When starting your electrical repair business you must set up a reliable accounts system. Whether it is hand written or a complex computer program you will need to be aware of your business accounts situation and your finances at all times.
Business Expense Receipts
Keep all of your receipts, even small ones for milk and tea. These are classed as legitimate business expenses and you or your accountant will be able to offset them against your business turnover at the end of the financial year in your business accounts.
Customers and Sales
Give each customer an invoice for what you charge them and keep a copy for your accounts system. Each invoice must have a number and all invoices should be filed numerically without a number being missed. If an invoice is spoilt file both copies together to show that you have not charged the customer and mark it as void. If you sell items through your shop or workshop and have a till hand each customer a till receipt for the goods they have bought. At the end of each day total the money taken and print off a copy of that day’s receipts. Both the money and the till receipts should add up to the same figure. If they don’t add up correctly you have made a mistake or given the wrong change. Mistakes will affect your accounts and not give you a true picture of your profit or business turnover.
Business Bank Account
Open a business bank account. Many banks offer free banking services, this will save your business a lot of money but only if you do not go overdrawn. Try to pay your takings into your bank each day. You will not be tempted to spend the money and there is less chance of it being stolen either. The money you bank should equal what you took in receipts. However if some of the money has been spent then make sure you have receipts to cover this. Mark that day’s receipts with the details of what has been spent and this will keep your accounts straight. Business accounts with banks make your company seem more professional and if you have to issue a cheque you will look very professional with your business name on the cheque. Arrange for online banking and check your account finances regularly to see that cheques paid into the account have not bounced and that you have enough money to pay your bills and wages.
Purchasing Goods on Account
You will gradually build up a good credit rating with suppliers and chances are you will be offered a monthly account. This means that when you order goods you do not have to pay for them until the end of each month. The supplier will send you a statement at the end of each month, check this against your invoices and what you have ordered to ensure that there are not any mistakes before paying promptly. Do not get into the habit of making your supplier wait for payment. It is not good business practice and you could end up owing a lot of money.
Keeping a Record of Accounts
Either write down each day’s receipts and invoices into a book or keep a record on your computer. File the paperwork away and at the end of the year your tax returns will be simple to calculate. Some people send their paperwork to a bookkeeper or accountant who will control all of your accounts and also your year-end tax returns. This is ideal for the smaller trader who does not employ office staff or someone who is not confident working on their own accounts.