Thursday, 8 December 2011

Accounting: The Idiots Guide To Doing Your Accounts

The title of this post is rather tongue in cheek as I have been doing the yearly accounts this week. Trying to unravel the spaghetti of receipts, notes scribbled on napkins and chewed train tickets into a set of books which balance and can be handed over to my accountant.
Accounts? Just let me check my twitter account first
I'm writing this post as a promise to myself to do better next year and hopefully so all you newly self employed people can learn from my mistakes.

Tip# 1 Don't just say you will spend one day a month doing your accounts-actually do it!
Sure I will do my accounts. Just need to ease into it.
When I first became self employed I was lucky enough to have a few sessions with an amazing business adviser who specialised in helping creatives set up business. One of his many valuable pieces of advice was "spend a few hours every week doing your accounts. Don't let them pile up" I nodded enthusiastically full of good intentions and proceeded instead to throw my receipts in an old suitcase and google nail varnish instead. 

Possibly not the most efficient form of paperwork storage

The end result when I had to do my first set of accounts was stressful to say the least. This year I will stop spending hours reading the paper on-line and listening to Woman's Hour and will instead start being a good girl and input all my financial In's and outs onto a neat spreadsheet-Girl Guides honour.

Tip # 2-Be realistic about what you can put through as an expense
During the tentative early stages of self employment I was given some real gems of help and wisdom and I'm afraid to say also told some real rubbish. One such nugget was "you can basically put anything through your books when you are self employed, even the pillow you rest your head on is tax deductible" so I merrily "invested" in lots of things using my new company credit card. Eye cream "well I'm the face of the business I must look beautiful", shoes "I'm the face the business I must have dainty feet in beautiful twinkly shoes", massages "I'm the face of the business I must radiate relaxed shoulders at all times" 
Its all tax deductible dahlink!
I can still hear my accountants slightly hysterical laughter even now. If its not a real genuine work related expense it can't be put through-so buy those Vivienne Westwood Lady Dragon shoes on your personal plastic sisters.

Tip-3-keep all receipts and paperwork in monthly files
If I had only thought to organise my receipts but I was too busy reading Valley Of the Dolls  in the bath
Now this is something I have actually been doing and although it is still a glorified version of throwing receipts into a shoe box its been very handy this time around when Ive had weird amounts showing up on my bank statements. Aha so the £12.50 to china was for make up spatulas-right you are.

Tip #4-Its all about balance baby
I just don't get it. Is Strictly on yet?
Now as you will have surmised from this post I am a bit of a financial cretin-give me  a milk crate and  a saw and I will make you a Marie Antoinette inspired table, give me a spread sheet with numbers on and I wither like a Victorian lady whose corset is too tight. For years and years even with the help of my lovely patient accountant and with a husband who has an economics degree drawing diagrams framed in toile de jouy I did not "get" how to balance my books. I couldn't understand why it mattered that somewhere along the line I appeared to had "lost" large chunks of money.However finally the penny seems to have dropped.This year I have been able to proudly present my accountant with perfectly balanced excel sheets of wonder which not only mirror my bank statements but have receipts attached for each item.
Make me an egg nog and squeeze my bangers-the book balance
For normal people of average intelligence this may be on a par to boasting about having the ability to walk and talk at the same time but for me it is quite something.I hope my post has either made you realise you are actually a financial whizz kid compared to my idiotic attempts or that you are not alone in wanting to kick the TV in whenever the "tax doesn't have to be taxing" advert comes on TV.

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