Four Tax Preparation Tips to Follow

Four Tax Preparation Tips to Follow

If you want to avoid the stress of the tax period, follow these four simple steps to prepare your business in advance.

Tax season is one of the most stressful periods of the year for a business owner. With proper planning, however, you can change that.

It’s essential to start preparing for the filing of your business tax return in advance so you have time to gather all relevant records.

Take a look at the following tax preparation tips that can make the upcoming tax season less stressful for both business owners and their accountants.

Organise Your Tax Paperwork

Before anything else, it may be a good idea to sort out any past years’ documents, if you haven’t already. Start organising your books to make sure that you’re prepared when the paperwork starts to come in.

Tax paperwork should be organised by category and you may want to make copies of important documents received by post.

Categorise Your Business Expenses

Another time-saving tip is to start organising and categorising your business expenses weeks before the tax return due date.

You can claim most of your business expenses as tax deductions. But if you’re not sure which expenses you can claim, check out the official guide on HMRC’s website.

All business expenses must be sorted out and explained in detail. Finally, don’t forget to itemise your expenses.

Alternatively, if you outsource your tax preparation, you will want to hold on to all your documents for when it’s time for your accountant or accounting firm to prepare the tax return.

Check Whether You Can Get Deductions and Credits

Small businesses may qualify for a number of tax credits. However, don’t wait till the last minute. Check in advance whether you’re qualified for these credits.

Deductions reduce your taxable income and credits are even better, as they directly reduce the amount of tax owed. Your accountant or tax preparation software will have a list of tax deductions that apply to your business.

Get Help

Tax season is very stressful for your bookkeepers and accounting team, assuming that you have them on the payroll. Even if they’ve been doing great the whole year, they may need some extra help now.

A smart business owner won’t let his or her accounting staff burn out during the tax period. Ask them if they need help and if so, make sure to relieve the burden.

It’s essential to get your tax done correctly and on time, which is less likely to happen if you try to save money on accounting staff during this hectic period.

Advance Prep Wins Out

For most business owners, tax season is far from the favourite time of the year. However, it’s not an excuse for you to wait until the last moment to start preparing your tax return.

To avoid unnecessary stress, the best course of action is to prepare in advance.

It won’t trouble you nearly as much if you’re to find that something is missing, but that’s only possible if you leave enough time to sort things out.

Book a free consultation here, to learn more about our accounting services and how can help you grow your business.

The 6 Most Important Numbers You Need to Know to Grow Your Small Business

The 6 Most Important Numbers You Need to Know to Grow Your Small Business

In order to grow your business, you need to understand how you’re faring. Financial numbers provide you with an accurate picture of your performance, but as a busy business owner it’s unlikely that you have the time or the inclination to spend hours pouring over complex numbers. However, ignoring your financial numbers is likely to lead you towards failure. It’s prudent to create a list of key performance indicators (KPIs) to focus on so that you can keep an eye on what really matters. This will then allow you to make informed decisions about the financial health of your business and measure your progress over time.

Profit and Loss Statement

It’s essential that you understand your profit and loss (P&L) report because it tells you whether you are making or losing money, and how much. You need to pay close attention to your P&L report and review it every month so that you get a good idea of how your status is changing over time. Keeping a close eye on these numbers allows you to identify areas where you can cut costs, understand seasonal patterns and know when to raise your prices.

Expense Report

It’s vital that you understand how much you are spending each month. If you don’t know how much you’re spending it becomes impossible to calculate profit and loss. Furthermore, you need to be aware of your spending so that you don’t blow your budget. You should use your accounting software to regularly create expense reports to review and compare against one another. This will help you to identify areas where you can reduce spending and ensure that your expenses are not growing faster than your revenue – although this is acceptable in the short term when preparing for growth, for example by hiring new employees or buying new equipment.

Accounts Receivable

Accounts receivable refers to the money that you are owed in unpaid invoices. If you have a lot of money tied up in accounts receivable then you’re likely to run into cash flow problems, even if you’re operating at a profit. Keep a close eye on accounts receivable by using your accounting software to automate invoices, as this will help you to understand who owes what. Being aware of your accounts receivable allows you to differentiate between cash flow and profit, take action to chase up payments and make informed decisions about when to spend and when to hold back.

Profit Per Client

Some clients generate more profit than others. Your most lucrative clients aren’t necessarily the ones who spend the most, and it pays to know who actually makes you the most money. This will allow you to focus on attracting profitable clients who will earn you more money in less time and thus optimise your business growth.

