With so many businesses facing a tough start to the 2020s, it was no surprise that many people decided that it was now or never to set up shop on their own and begin their business venture.
Whilst some people found the time to think and plan out their strategy moving forward, some had to set up out of necessity and learn as they went along, becoming a business owner for the first time with no warning. It could have been something that started as a hobby and was suddenly an avenue to support the household.
New Learnings
With many not initially thinking of their hobby as a full-blown business venture and more of an extra income, whatever income above £1000 per tax year requires declaring and may be taxable. You will also incur costs to make your sale, from postage to send the goods, packaging, insurance, websites, and charges for online sales platforms. Everything associated with your new business will have elements of cost – and this is where you need to keep records of everything.
When running it as a business, as either a sole trader or self-employed, you will need to keep accurate records of all income and expenditure. All income whether paid by bank transfer, card, cash or in-kind must have a paper trail to it.
All expenses relating to your business operation must also be recorded whether paid through a personal or business account, by credit card or cash. At the end of the tax year, either March 31st or April 5th, your total income will be reported and your total expenses on a self-assessment tax return and you will pay tax on profit above the tax-free allowance for the year.
Keeping Track
These figures can only be done accurately by keeping records of all income and expenses, and it can be tricky in the first year to assemble and remember everything, as well as separate them. It is ideal to get your records in order as soon as you start your business but understand that it may not be possible or easy to get it right the first time on your own.
Many businesses starting to outsource this to bookkeeping services in Manchester to help them get in line. Realising that keeping finance records is just not their thing, bookkeeping services can either start from the beginning or help clean up records later on to get a business on the right track before the tax year ends.
Seek Professionals
If you are overwhelmed at the prospect of keeping tabs on all of your financial records, bookkeeping services are a sure-fire way to keep your business running smooth and stress-free when it comes to your books being balanced.