Starting your own business is exciting, but let’s be honest… it can also be a bit overwhelming. One of the first things you’ll need to tackle as a new sole trader is your bookkeeping. But don’t worry, we’re here to make it as simple as cracking open a coconut.
1. Understand what bookkeeping actually is
Bookkeeping is basically keeping track of the money going in and out of your business. Think of it like keeping a diary for your finances. You want to know:
- How much money you’ve earned
- How much you’ve spent
- How much tax you might owe
Having your books in order will make tax time way less stressful and yes, it’s something you can totally handle yourself.
2. Set up a business bank account
First things first, separate your business money from your personal money. It’s like putting your coconuts in a separate basket, easier to count and less messy.
A business account makes it easier to track income, expenses and VAT (if you need to register). With !Coconut, you can even link your transactions and have your bookkeeping updated automatically so that’s less paper, more time to focus on what you do best.
3. Keep track of everything
Every receipt, invoice and bank statement matters. Whether it’s coffee for meetings, software subscriptions or office supplies, log it.
Tip: Snap a photo of receipts on the go. !Coconut lets you attach these to transactions, so everything is stored in one handy spot.
4. Decide how you’ll record your transactions
There are a few ways to keep your books:
- Spreadsheet: Simple, cheap, but takes time. Note that spreadsheets may not be Making Tax Digital (MTD) compliant in the coming years, as HMRC moves towards fully digital record keeping.
- Accounting software: Automated, keeps you organised and helps you see the big picture.
!Coconut is built for sole traders, so it’s like having a friendly accountant in your pocket - tracking your income, expenses and even calculating how much tax you should put aside.
5. Stay on top of tax
As a sole trader, you’ll need to file a Self Assessment tax return every year. Keeping your books updated means you won’t be scrambling at the last minute.
Tip: !Coconut automatically calculates what you owe, so you’re never caught off guard. Think of it as your trusty !Coconut guide helping you navigate tax season.
6. Make it a habit
Bookkeeping isn’t a one-time thing. Spend a little time each week reviewing your transactions, categorising expenses and checking your cash flow. Regular maintenance means less stress and more time to focus on growing your business.
Wrapping up
Setting up your books as a sole trader doesn’t have to be scary. Keep your finances organised from the start, use tools like !Coconut to save time and you’ll have everything under control… without the headache.
Remember, even if your business starts small, keeping your books in shape now helps you build a good habit early and makes life a lot easier down the line. With !Coconut, you can focus on what you love while we handle the numbers.
Ready to make your business finances a breeze with !Coconut’s self employed accounting software? Sign up now and try it for free.
