Look - there are probably significantly more insightful tips from business gurus on how to make your business a success. Could it be Reels and TikToks, SEO optimization or investing in crypto. Potentially all of the above!
But from an accountant who has seen how many small business owners manage their businesses - here is one practical tip which I think is key. This tip will help:
- save you time
- keep your accountant happy
- feel more in control of your business finances
- ensure that you aren't missing out on business expenses (thereby lowering your tax bill)
And it's super simple 1) open up a separate bank account for your business 2) be super strict in making sure you use your business debit or credit card in making business purchases.
I guarantee* you - a few additional hours on the initial set up will save you significant time and headaches down the line. You can even link up your business bank to an app such as QuickBooks to help automate your tax returns.
At present - my clients who are the most stressed out tend to be the ones who have not had a division between their personal spending and their business spending. The result? A common question of "where is all my money going?" and a general feeling that they are doing something wrong in using their businesses cash to fund their personal outgoings.
If you are a sole-trader - when wanting to spend the cash generated by your business - you can transfer money from your business to your personal account periodically. This process is called making "drawings" from your business.
If you own a company - start thinking about whether you will be taking money out of the company as salary, dividends (or a combination of both). An accountant can help you cover off this side of things to make sure you are compliant with HMRC and making the most of the tax structures available to you to be as tax efficient as possible.
So please - if you do one thing to improve your business this year - get a separate bank account for it. You are then well on your way to feeling more in control of your accounts and tax.
*guarantee limited to a few slices of pizza and a beer if your prove me wrong!