Top tips: bookkeeping for SMEs

bookkeeping for a start-up

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Setting up and running your own business is extremely exciting but if you neglect your bookkeeping, you run the risk of your business failing. Business Garage offers top tips for small businesses on how to manage your bookkeeping effectively.

Of course you want to focus on fulfilling orders or providing a great service, and growing your customer base. So bookkeeping can be low down the list of priorities for many new entrepreneurs. Here are our top tips on how to manage your bookkeeping effectively:

  1. Keep your bookkeeping up to date

Letting those receipts pile up in a dusty shoebox is a common mistake (and guilty habit) for many people new to running a business. The more behind you are on your bookkeeping, the bigger the challenge will be for you to get on top of it. Little and often will probably work best for you when it comes to bookkeeping.

If you are not invoicing or chasing payment on a timely basis, your cashflow will suffer – not what your business needs! Equally, HMRC is strict on deadlines, and there are sizeable penalties if you miss them because you are not up to speed.

  1. Use decent bookkeeping software

Bookkeeping or accounting software enables you to keep track of your business’ finances, manage your cashflow, and produce insightful management account reports which are particularly helpful if you’re seeking investment. Making Tax Digital also requires VAT returns to be submitted online, so a software package that links up to HMRC makes this possible.

We love Xero: it’s a brilliant online accounting software for small businesses, with lots of great functionality, can be accessed securely from the cloud and tailored as needed: from simple invoicing to more sophisticated reporting tools and features such as handling different currencies.

Business Garage is a Xero Silver Champion Partner. We look after many SME clients’ bookkeeping and management accounts via Xero. We’ve managed multiple Sage to Xero conversion projects, using our expertise to ensure a seamless transition.

  1. Organise your sales invoices

To avoid confusion and delays in receiving payments owed:

  • Create a simple template that you can use each time, which clearly lays out a description of what the invoice is for, the amount owed, due date and your bank details.
  • Keep the design clutter-free with easy to read text as many larger companies will scan the invoice, making blurred text or heavily coloured invoices harder to read later.
  • Include the word ‘invoice’ (legally required) and invoice number, purchase order number if relevant.
  • If your company is VAT registered, you must use VAT invoices, stating the VAT amount.
  • Sole traders must also include your name and any business name being used, and an address where any legal documents can be delivered to you if you are using a business name.
  • In the case of a limited company, you must include the full company name as it appears on the certificate of incorporation. If you have decided to put the names of your directors on your invoices, you must include the names of all directors.
  • While you don’t have to state payment terms, you should agree these up front and ideally include these for clarity.
  • You may also wish to include your logo to fit in with your branding. It looks more professional and makes you easier to remember.
  • Emailing a PDF invoice or a link to accountancy software is much more practical these days than relying on post. Follow up to ensure the invoice was received.
  • Send the invoice to the correct person by checking in advance – often the purchaser of your product/service is not the person paying the invoices.


  1. Open a business bank account

Separate your personal and business finances to manage your bookkeeping more easily if you’re just starting up. Paying by electronic transfer, credit or debit card will mean your bank statement provides you with a permanent record of the transactions – a free and easy way to keep track of payments.

  1. Manage your purchase ledger

Accounts payable is important for a fledgling business. You don’t want a reputation as a bad payer, but equally cashflow can be difficult to manage. Keep up with your payments and protect your business from cyber fraud by:

  • Keeping your purchase receipts and a record of your expenses.
  • Agreeing payment terms with your suppliers in advance, so that you will have cash when you need it. Align payment terms for your suppliers with those from your clients.
  • Checking that the amount due on the invoice tallies, errors are easily made. Reject any invoices that do not match what was agreed.
  • Implementing a purchase order (PO) system where possible. This allows you to agree from the outset the price and any payment terms.
  • Checking payment terms – there is no need to pay the invoice before the due date but do try not to miss the due date and incur late payment charges. In worst cases, some vendors may refuse to supply you in future if you are badly overdue with payments.
  • Ideally more than one person should approve any outgoing payments to protect against cyber fraud and ensure accuracy of payment.
  • Being cautious about unexpected emails requesting payment – either roll your mouse over or hit reply to see the true sender of email (as emails can be disguised).
  • Verifying all requests for changes to bank details (including internal emails) by contacting the sender by telephone.
  • Equally, call new suppliers to check bank details for supplier payments, don’t just rely on an invoice you have received as this could be open to fraud.

At Business Garage, our team is professionally cautious with meticulous attention to detail. We always use two levels of approval for any outgoing payments, so you can rest assured that your payments are always correct, secure and on time.


  1. The right time and place

Working from home may be the ideal commute (and the norm now for many of us), however, it’s all too easy to be distracted at home (and by work). Concentrate on the bookkeeping by giving yourself dedicated time and shutting yourself away so you’ll be less likely to make costly mistakes.

Alternatively, find a reliable and proactive bookkeeper who can handle the bookkeeping for you, so you can save your valuable time for growing your business. We act as our clients’ finance function so they are in control of their business financials and have the data they need to make informed decisions.

Contact Business Garage on 01235 433099 or [email protected] to arrange a free no-obligation consultation.

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bookkeeping for a start-up

Top tips: bookkeeping for SMEs

Setting up and running your own business is extremely exciting but if you neglect your bookkeeping, you run the risk of your business failing. Business

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