Starting Basic Accounts Bookkeeping At Home Saves Assessment Tax

The financial benefits of preparing basic accounts bookkeeping records and producing the self assessment tax return can be overlooked. Starting bookkeeping at home is an option for anyone self employed and is important as the self assessment tax paid each year is typically the highest financial outgoing. Bookkeeping home accounts is worth the effort and does not require a high level of technical accounting or tax knowledge.

Sole Trader Basic Accounts Bookkeeping

Sole trader basic accounts require the simplest form of bookkeeping. Sole trader basic accounts bookkeeping require little more than retaining supporting documents of sales income and expenses and creating two lists of financial transactions. Producing the basic accounts in the format of an income and expenditure statement is sufficient to complete the self assessment tax forms.

An income and expenditure statement is the total sales made during the financial year with the expenses listed by type of expense and deducted to leave the balance as the net taxable profit or loss.

Starting Bookkeeping Home Accounts

The first stage in starting bookkeeping is to collect together all documentary records of receipts or sales received. Review the documents and if incomplete use other sources of third party evidence such as bank statements and deposits t achieve an accurate total.

Stage two to producing the home accounts is a similar process of collecting together the supporting evidence of purchases made and expenses incurred. Again if incomplete examine other potential sources of evidence such as bank and credit card accounts.

Bookkeeping home accounts is just that, keeping books at home which is the home accounts. Bookkeeping is a function that many self employed business people can benefit from financially.

Basic Accounts Bookkeeping Can Save Accountant Fees

A significant proportion of a bookkeepers fee or the accountant fees for small business is the sorting of receipts and listing them in order, in effect doing the basic accounts bookkeeping. Accountant fees are better spent on financial advice and tax matters than producing the basic accounts themselves.

The basic bookkeeping task of sorting the sales and purchases documents can produce real savings in the accountant fees. Most accountancy firms would actually prefer to receive their client records in a basic accounts presentation to enable the accountant provides a higher level of accountancy services.

Save Self Assessment Tax by Understanding Basic Accounts

When a sole trader adopts a positive attitude in preparing the bookkeeping basic accounts other benefits accrue. Preparing the basic accounts increases the perception of profitability and may encourage the small business owner to prepare the bookkeeping more often. By paying attention to business profitability financial problems may be noticed sooner and low profits will stimulate the competitive nature of sole traders and self employed businesses to improve the financial performance.

The self assessment tax liability for self employed people is a major annual issue. Understanding the basic accounts will pose tax questions in regard to capital allowances which need to be claimed in the self assessment tax return. The increase in tax knowledge should maximise tax allowance claims thereby reducing the self assessment tax liability.