Want to take the stress out of tax season? It starts with staying on top of your books all-year-round with an MTD-compliant and HMRC-approved tool like FreshBooks.
Even though it comes every year, getting your business ready for tax season can be daunting and stressful. There’s nothing more annoying than realising you’ve forgotten a major expense just as you’re about to file your return (who hasn’t been there?). And with new rules like Making Tax Digital (MTD) in the mix, it can seem like there are only more complications to wrap your head around.
But using cloud accounting software like FreshBooks can make filing your taxes a hassle-free process. FreshBooks is MTD-compliant and HM Revenue & Customs (HMRC)-approved, and tools like expense tracking and accounting reports keep you on top of your business all-year-round.
Here are 6 ways FreshBooks helps you manage your books.
There’s nothing fun about scrambling through receipts just before your return is due. With FreshBooks, you can automatically track your expenses all-year-round. This helps you know what you’re spending each month and allows you to stay on top of your cash flow.
Start by connecting your bank account and credit cards to FreshBooks and automatically import expenses into your FreshBooks account. Not only will you know exactly what you’re spending and when, but you’ll save yourself countless hours of entering numbers manually. That’s time you can better spend on pleasing your clients.
Another useful tool for tracking your spending in FreshBooks is Expense Categorisation. When you set up expense categories in FreshBooks, you can easily sort and classify expenses as you spend money. This is super helpful come tax season, as it allows you to better assess your books for allowable expenses, helping you reduce your taxable profit for the year.
2. Double-Entry Accounting
Have big plans to grow your business? Then it’s important to understand double-entry accounting, the industry-standard method that bookkeepers and accountants use to track and manage business financial records.
Double-entry accounting means you need to create two entries for each business transaction: a debit and a credit. For example, imagine you just bought a new laptop for your business. The double-entry system tracks the purchase as a credit for the cost and a debit for your new asset. This helps you keep accurate records of your profits and losses. Which in turn helps you lower the chances of making errors on your tax return.
It might sound complicated at first, but FreshBooks designed a double-entry accounting system that’s simple and easy to use. With Plus or Premium plans, you get access to 8 key functions:
Cost of Goods Sold. Associate your expenses with the costs of delivering services to your clients. Other Income. Track income outside of your expenses so you can view all your earnings in one place. General Ledger. A history of your business’s financial transactions in its lifetime. This is useful for completing your payment on account. Trial Balance. The debit and credit balances in your chart of accounts, with errors marked for you to review. Chart of Accounts. A list of all the accounts for categorising your business transactions. Accountant Access. Lets your accountant see all your financial information and access double-entry accounting features with their own log-in. Bank Reconciliation. See anythingContinue reading