In our ‘always on’ society, accounting for small business owners is a battle against their time and energy.
That doesn’t mean it’s not fun – far from it. Why else did you start a retail company if you weren’t excited by a challenge?
But you can only stare at a balance sheet for so long before you realise there must be a more efficient way of doing things.
Keeping financial records is unavoidable, but there are other things you can be doing to ensure your retail business is thriving in the modern market.
Here are our five top tips:
1. Use accounting software
It’s 2023, you should be using accounting software to track your finances, such as QuickBooks, Sage or Xero.
They’ll help you save time, reduce errors, and have more accurate financial data that’s universal across all platforms. And if you’re working with an accountant, they’ll almost always want you to use cloud-based software unless you have a good reason not to.
Making Tax Digital (MTD) is mandatory for some businesses at present, and in the not-too-distant future will become a non-negotiable for all companies.
The best way to prepare for MTD is to use cloud software for your business accounting.
If you’re submitting VAT returns, you’ll be all too familiar with online submissions by now, but not all businesses – although most retail businesses will be – are used to HMRC online.
2. Set up a budget
As a small business owner, you’ll probably be familiar with a budget. But despite this knowledge, you likely don’t have the time to set one up properly.
Creating a budget for your business that includes projected sales, expenses, and profits will help you to plan and manage your finances more effectively.
And if you work with an accountant, they’ll help you create a budget document that gives you a clear and measurable path towards a successful business.
As a retail business owner, this is so valuable, as you’ll be able to account for profits and losses in a way that gives you more flexibility in your decision-making.
When you have more information, you make better decisions.
3. Monitor your inventory
By keeping track of your inventory levels and ensuring you’re not overstocked or understocked, you’ll be running an efficient business.
This will help you manage cashflow, reduce waste, and improve customer satisfaction.
Sometimes you’ll have to make decisions regarding stock – for example, if a certain resource is discounted, and you know you’re going to sell it, it might be worth spending extra to get more at the discounted rate.
One method you could consider implementing is the retail accounting method, something we covered recently in our post, ‘The basics of retail accounting’.
This gives you a quick formula that allows you to estimate inventory costs and can prove as a real time saver if you’re swamped with orders.
4. Stay up-to-date on tax regulations
Why would you start a business just to spend all your money on unnecessary tax bills? To avoid this, you need to understand the tax regulations for your business, including VAT, PAYE, and business rates.
Hiring an accountant will ensure you’re on top of your tax returns and taking advantage of any available breaks.
They can work with you to build a structure for your business’s financial information so that come the year end, you’re ready to go rather than frantically submitting your accounts.
VAT is vitally important in a retail business. If your turnover is below £85,000, you don’t have to register for it.
Submitting VAT returns is a common question we get asked about, so don’t worry if you’re stuck, we can help.
The most important step for any successful small business, retail or otherwise, is to create a proper business plan.
Even if it’s just some scribblings on a piece of paper, planning out your year will set you up for success or at least give you an indication of where you can improve.
Growing businesses need to plan as a matter of priority – you can’t grow properly unless you have actionable steps to help get you there.
Again, by talking to us, we could help you set up an accounting system that works for your business model and give you advice on where you could be improving.
Get in touch
Retail businesses are subject to the same market fluctuations as the rest of the working world.
Sometimes you get lucky, and your product becomes really popular overnight. Or maybe you’ve got a clear plan to increase your sales year-on-year.
Whatever visions you have for your company, we’re happy to talk to you about where we can make things better.
Need support help with accounting for small business, contact us today.