If you are starting a new business you do not need to spend money on accounting software. The majority of new businesses will have few expenses and sales at the start. In this article we’d like to cover what you need to record for your accountant and the tools you can use to do it.
Get a system in place from the beginning
It’s really important you have a good system in place for capturing all inflows and outflows of money. You do not want to be in a position at year end when your accounts are due and you are going through invoices and bank statements trying to pull it all together for your accountant.
It’s important each month you capture what money you spent and what revenue has come in. One of the best things you can do is have a separate bank account for your business. We’ve written an article on Revolut if you’d like more information on what they offer. We will cover other banks shortly.
Know what you can expense and what you can’t
In general you can expense any cost which has arisen as a result of engaging in business. However, for tax purposes there are some exceptions. For example, in Ireland you cannot expense client entertainment.
Also in Ireland you can expense a portion of your rent if you’re working from home. The amount you aportion must be reasonable. Any assets you buy are expensed over 8 years so each year you expense 12.5% of the cost as depreciation.
Please speak with your accountant and read articles online. It’s very important to expense everything permitted by local tax legislation to keep your tax liability to a minimum.
Free expenses tracking tool – Google sheets
If you are a micro business you can use Google sheets which is completely free. We’ve created a very basic file using Google sheets. But it can be developed much further to better track your sales and expenses.
It’s really important you have some way of tracking how your money is being spent. It means your accountant will spend less time going through all of your documents which will result in lower fees for you.