Keeping accurate books and accounts
In the sixth episode of the Startup Series, user interface designer and owner of digital media agency FLAVR, Omar Choudry, gives his tips on how small business owners can keep their books and accounts up-to-date.
Using online accounting to keep on top of his cash flow gives Omar Choudry more time to focus on his most important task – winning more business.
Omar learned an important lesson on the importance of keeping accurate financial records in his first year of trading. “When I did my first year of trading as a freelancer, I knew of this thing called HMRC but I didn’t realise how real they were,” he laughs.
“I got my first corporation tax bill and I panicked because I didn’t know what it meant. I started Googling it. ‘It was like ‘this is real tax, you have to pay it?’ I remember thinking to myself, ‘can I do installments?’”
Today, Omar uses Xero to raise invoices, record receipts and transactions. He’s also hired an accountant to advise him on tax and financial matters.
Read on for Omar’s tips on keeping accurate books and accounts:
1. If in doubt, speak to HMRC
Omar’s surprise tax bill taught him an early lesson – if your business is facing issues with tax, contact HMRC at the earliest opportunity. Omar says: “I remember speaking to them on the phone and they were actually very polite people. One piece of advice I can give is to always communicate with HMRC.”
2. Hire an accountant
Hiring a qualified accountant can help you make better business decisions. A good accountant will have detailed knowledge of the latest tax regulations and how they apply to your business. They will also possess the concentration and attention to detail needed to prepare detailed financial documents such as tax returns.
“With FLAVR, I’ve learned from previous lessons,” explains Omar. “I need an accountant who is more of an accountant to me, who’s not like just a family friend but someone I can rely on as an authority. “
3. Easy online accounting means 'no excuses' for disorganised business finances
Online accounting platforms such as Xero are accessible from your desktop, mobile or tablet, so you can stay up-to-date with your cash flow, even on the move.
Omar uses Xero to raise invoices and keep on top of bookkeeping tasks. He says: “Accounting and bookkeeping has been made to sound like this kind of horrible thing, but now with technology, there are so many good companies that make it fun. I have a thing I use across my social media and with my team. I say to everyone: ‘no excuses.’ We are in a time and era where we have access to everything.”
4. Don't let receipts pile up
Keep track of all your receipts by implementing a simple filing system. “I have a folder which is month by month, separated. A very easy mistake is to make is to have loads of receipts sitting in your wallet that just pile up, or they’re in your car and you forget about them. Having that organisation makes my brain so free, I’m not stressing. All I need to focus on is building my company.”
5. Keeping on top of your finances leaves you more time to grow your business
Having the software and systems in place for accurate financial recording leaves Omar more time to concentrate on his most important task – winning more business.
He says: “Your company account is like a bucket. You want to spend as much time filling the bucket as possible. You don’t want to fiddle around with the tap, trying to figure out how it’s working or if the water’s coming out. You just want to make sure it’s running and filling up at all times.”
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