providers who help in filing confirmation statements, corporation tax filing, company annual accounts filing, and VAT registration when your company meets the threshold.
During company incorporation, start-ups can acquire these services at an affordable rate if they are new in accounting or may find it confusing and complex.
Businesses can also hire a virtual assistant who can help in minimal tasks like marketing, administrative work, customer service, and email management as you work on accounting.
6: Digitise payments, records, and documents
With ever-evolving technology, it is important to go digital. This will ensure your records are safe and easily accessible. You won’t waste time searching for that one record that is tucked in a file in an unorganised storage room or cabinet.
VAT-registered businesses need to submit their returns digitally on an HMRC account.
Money and payments can also be processed digitally to make the accounting process easier. Digital payments are convenient to process businesses’ payments and enable real-time visibility into company financials.
Investing in strategies that can help simplify your business’s accounting process not only is it vital in staying compliant but also reduces stress and improves the financial health of your company. being compliant with legal requirements. However, simplifying accounting processes does not mean sacrificing accuracy.
Icon offices can help you with your accounting needs at an affordable price. And also with VAT registration , VAT returns, Annual Accounts filing and Corporation Tax Returns, Confirmation Statement filing and much more.
