How to take the hassle out of doing your expenses
Sorting your business expenses can be a real headache. It can feel like staying on top of them takes dedication and time that many business owners simply don’t have.
Here are 3 things you can do to take the hassle out of sorting your expenses once and for all:
ACTION 1: Automate as much as possible
Good old-fashioned manual records take time to manage, and if business owners are short of one thing it’s time. Using an automated system makes expenses management much easier. A good system won’t encroach on the time you spend on your business or on your personal time.
For example, being able to photograph your receipts as you go along, dictating key details, and then sending the records to your accountant on the move.
Automation is also an effective way of sorting VAT calculations. If your system automatically categorises and calculates VAT you can be sure you’re claiming the correct amount.
ACTION 2: Develop, and stick to, logical expense categories
If you have a set list of expense types, it’s much easier to categorise your expenses. This will help ensure you’re claiming everything you’re entitled to on an ongoing basis.
For example, the most common unclaimed expense category for sole traders is entertainment. You’re entitled to offset costs associated with entertaining customers, and having a dedicated category will remind you to record those receipts.
Categorising expenses by project or customer will also ensure you recharge the correct amounts on your invoices.
ACTION 3: Help your accountant
If your expenses management approach is a shoebox with 3 months’ worth of receipts, your accountant is going to have to spend a great deal of time sorting and categorising.
First of all, if you pay an external accountant, this will increase the amount you have to pay.
Secondly, it’s difficult to know if you’ve misplaced a receipt, which means it’s difficult to claim accurately. This costs your business in terms of VAT claim and income tax bills.
Finally, this approach also puts your audit trail at risk, should HMRC re-open your return. Making it easy for your accountant to maintain accurate records for 7+ years means that, if there is an HMRC query, your records are self-explanatory and no one has to waste time rooting around for further information.
Want more expense management tips? Read our blog, ‘4 quick tips for managing business expenses.’