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Record keeping for the sole trader

If you are self employed as a sole trader you will need to fill in an annual tax return each year and submit it to HMRC showing any earnings you have received and any expenditure that you can claim for. By law you need to keep these records for five years from the latest date of sending back your tax return.

Many small businesses use cash basis accounting and record income and expenses when they receive money or pay a bill. It is the most straightforward way to record transactions. It is important to keep proof of income and expenses even though you do not need to send these to HMRC when completing a tax return.

The important records that should be kept are evidence of all sales and income, all business expenses and records of any personal income such as pensions and other employment. If you use a vehicle for your work, receipts for fuel and other vehicle expenses should be kept as this will be part of your expenses. It is a good idea to keep a record of the mileage of the vehicle as sometimes it is better to claim mileage costs rather than the actual costs of fuel etc.

Why it is important to practice good record keeping

When it comes to running your own business, you need to ensure that you are keeping the correct documents and evidences and that it is being kept as securely as it is needed to be.

When it comes to accounting you should keep your documents for at least 5 years and be sure to keep comprehensive records that are easy to find should you need to. If HMRC ask you to show receipts for expenditures you have claimed for your business you need to be able to show them these quickly and if you cannot then you may find yourself having to pay money back and also having a fine.

Its not only for HMRC’s benefit that you should keep records. At times in your business you may need to refer to a similar case you had or to look up details for a previous client. It may be that you want to get in touch with clients that had made purchases off you before and so you need a place to store their details securely. Since GDPR came into force, you need to be able to prove that you have consent off everyone, that you can contact them in the future. If your database is quite old then you will need to update the information to ensure you are still ok to contact them in the future.

Business Applications that can help you in your work

When it comes to computers and mobile devices apps are essential. All smart phones allow you to download apps from some sort of store whether it be the apple store, Android or Google Play. Many of these applications are designed for business use.

There are so many great and useful business applications available today that it can be easy to become a little confused about which one to go for and how to use it to its full potential. If you look at the App store on your PC, Laptop or mobile device will notice each app has a star rating and reviews. It is always recommendable that you look at these before installing any new app and also make sure that you have valid anti-virus software installed prior to downloading any new software.

If you run a business you might want to recommend an app you use to your clients. This can build up a relationship with the client and show that you want to try and assist them in making the day to day running of the company as easy as possible. Some apps may be useful for accounting whereas others may make marketing a doodle. Some apps are free to use others will require either a one-off purchase or a subscription fee to be paid.

Unfortunately, there are some rogue apps out there that may not be secure or are built intended to steal your data. Not all anti-virus software will pick these up so it is vital you only install and recommend apps that you are confident are genuine and made by a reputable company.

What is the role of a Bookkeeper?

If you are considering going in to bookkeeping then you need to fully understand what is going to be expected of you and what your main day to day job is. Bookkeeping is a method of recording financial transactions that are used by a business on a day to day basis. These transactions can include purchases, receipts, sales and payments that are made by a certain individual or an association. It is very important that this is done with the upmost care and attention as a simple mistake such as missing off a zero, could get the business in a lot of trouble. Often a bookkeeper liaises with an accountant or an accounts department who will usually collate all the information into the relevant accounting systems or spreadsheets.

Some bookkeepers still prefer to use pen and paper for all their workings out and record keeping whereas others will use computer system such as Sage or Xero. Lots of companies are moving towards electronic record keeping as there are many advantages such as less likely to make a mistake, multiple copies can be made instantly, data can be accessed remotely and handwriting does not cause issues when someone else needs to read the information.

Building a brand-where do I start?

For many people making the decision to start up their own business whether it is going to be a sizeable company employing staff or a small home-based business is an exciting but anxious time. One of the first things you will need to decide on is a company brand name and how you are going to create and promote your brand.

Initially you will need to come up with your brand name. Give some thought to your business services and whether the name reflects what exactly your business is and what services and products you supply. Once you have come up with a memorable name, you need to double check that no one else has that name because if there is, they may have a copyright on that brand name and you could find yourself in breach of copyright and facing a legal challenge.

Next you will need to come to a decision about your brand logo. You can employ a graphics designer to create a logo for you, but the majority of people will be able to create a design themselves using the internet to give you a few initial ideas if you are struggling.