Calculate profitability per client by taking the total fees received and subtracting the expenses involved. Then, divide this number by the hours that you spent on the work to calculate the hourly wage per client. You may be surprised at just how much this can vary!

Cash Flow

Managing cash flow can be a tricky balancing act. It’s important to produce cash flow statements regularly so that you understand how much is coming in and going out of your business, and how much you are left with. Remember that cash flow and profitability are separate entities. It’s possible to be in profit but run out of cash because your money is tied up in assets and unpaid invoices.

You should create and review cash flow statements regularly and track how your situation is changing. It’s important to stay on top of your cash flow so that you know when you are able to make investments without running out of available funds.

Item Sales

Item sales reports create a clear picture of how profitable each of your products or services are. For example, one product may generate a lot of sales but a minimal amount of profit. This is actionable data that indicates which products or services you should be focusing on, and which to discontinue.


Like it or not, numbers don’t lie. As a small business owner, it’s vital that you stay on top of your financial numbers so that you can assess the health of your company and take action accordingly. You need to review and analyse your numbers regularly to understand how you are performing and give your business the best chance of success.

Did you know we’ve also got a free downloadable eBook dedicated to the most common profit draining mistakes made by small businesses. Check it out here.

Book a free consultation here, to learn more about our accounting services and how can help you grow your business.

5 KPIs Small Business Owners Should Be Tracking

5 KPIs Small Business Owners Should Be Tracking

As a small business owner, you have the power to decide what your priorities are. However, regardless of your goals for the company, there are certain KPIs that should be tracked in order to ensure success. These five KPIs will help give you an idea of how well your company is doing financially and if it’s on track to meet its goals.

What Are KPIs?

KPIs are key performance indicators. This is a way for companies to measure the health of their business by evaluating certain factors, such as increased sales or a decrease in spending.

You can’t track every single possible KPI under the sun – it’s impossible. However, there are some universal KPIs that you need to keep an eye on regardless of your niche and business model.

The following seven KPIs should be used by small businesses to track success. If you’re looking into specific areas that your company could improve upon, these metrics can  help you determine what to focus on.

Net Profit

Net profit is the amount of money your business makes after factoring out expenses and other costs. As a small business owner, you need to know whether or not your company is turning a healthy profit on its operations.

It’s important to understand the difference between revenue and profit. Let’s say your business turned over $100,000 last year. If you spent $40,000 then your net profit is $60,000.

However, if you turned over $120,000 but spent $80,000, you still keep $40,000 as profit. More revenue does not always equate to more profit, so it’s important to keep an eye on this figure.

Net Profit Margin

Net profit margin is the percentage of net profits your company makes. This number represents how efficient you are with your finances and whether or not you’re making a healthy amount on each sale. If this figure  drops, it could be an indicator that there’s an issue in terms of spending or that revenue increases need to be made.

Let’s go back to the example above.

Again, let’s say that you made $100,000 in revenue and spent $40,000. Your net profit is $60,000, giving you a profit margin of 60%.

Now let’s imagine you made $120,000 in revenue and spent $60,000. Your net profit is still $60,000 but your profit margin has decreased to 50%.

Your net profit margin is a great indicator of how well you’re spending and making money. It can also inform decision making around pricing and marketing.

Quick Ratio

The quick ratio is a number that represents how efficient your company’s liquidity is. It tells you whether or not your business can meet its short-term financial obligations with the assets it currently has on hand.

In this sense, “quick” refers to liquid – i.e., money in checking accounts and easily convertible investments like stocks and bonds.

The Quick Ratio is calculated like this:

(Cash + Marketable Securities + Accounts Receivable) ÷ Current Liabilities = Quick Ratio

A Quick Ratio of 1 or greater is good news for your business because  it means you have enough assets available to cover your expenses and keep your company afloat. A number lower than 1 suggests  that your business is struggling to meet its obligations and may need to borrow money or liquidate some assets.

Cash-to-Debt Ratio

The cash-to-debt ratio tells you how much liquidity a company has relative to its liabilities. It’s another great indicator of whether or not your business can pay off any debts it might  have.

To calculate your cash-to-debt ratio, divide the company’s cash by its current liabilities:

Cash from Operations/Total Debt

This is how long  it would take for your business to pay off its current liabilities if it used all of its cash in hand.

