Starting a New Business Guide

9. Doing the Numbers You need to create a method to track your income and expenses. The easiest way is to have all transactions go through your business bank account. At the end of the month you can see easily what profit you’ve made. Has the balance on your account gone up before you have taken any drawings out of the business for yourself? You could record week by week on a spreadsheet or on paper. Keep a note of your sales with a receipt book or invoice document using Microsoft Word or other word processor. These often come with invoice templates that you can adapt. Don’t forget to add your logo and method for people to settle the invoice. If you are going to issue lots of invoices you may want to start using an accounting software such as Quickbooks, Xero, Clearbooks or other. This will help when it comes to the end of the year and if you have customers who haven’t paid, you can chase them up easily.

10. Tax doesn’t need to be Taxing If you have recorded your income and expenses then doing your tax return is straight forward. You will need just two figures. The first is your total income for the financial year and the second is the total of all your allowable business expenses. You enter these two amounts into your self assessment. If you have earned less than £85,000 you can complete a simpler form SA103S. The system then calculates your taxable profits and what you need to pay. The process can all be done online. If you have also worked part time or had another employed job during that year, you will need to mention this on your tax return too, so have your P60 to hand. What can be claimed as an allowable expense can be found from this link: www.gov.uk/expenses-if-youre self-employed . If you are not sure how to do your return you can always employ an accountant firm to do it. These may charge as little as £149.