To promote your brand successfully, use your logo and brand name on all communication, advertising and marketing materials.

Do you need to use an accountant to do your tax return?

When you are self employed one of the main headaches for many people is completing your online tax return. It can be very confusing especially if it is the first time that you have had to do this. You make ask yourself whether you need to employ an accountant to file the return or whether you can save yourself the accountant’s fees and submit it yourself. The answer to this is not straightforward and is dependant upon a number of points.

Firstly, how complex are your accounts for instance are you VAT registered, do you employ staff, are you self employed but also employed and use the PAYE system or do you work from your home address. If the answer to these questions are yes, then using the services of an accountant will probably be advisable certainly if you are not a confident bookkeeper and are not fully conversant with current tax regulations.

If you are a sole trader with a small turnover it may be that using an accountant would not be financially prudent. There is lots of helpful advice online to help you to complete a tax return independently and the tax office will be able to give you further guidance if required.

Promoting your business on a budget

In this increasingly competitive marketplace for any business it is important to promote your business as effectively as you can within the limits of your advertising budget, but what is the most efficient way of doing this?

The most important aspect is to get your brand recognised by your target audience. Social media advertising is an effective way to do this as it is straightforward to set up and maintain a social media business page. Advertising videos can be easily uploaded to show product usage and range whilst customer review videos can be used to convey positive comments from previous clients.

You may decide that it would benefit your business to have a website alongside your other advertising. There are many build your own website programs available online with step by step instructions meaning that even if you are not an expert in this field you can still build a simple website for a fraction of the price of a custom-built site.

Although online advertising is probably the most effective form of advertising, if your potential client base is very local it may be worth doing a leaflet drop especially if your leaflet then directs people to your online sites.

Keeping your accounts up to date when self-employed

Being self-employed can have many benefits such as working the hours that suit you, not having to answer to an employer and taking holidays to fit in with the family however most people in this position would have to admit that one of the disadvantages is the bookkeeping and filing of tax returns.

Employing an accountant is a wise choice as they can often reduce your tax bill by claiming for everything that you are entitled to claim for, but the month by month bookkeeping is usually completed by the self-employed person or their secretary.

The accounts need not be over-complicated, and a series of spreadsheets are usually sufficient. The first spreadsheet ought to show income with a record of the date the invoice was given to the client, invoice number and amount. A further column will show the date the invoice was paid and the method of payment.

The second spreadsheet will show expenditure. This will include columns showing the date, amount paid, method of payment and recipient. A further spreadsheet or an area on the expenditure sheet can be used for vehicle expenses.

It is wise to bring these sheets up to date on a monthly basis as it is more manageable overall.

Are you unsure how to design your business cards?

A business card can be very useful and as a business owner you should always try to carry a few on you at all times as you never know when you may need one.

Business cards are perfect for handing out at networking groups, leaving with your clients or potential customers or even handing out when you do cold calling. A business card  needs to be clear so that your information can be easily read but you should also try and stand out a little bit. You will need to include all of your contact details such as name, office address (if required) phone number, email as a minimum, maybe even your social media profile names etc.   

When it comes to designing a business card you should try and keep in line with the rest of your print design for example, your logo and colourways should all be consistent across every platform. You may want to be a little quirky with your business cards, possibly by making them a slightly different shape or texture. Even subtle changes like this can make a big difference and if done correctly and can you noticed for the right reasons.

Creating a professional looking flyer

With 2020 nearly upon us many companies are thinking about how they can kick start their marketing in the new year to give their business the best chance. Many companies spend a lot of their marketing budget online, which often makes sense, but some companies still invest in offline marketing such as leaflet dropping. For certain types of businesses leaflet dropping works very well. This may be for a business that offers their services to the local community such as a florist, butchers or window cleaner.

If you can offer people a discount such as a money off voucher on the flyer then this will often increase the response that you have from the advertisement. It is very important when creating a flyer that it looks professional. If you are a small business you may be tempted to skimp on print or even print your own. If you are going to do this you need to make sure that the paper is of high quality and the images used are not pixelated. Always print off one or two test flyers before you print the rest and double check for spelling errors or issues with the layout which can often slip through.