If you’ve just started out in the property business, then you might not be thinking about hiring an accountant, choosing instead to save money and do your own books. If that’s the case then, be warned, as it can prove a time-consuming endeavour – unless that is, you follow some of these tips designed to save you some time (and money):
Tips to save time doing your accounting:
Update your accounting books.
Do this on a very regular basis (at least every month). Otherwise, not only will you panic when it comes to tax time, but you’ll be completely unmotivated to catch up on 12-months’ worth of outgoing and incomings, as well as having lost half your expense receipts (if you haven’t already been filing them neatly away in a folder).
Consider using software.
The beauty of using an online accounts programme means you can input all your necessary data so it doesn’t really matter if you mislay a paper copy of an invoice (because you’ll already have taken a photo of it and uploaded into the system). Just think, no more little paper receipts to find…
Use separate accounts.
If you have a number of rental properties (more than two) then keep the income and expenses for each in a separate account. Otherwise it can be too easy to mix them up. The same applies for your own personal account – don’t mix it up with business expenses. It’ll be so much easier come tax reporting time if you separate your business and personal accounts.
Go on a workshop.
Yes, this may seem counterproductive as you’re spending more time attending a half or full day workshop. But, the benefits can be huge and will more than likely save you lots of time in the long run. HMRC itself runs workshops to explain how to fill out self-assessment forms, how VAT could affect your business and how to run a payroll.
Get an accountant.
Yes, you may have to pay for his or her services, but it won’t be that much and anyway, an accountant is a tax-deductible expense! Getting someone else to do the books also means that you’ll have more time to do what you do best i.e. getting out there to source or renovate properties.
Use direct debits and standing orders.
One way to really save time with your business is to use a means of electronic transfer to collect the rent. Not only does this mean you will receive the money directly into your bank account on an appointed day (so you will know when to expect it and can plan accordingly), but the same amount of money will occur regularly every month. That means you can save time on having to write out and send a new invoice every 30 days or so.
Another plus of electronic transfer is that you don’t have to physically go round and collect the rent in person (think how long that would take). And, of course, you have a record of what you’ve received in your bank statement, which will help back up your accounting records should you ever be subject to a HMRC inspection.