As a Virtual Assistant, the likelihood is that bookkeeping isn’t your favourite task. It is, however, extremely important in order to establish a profitable and financially healthy business that will be around for years to come. Understanding your numbers, compiling accurate financial data allows you to make informed decisions about the future of your business, whether that’s working with associates, cutting costs or identifying potential problems before they do any real damage. I want to share with you 4 basic bookkeeping tips to save time and money for your VA business.
On a personal note, I used to hate doing my bookkeeping and would find myself procrastinating over it and then feeling massively overwhelmed when I did actually do it.
1. Update Your Books Regularly
Are you currnetly doing your bookkeeping weekly? Probably not. But it’s important to get into the habit of regularly updating your records. The little-and-often approach certainly beats having to spend late nights catching up or having to dedicate an entire weekend to bookkeeping because you procrastinated for too long.
Furthermore, mistakes and problems compound over time; a small mistake in September could turn into a huge headache if you don’t notice it until April the following year! Staying on top of your records allows you to solve problems quickly and efficiently, rather than trying to untangle a big web of errors.
Set aside a regular time slot each week for bookkeeping. Personally, I now use the Weekly Co-working sessions as part of the VA Membership to ensure I have a dedicated space in my diary to do them. If you know you’re likely to put it off, push it to the top of your to-do list and get it done first thing in the morning. I use this time to send invoices, look at cash flow, track your costs, chase unpaid invoices etc. Some weeks it takes 5 minutes other times it takes the full 60 minutes, I have allocated in the diary. But I have found it to be simpler and more manageable this way.
2. Separate Your Personal and Business Finances and Bank Accounts
It’s always smart to separate your personal and business finances and this includes your bank account is no exception. If you use the same bank account for personal and business transactions, it becomes incredibly difficult to separate the two and this may lead to expensive mistakes on your tax return.
Furthermore, mixing your personal and business finances can make it difficult to keep track of your spending and calculate your profits accurately.
The best way to keep your personal and business finances separate is to open a business bank account to keep your financial records as transparent as possible. This will save you from having to spend hours trying to remember whether a transaction was personal or business-related and thus greatly simplify your bookkeeping.
Remember in the UK, you need to keep financial records for 7 years and so you would need to keep your personal statements with the business transactions highlighted for this length of time.
If you are a sole trader or freelancer, or contracting (but not through a limited company), you do not need a business bank account. However, there are still many benefits to having one, such as:
- It can help you to keep your business and personal finances separate.
- It can make it easier to manage your business finances and track your income and expenses.
- It can give you access to business-specific banking features, such as business loans and overdrafts.
- It can make you look more professional to potential customers and suppliers.
Here is a table summarizing who needs to open a business bank account:
|Business structure||Need a business bank account?|
|Sole trader||No, but recommended|
|Freelancer||No, but recommended|
|Contractor (not through a limited company)||No, but recommended|
3. Stay Organised
In addition to keeping accurate records, it’s important to stay organised so that you can locate your files quickly and easily when necessary. This will save you a huge amount of time when reviewing your records and help you to avoid mistakes and lost data. If you keep your records electronically, use cloud based software or make sure that you perform regular backups to avoid losing documents. Personally I use Xero to maintain my business accounts but there are others, however, I have found this one to be great with integrating with time tracking software as well as payment processors such as Gocardless – Gocardless is great for when working with clients on a retainer basis.
4. Ask for Help
Business is not a DIY affair and if you’re struggling with your bookkeeping, it pays to ask for help sooner rather than later. For example, it can be difficult to know which categories to file certain costs under and what does and doesn’t count as a business cost. When doing your own bookkeeping, you’re also likely to make errors which lead to a lot of wasted time and even mistakes on your tax return. Needless to say, this is very bad news for your business as you could face penalties.
Outsourcing to a professional bookkeeper is one option or paying for some time with an accountant or bookkeeper to learn how to maintain your accounts is totally worth it.
Bookkeeping is an important part of being the CEO of your business. Please don’t do as I did in the early days, procrastinate and neglect my bookkeeping only to panic later. It really does pay to learn and understand how this data helps you run your business.
Are you ready to take your VA business to the next level?
Join The VA Membership, the only UK VA business accelerator designed specifically to help you build and grow your business, create recurring revenue, and achieve consistent growth.
With over 150+ hours of courses, weekly co-working sessions, weekly group coaching calls, a private support group, and the ability to pay as you go, The VA Membership has everything you need to succeed.
Here are just a few of the benefits of joining:
- Learn from and network with other successful VAs
- Develop new skills and services to expand your offerings
- Increase your rates and earnings
- Create a more sustainable business
- Become the “Go-To” Virtual Assistant in your niche
Don’t wait any longer to start growing your VA business. Join The VA Membership today!