8 Essentials for Small Business Accounting
Accounting might not be the most exciting part of running a small business, but it’s absolutely essential for long-term success — especially for small businesses. From staying compliant with HMRC to managing day-to-day finances, good accounting practices keep your business on track and help you make smarter decisions.
Here are 8 key accounting essentials every small business owner should know:
- Separate Business and Personal Finances
Open a dedicated business bank account and credit card. This simplifies tracking expenses, ensures accurate records, and avoids HMRC red flags. - Register for the Right Taxes
Make sure your business is registered for all the appropriate taxes with HMRC. This includes Corporation Tax (required for all Ltd companies), VAT if your turnover exceeds the threshold (currently £90,000), and PAYE if you employ staff. Failing to register on time can result in penalties. - Track Every Expense
Keep detailed records of all purchases, utilities, supplies, and miscellaneous costs. Use accounting software or apps to categorise expenses and prepare for deductions at tax time. - Automate Invoicing and Payments
Use invoicing tools to send professional bills and track customer payments. Automation reduces errors, improves cash flow, and saves time. - Maintain a Chart of Accounts
Set up a structured chart of accounts to categorise revenue, expenses, assets, and liabilities. This is the backbone of accurate bookkeeping and reporting. - Stay on Top of Payroll
Whether you have employees or contractors, payroll compliance is critical. Automate payroll systems, handle taxes properly, and stay updated on labour laws. - Reconcile Bank Statements Monthly
Match your records with your bank statements every month. This helps catch errors, prevent fraud, and ensure your books are accurate. - Keep Yourself Informed
Even with great software, a bookkeeper or accountant adds strategic insight, ensures tax compliance and helps you make informed financial decisions.
