A recent survey by Kashflow has revealed that sole traders and micro businesses are spending only 3.6 hours each month managing their business finances.
Despite the small amount of time spent managing finances, there is a confident air surrounding the sole traders and micro businesses doing their own books. 87% of the survey’s respondents rated themselves as either ‘really good’ or ‘not bad’ at tasks such as keeping on top of cash flow, managing payments and staying compliant.
This large figure stands in contrast to the third of respondents who admitted that managing their finances leaves them feeling stressed.
Roy Maugham, tax partner at UHY Hacker Young, comments on how small businesses need to pay attention to every mistake: “There is increasing pressure on small and mid-sized businesses to spend their time and money on systems to ensure that tax affairs are accurate and up to date.
“Without adequate care, small businesses are at risk of being pulled up over minor mistakes or small disparities, which could incur disproportionately heavy fines and penalties.”
How to stay in control of your finances
With so little time spent on managing finances, it’s inevitable that sole traders and micro businesses are the ones being hit with fines when it comes to Self Assessment season.
If you fear you aren’t being thorough enough with your accounts, there are a few ways you can change your ways to ensure your accounts are mistake-free.
A simple cloud accounting solution
Often we think the more we pay, the better the product will be. However, something this fails to incorporate is how the solution is suited to you. Going over the top by paying a lot of money for a complex cloud accounting software can mean you struggle with multiple functions when in reality, you only need a few.
A simple and comprehensive cloud accounting solution is all sole traders and micro businesses need – looking at the complex systems accountants use could mean you’re doing you and your business a disservice.
Keep the receipts
One of the biggest mistakes made when it comes to small businesses managing their own accounts is failing to accurately record expenses. Often, this is down to disorganised accounts and mislaid receipts.
If you want to avoid making mistakes that will get you fined by HMRC, you need to come up with a fool-proof system for keeping your receipts in a safe place.
Manage your accounts regularly
While spending as little time as possible on your accounts is tempting, the reality is that you need to update your accounts little and often to ensure you’re on top of them.
Coming to them once a month and attempting to track all income and expenditures in one go won’t just eat into a huge chunk of the time you could be spending working, it will also increase the likelihood for mistakes.
Are you on top of your business finances? Use Pandle to help manage your accounts on a regular basis, where you can keep up to date with financial activity such as overdue payments.