Bookkeeping is very easy if you want it to be – especially if you are a self-employed sole trader. But many people seem to think that it’s a tedious task that takes too much time! I hear of small business owners who collect receipts of their expenses all year, and come tax return time, hand over a box full of them to their bookkeeper to sort out.
I think that’s complete madness. What a waste of time for the bookkeeper to go through all those hundreds of receipts, try and match every expense to the correct shoot and date after so much time has passed. I bet it takes a lot of research and frustration to get it all sorted, and of course quite a bit of money for the self-employed business owner to pay for the bookkeeping – whether they outsource it to someone else or do it themselves. Either way, it is a big, stressful task at the end of the tax year.
It doesn’t have to be that way.
Bookkeeping for small business is easy!
The sensible way to do it is to record every expense as you go. That way it’s fresh in your memory and – unlike the ‘once a year method’ – there is no need to waste time going through records, calendars and photo shoot booking systems after the fact, to match expenses to each job.
Here’s how to make bookkeeping easy peasy:
- When you buy something for your business online, enter the expense in FreeAgent immediately after. Archive (don’t delete) the email that has the receipt so that you have that record in your email system should you ever need to look it up. (Apply a ‘Business Expenses’ label/tag to the email so that you have all expenses in one place)
- When you buy something for your business off-line, take photo of the receipt and enter the expense with the photo attached to FreeAgent. If you can’t do it immediately after buying, make a note in your diary to do it as soon as you can.
- If you prefer to scan all your receipts, have a system in place so that you remember to process the expense as soon as you get home/office. Throw away the receipt after you have scanned and entered into FreeAgent. Save a copy of the scanned receipt on your computer/cloud, just in case.
To make sure that I never forget to claim, I have added a task called ‘Enter All Expenses into FreeAgent’ as part of my workflow for every photo shoot in Light Blue. That way I can be double sure that I have processed all expenses before I close off a photography job in my booking system.
Examples of photographer’s expenses:
- Lunch, if you have an all day location shoot
- Travel expenses (public transport, own car mileage, etc)
- Accommodation and meals for overnight location shoot
- Any camera & computer gear (software & hardware) that is used solely for business
- Professional insurances
- Use of home as office (check how to calculate the percentage you can claim)
- Any products that you sell or provide to your clients (USB sticks, framed prints, etc)
- Business related subscriptions
- Subcontractor costs (eg. when you hire a second shooter)
- Advertising and promotion
- Website hosting, broadband, etc)
You also need to enter the expenses into the correct categories so that you get the correct tax relief for them. Check with your accountant if you are not sure. FreeAgent is brilliant in this aspect, as well: it is connected to HRMC website and if you are a self-employed sole trader, you can submit your Self Assessment directly from your accounting software! As long as you have entered every expense in the right category, FreeAgent will calculate the correct asset depreciation etc and fill in 90% of the Self Assessment for you. I love it.
Bookkeeping can be fun!
I used to think of bookkeeping as a boring task that no one wants to do, but then I had a brainwave and decided to change how I think about it. Now I think of it as getting a bit of extra money (in way of paying less tax) with every expense I enter into FreeAgent. That way I don’t mind at all doing this extra little task every time I spend something in my business. Quite the opposite: I can’t wait to do it!
As with anything in life and business, make things easy for you. Nothing needs to be more complicated and difficult than it is. Always strive to find the most efficient and fun way to do the things that you need to do.
More about business finances: Do you know what is your break-even point?