Working from home has many benefits, but some downsides too: home workers are notoriously poor at staying on top of their books. In this article, we look at the reasons why, and what you can do to keep your own records in order.
Why homeworkers sometimes struggle with bookkeeping:
- When your office is in your house, it’s easy to mix household and business purchases, making it hard to separate out what you can and can’t claim for.
- If you’re not always in a ‘business’ frame of mind, you might not always file receipts promptly, meaning they are often thrown out in the bottom of shopping bags.
- When you’re a sole trader, ever hour counts, so you might fall into the trap of seeing spending time on books as time wasted when you could be doing ‘real client work’.
- Without a boss to report back to, you may not have to submit expenses every week / month, meaning unfiled records pile up until they become unmanageable.
- A lack of a formal bookkeeping system often leads to late invoicing, meaning more time goes into chasing up missed payments and managing stuttering cash flow, using up time you could be sorting records, in an ever more vicious circle.
Some tips to help you keep on top of business books
- Pay for business supplies and personal supplies separately, even if it means having two lots of shopping at the till.
- Keep a separate bank account for your business finances to make it easier to match business purchases against your monthly bank statement.
- Set up two boxes – one marked business receipts and one marked household receipts – and put them by the front door. File your receipts as soon as you get in.
- Start a basic bookkeeping spreadsheet. A simple excel spreadsheet with columns for purchases, sales, etc should suffice.
- Create a purchases folder and a sales folder – keep all your incoming invoices together in one folder, with all your outgoing sales invoices together in another. Transfer due dates straight into your calendar so you don’t forget when to make or chase payments
- Put an hour a week in your calendar to sort through your paperwork, and stick to it! Doing this task weekly will mean it doesn’t build up and become out of control.
If all this sounds just too time consuming, you can always hire in some help in the form of a professional bookkeeper. Many providers will be happy for you to simply send your folders and receipt collections on to them once a month. You’ll then get a trading statement back at regular intervals you so you can see how your business is doing at a glance.