Each month, Girl Tribe Gang leverages our collective voice and empowers our members to upskill each other by exchanging their knowledge in a series of blogs, FB and Instagram Lives.
March 2019 is our #KnowledgeExchange Money month. In this guest blog, Laura Moss our Sutton Coldfield Tribe Boss and founder of Laura Moss and You, shares her 5 top tips for simple self-employed accounting.
Mention the words ‘accounts’, ‘self-assessment’ ‘tax’ and ‘HMRC’ to any self-employed business owner and you’re likely to cause fear and anxiety. I started my business 5 years ago and in that time I’ve realised that for many, accounting can be a scary subject. But it doesn’t have to be.
My mission is to help female business owners understand that they can easily feel in control of their business accounting.
Let’s cut out the jargon when we talk about accounting and turn that panic into calm. In this blog I explain how you can simply and easily manage your accounting when you are self-employed.
5 tips for simple self-employed accounting
1. Manage your money mindset
It took me a while to realise that preventing overwhelm had a lot to do with mindset.
Without a positive mindset you cannot change anything. So, the next time you are feeling stressed ask yourself a couple of questions:
Why are you feeling overwhelmed?
Do taxes and HMRC bring up negative connotations for you? Or your self-employed finances generally?
If you are left feeling anxious about your accounts, there may be some issues you’ll need to tackle first.
The unavoidable truth about taxes
We all have to pay them!
Instead of thinking of taxes in a negative light, start to think of them as a positive expense that help you to receive treatment when you are ill through the NHS, provide jobs to the council, help to improve roads and look after the elderly.
We can’t choose to pay tax, but we can choose to change our mindset around taxes instead.
Stop thinking of HMRC as this big scary organisation who are going to come and knock at your door. Instead, think of them as someone who is there to support you. They offer free advice and guidance on their website, they offer webinars, FAQs and are at the end of the phone to answer your queries.
As soon as you start to change this, you will start to change how you work and feel about it all. After all, the more tax you pay the more money you are earning, which is a positive!
2. Stop over-complicating your finances
You don’t need to spend money on complicated software, break the bank with new fancy apps or even hire an accountant.
I am not trying to sell myself out of work here, but I honestly believe that if you feel competent enough to keep track of your business finances yourself, then do it. Save yourself the money whilst you have the time to complete your accounts.
Get started with simple accounting:
Whether you like a spreadsheet or not this is one of the simplest ways to start. Create one column for income and one column for expenses. Take one off the other and there is your profit.
Set yourself up with a simple system of recording and storing your information. If you are anything like me, I will take any excuse to go and get some nice new stationary. Use a simple box file to store your receipts or a plastic Ziplock bag in your handbag so you don’t lose any loose receipts.
Open a new folder in your emails and label it ‘business expenses’ so you can drag and drop all receipts and invoices easily.
Everyone is different. Some like to give their accounting a go themselves and save the pennies, whilst others would prefer someone else to take control and ensure it is been done correctly.
Neither way is correct; you must choose what feels right for you at the present time.
3. Being organised is the key to accounting
When you are getting started with your business accounts, or even if you have been doing them for a year or so, it is never too late to become more organised and remain productive.
Why? You prevent the last-minute panic, loss of information or getting things wrong.
Keep all receipts/invoices in one place, whether that be paper or electronic. This way, they are easy to find when you come to enter them into your spreadsheet or pass onto your accountant.
Something I always remind my clients is to open up a separate bank account. When you have a business bank account you prevent the confusion when sifting through your personal account and trying to remember whether something was business or personal. You may sometimes be going back almost 12 months and who can remember why you had a coffee 12 months ago?! Your bank account will act as a checklist when looking for those receipts and invoices.
Set time aside each month to record your information. If you don’t block out time in your diary, you will go into what I call ‘Avoid Mode’ and keep putting it off for another day. The time it takes to do your monthly accounts may increase as your business grows, but get into the habit of spending time on your record keeping now.
4. Understand your self-employed role and responsibilities
I come across so many people who do not fully understand what it means to be self-employed and what is required of them. Unfortunately, being unaware is the worst thing you can be. Ignorance is not an excuse that washes with HMRC.
Even if you have an accountant, the onus is on you to complete your accounts and you are responsible for the information that is submitted on your behalf.
Make sure you can understand the basics so you can check the information that is being sent to HMRC and be happy that it is correct. Do some research on what is required of you as a self-employed person; what are allowable business expenses, what key dates do you need to know about to submit information to HMRC?
If you are unsure about anything then ask your accountant to explain. It is their role to guide you and provide you with advice.
This leads me perfectly onto number 5…
5. Choose your accountant wisely
It is so important that you don’t just start working with the first accountant that you see when looking for someone to support you. It is so important to get this right. As I said before, the onus is on you for the information that’s submitted to HMRC to be correct.
When you are looking for an accountant firstly ask friends, family or colleagues who they use. Book in a call (video if possible) or arrange to meet them because you will get a much better idea about whether they are the right person to support you and your business.
Accountants are not one size fits all as people are so different. For instance, I understand that not everyone will choose to sign up to my services. I must be the right fit for them and their business and vice versa or it is not going to be the best professional relationship.
How to choose the best accountant when you’re self-employed
You need to find someone you can have a good talk with.
Are they friendly? Do you think you will be able to pick up the phone and ask them a question?
Do you feel a sense of relief when you have spoken to them and believe they will have your back? Or are you coming out with more questions than you started with?
These are all great things to think about before choosing someone that suits you.
When I am looking at investing my money to work with someone, I follow them online to gauge whether they are the right fit.
Do they have a page? A group?
Are you able to see them live giving tips/advice/guidance?
Can you sign up to their email or download a freebie guide?
It’s the same when choosing a coach; one coach may be perfect for someone but not another person’s cup of tea. It’s personal preference.
Small business accounting doesn’t have to be scary
So, when you are feeling overwhelmed or worried about where to start just sit down and think ‘how can I keep this simple and prevent the overwhelm?’
Check in with how you are feeling about your accounts, HMRC and tax and think about how you can switch all those negative thoughts into positive ones.
When you have tackled your mindset around accounting, then investigate how you can keep things simple.
Managing your business finances does not have to be stressful. With the right plan and people supporting you, you can easily have a positive experience.
Girl Tribe Gang’s #KnowledgeExchange has been designed to recognise that ALL of our members have knowledge to share and that we’re ALL experts in the stuff that we know. Each month, we leverage our collective voice and empower our members to upskill each other by exchanging their knowledge.