Losing track of your business expenses throughout the year can leave you with the unenviable task of sifting through months of bank statements and stacks of receipts as deadlines approach. Not only is this tedious and stressful, but it’s also error-prone. Keeping track of your expenses regularly doesn’t have to be such a hassle. It requires a small, regular approach, which is made easier with accounting software like Xero.
Gone are the days when receipts sat in a drawer or invoices gathered dust in a folder. largely. This is already mandatory for most businesses, but from April 2024 all small businesses with income over £10,000 and below the £85,000 VAT threshold will be required to do so as part of the digitalization of taxes and expenses (MTD). As such, you are legally required to keep a digital record of your income.
MTD is the government’s attempt to digitize tax processes to make it easier for businesses to track their tax operations and file tax returns more accurately. MTD requires businesses to maintain records in approved accounting software such as his Xero.
Therefore, a good accountant’s advice is to start using recognized accounting software to record your income and expenses as soon as possible to avoid unnecessary stress near deadlines.
If you still rely on paper receipts or use spreadsheets to track your expenses, Approved Accounting allows for an easy transition to cloud accounting software. Do I need a separate business account to track my expenses? As a sole proprietor, you don’t need to have your own business account. If you prefer, you can handle all your business transactions, including expenses, through your personal bank account.
However, it is certainly beneficial to handle your business expenses in a single bank account to make it easier to track expenses. All of your business purchases are on one statement, which makes it much easier to copy them into your general ledger. In reality, you probably use your own money to buy things for your business. You may also need to reimburse your employees and family members for business expenses. When that happens, it’s easy to lose your way.
Therefore, it’s important to create and stick to a process to track business expenses as they occur.
Do I need to keep my receipt? You don’t need to provide evidence of business expenses on your tax return, but HMRC may require it. Records of all transactions must be kept for at least five years.
Online accounting software makes expense management easy and convenient. Deliver accurate financial and expense reports with the click of a mouse or tap on your phone.
