The decorations are already going up and we are starting to think about the Christmas break. It’s a time for unavoidable spending with Christmas parties, client and staff gifts and you may close for the festivities. As a small business we understand that this may make you worry about your cashflow.
This time of year can be slow for small businesses so here is our top bookkeeping tips to avoid the January blues…….
Keep hold of any receipts
So many of us make the mistake of not keeping our receipts but all those small amounts can soon add up which is why we couldn’t do without the Xero add-on Hubdoc.
Hubdoc automatically processes, categorises and sends your purchase receipts into Xero without you having to do a thing … so when you return from your Christmas break, they are all sat there for easy reconciliation.
Understand your cashflow
A clear view of cash flow helps to inform better business decisions. There are many tools and apps out there to help you put a cashflow forecast together but we would recommend the Xero’s short term cash flow tool. This feature takes all the relevant data from your Xero account and gives you an up-to-date view of your cashflow in one place. It projects your bank balance 30 days into the future, taking into account bills and invoices that you have as outstanding.
The add-on Float is also a great tool for managing your cashflow. It syncs to your Xero account, analysing your real-time financial data, giving you knowledge of how much cash you have now and at any point in the future. It can help you make decisions and allows you to create different scenarios to look at any potential opportunities or risks that could occur.
If you haven’t made the move to online accounting yet, you can still create a simple cashflow forecast via a good old spreadsheet.
Issue any invoices
If you’re on a cloud accounting system such as Xero, scheduling your sales invoices is an easy way to keep the cash flowing while you enjoy that hot chocolate.
The repeating invoice function allows you to invoice your clients on a regular basis without having to lift a finger.
This can be combined with tailored e-mail reminders which automatically prompt clients who haven’t paid but still have that personal touch.
It is the time of year when you want to show appreciation to clients and team members, but you should bear in mind which Christmas expenses are claimable.
If you decide to treat your employees to a meal or a Christmas party, it is tax deductible as long as you do not spend more than £150 per person. This is to include the venue, transportation, accommodation as well as VAT. The budget is an exemption, not an allowance so if the party or meal costs more than this, the event would therefore be taxable.
If you provide a Christmas gift to your clients or team members, its value must be less than £50 or it could be deemed a taxable benefit. You can claim VAT back on these if you are VAT registered.
Christmas decorations count as an allowable expense if they are for an office, shop or anywhere that isn’t your home.
HMRC has a more details explanation which you can read here. https://www.gov.uk/expenses-benefits-social-functions-parties/whats-exempt
We hope these tips are useful and help start the new year on the right foot. If you need any further information, we would be happy to help. You can contact us at firstname.lastname@example.org