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Small business accounting for tradespeople

Understanding your business's finances is fundamental to its growth and continued success. In this post, we'll explain everything you need to know about small business accounting, effective bookkeeping, and how to keep track of your finances in the most efficient way possible.

The best way to help make small business accounting as painless as possible is to stay organised.

Keeping organised records of invoices and receipts throughout the year will make your small company accounting much less of a headache. It’ll also give you a clearer ongoing picture of your business’s finances, which is invaluable for effective cash flow management.

If you’re yet to learn the importance of cash flow management, please make our post: 4 simple tips for cash flow management your next read. It can make or break a business.

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Bookkeeping for small business

Bookkeeping is what underpins your business accounting, so it’s vital to get it right.

  • Bookkeeping is the process of recording and reporting your company’s financial information
  • Accounting is using that information to gain an understanding of how your business is performing, to make informed decisions, and find out how much tax you owe

Bookkeeping services for small business

If you’re looking for professional bookkeeping services for your small business, you can expect to pay around £25 – £35 per hour.

However, you can save money by organising your small business bookkeeping yourself. And you don’t need to be a mathematical wizard or have a degree in economics to do so.

Simply follow our step-by-step guide to bookkeeping for small business, below, and you’ll see how easy it can be.

Step-by-step bookkeeping for small business

1. Record your business income and expenditure

Bookkeeping involves recording the day-to-day finances of your business. That is, money coming in and money going out.

As a minimum, you should collate this information under three types of financial records:

  • Cash books – record in date order when payments were made into and out of your business. Keep your receipts to claim tax back on your business expenses.
  • Sales invoices – record in date order when invoices should be paid. Include unpaid invoices here too.
  • Purchase invoices – record what you’ve bought for the business and how you paid for it.

Tip: open a separate business bank account to make it easier to manage your business’s finances.

2. Be aware of payment deadlines

Late payments can cause havoc with your cash flow, so keep a close eye on outstanding customer invoices and follow up where necessary.

You also need to be aware of when you need to file your tax return and when your tax bills need to be paid to avoid penalties and added interest from HMRC.

What business taxes do I have to pay as a tradesperson?

3. Make time for your finances

Taking the time to produce a monthly report outlining your business’s performance will make sure you have a clear view of things and help to highlight any minor issues before they turn into major problems. For example, identifying unpaid invoices early before they begin to affect your cash flow.

Save time with your business finances

Join Checkatrade to receive finance app, Powered Now, free for 1 year

Start our checks now

How to tackle DIY accounting for a small business

With everything neatly recorded, you then have the foundations to tackle the accounting for your small business.

Providing you have the time and the inclination to do a bit of DIY accounting, a good first step is to familiarise yourself with some of the tax and accountancy jargon you’re likely to come across.

Busting tax and accountancy jargon

Basic accounting for a small business requires you to outline the yearly financial performance of your company under three reports: the balance sheet, income statement, and cash flow statement. This covers:

  • Your sales
  • Your outgoings
  • Your assets (e.g. stock, machinery, and equipment)
  • Monies owed

Read our guide to completing a self-assessment tax return as a sole trader, below, to submit your return without using an accountant.

How to complete self-assessment as a sole trader

What’s the cost of an accountant for a small business?

If you’d prefer to use the services of a professional to prepare your accounts, you may wish to look for accounting services for your small business.

How much does an accountant cost?

Accountant costs will vary depending on the services you need:

  • Basic bookkeeping will set you back between £25 – £35 per hour
  • Tax planning, or more complex work, could cost upwards of £150 per hour
  • A tax return typically costs between £150 – £250. Expect to pay more for a complex return
  • A combined package, to help the day-to-day running of your business, may be charged as a monthly fee, which could range from £60 – £250, depending on the size of your business

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Stay on top of your finances with accounting software

Accounting software makes light work of small company accounting, helping you to create and maintain accurate records throughout the year.

With plenty of user-friendly apps on the market, it’s easy to find one that’ll suit the needs of your business.

Basic features

Most accounting software will have basic features such as the ability to create invoices, prepare quotes, provide estimates, and digitally store purchase orders. Not a bad place to start if your business is in its infancy.

Advanced features

More advanced apps will offer a wider range of features, for example, the ability to view cash flow forecasts, prepare digital certificates, track your team’s scheduling, and submit VAT returns direct to HMRC.

Quickbooks for sole traders is an example of accounting software. As a tradesperson, you’ll be interested to learn there’s a finance app designed specifically for tradespeople called Powered Now.

Free 1-year Powered Now subscription for Checkatrade members*

When you join Checkatrade, not only will your business receive a listing on the #1 trade directory, but you’ll unlock hundreds of pounds worth of exclusive discounts on business essentials too.

One of these member benefits is a free Powered Now subscription for 1 year, worth £180.

With Powered Now, you can:

  • Quote and invoice in seconds
  • Manage your contacts, calendar, and projects
  • Create smart documents with customer response alerts
  • Create job sheets, and log expenses and purchase orders
  • Include handy payment links with invoices and accept card payments with Sumup
  • Protect your business with customer sign-off forms
  • Access anywhere, anytime – from your phone, tablet, or computer

You can also upgrade your Powered Now subscription for even greater functionality.

Save time with your business finances

Join Checkatrade to receive finance app, Powered Now, free for 1 year

Start our checks now


What accounting is needed for a small business?

Basic accounting for a small business requires you to outline the yearly financial performance of your company within three reports, including the balance sheet, income statement, and cash flow statement.

How do I do simple bookkeeping for my small business?

The simplest way to do bookkeeping for your small business is to use accounting software. Powered Now is a specialist finance app that many tradespeople rely on.

Is it worth getting an accountant for my small business?

If you’re unsure how to prepare the accounts for your small business, or simply don’t have the time, it’s worth getting an accountant to help.

Can I do my business accounting myself?

You can do your business accounting yourself if you’re confident you know what you’re doing. Failing to file your tax return to HMRC on time or pay the taxes you owe can result in penalties and fines.

Save time with your business finances

Join Checkatrade to receive finance app, Powered Now, free for 1 year

Start our checks now

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