You should use your cash-to-debt ratio to  help you figure out how much short-term and long-term debt your business can handle.

Cost of Customer Acquisition

As a small business owner, attracting new customers is no doubt one of your primary goals, but how much do you need to spend in order to do so?

The cost of customer acquisition is the amount you spend, on average, to get a new customer. You should use this metric to inform your sales process and marketing strategies because it can give you an idea of how much money  you need in order to compensate for all costs associated with bringing customers on board.


The KPIs small business owners should be tracking to ensure financial success are: net profit, net profit margin, the quick ratio, cash-to-debt ratio, and cost of customer acquisition. These numbers can help you make more informed decisions about your business and to ensure that it’s financially stable.

Did you know we’ve also got a free downloadable eBook dedicated to the most common profit draining mistakes made by small businesses. Check it out here.

Book a free consultation here, to learn more about our accounting services.

Why You Need An Accountant For The Growth Of Your Small Business

Why You Need An Accountant For The Growth Of Your Small Business

Small businesses often put off hiring an accountant until they’ve grown bigger, but that’s a mistake that can actually delay growth. The services of an accountant extend beyond simply minimizing your tax bill, although that’s an undeniably valuable advantage. In addition to saving you time and money, a good accountant helps you to manage your cash flow, plan ahead, make smart decisions and reduce any risks to the financial health of your business. Here’s why investing in a quality accountant beats the DIY route every time.

1. Save Money On Your Tax Return

Let’s start with the most obvious advantage of hiring an accountant: to save money in taxes. Filing your taxes is notoriously complex and even a small, innocent mistake can result in a hefty fine. Chartered accountants train for years in order to be able to complete this process accurately, so doing your own return puts you at risk of making expensive mistakes.

Furthermore, a qualified accountant will have up-to-date knowledge of tax breaks, loopholes and business incentives to save you a sizable sum of money that you can re-invest in scaling up. If you do your own accounting or go with a very cheap firm, you’re unlikely to benefit from these savings.

2. Free Up Valuable Time

In addition to saving you money, an accountant will also save you a lot of time that you can put to far better use. As a small business owner, it’s vital that you keep accurate financial records and stay on top of your accountants. However, it’s equally true that your efforts are most valuable when concentrated on your area of expertise. Hiring an accountant allows you to ensure that your accounts are being managed well whilst allowing you to focus on growing your business.

3. Startup Advice

As mentioned, many small business owners are reluctant to hire an accountant in the beginning stages. However, an experienced accountant will be able to provide valuable advice during the startup stage that can accelerate your growth on areas such as:

  • Key financial risks
  • Budgeting
  • Financial forecasting
  • Growth
  • Funding
  • Tax incentives
  • Overall financial health

Hiring an accountant from the very beginning can help you build a solid financial foundation to ensure that your business is around for many years to come. They can advise you on which legal structure to choose and offer unbiased, constructive criticism of your business plan. It’s also worth noting that an accountant-approved business plan is more attractive to prospective investors.

4. Manage Cash Flow

Managing your cash flow well is essential to the growth of your business. Poor cash flow management is a serious threat to even the most profitable businesses, so it’s very important to get it right. Accountants are experienced in managing cash flow and can produce regular forecasts to ensure that you always have enough funds to continue operations as you scale up and market conditions change.

5. Growth Management

A quality accountant can help to fund and manage the growth of your business. Firstly, an experienced accountant will help you to identify sources of funding and present your case to potential investors. Additionally, they can also help you manage sudden growth spurts and ensure that they don’t overwhelm you and damage the financial health of your business, as is often the case.

6. Market Knowledge

It pays to hire an experienced accountant who knows exactly where your company is positioned in relation to your market sector. You can leverage this knowledge to create your unique selling point, price your services appropriately and gain a competitive advantage. In short, an experienced accountant allows you to benchmark your company which is incredibly useful for growth.

An Accountant Is An Investment

It pays to hire a high quality, proactive accountant. Whilst there are many cheap services out there, you’ll see the greatest return on investment from hiring an accountant who has the time, knowledge and experience to grow your business. A good accountant will do everything they can to not only save you money on taxes but to provide valuable advice, manage your cash flow and secure the financial health of your business for years to come.

Did you know we’ve also got a free downloadable eBook dedicated to the most common profit draining mistakes made by small businesses. Check it out here.

Book a free consultation here, to learn more about our accounting services.