Top Accounting Tips for a Locum Pharmacist
This Guest Blog is written by Jema Daya (marketing manager) and Kupesh Patel from Elsby and Co, Accountants and Tax Advisors.
If you are a locum or pharmacy owner these great tips will definitely help you become more compliant in the eyes of HMRC and improve tax efficiencies.
If you’ve done your research, you’ll have read or heard about keeping ‘good business records’. If you haven’t done your research, let me tell you it’s nothing to do with having a credible music collection.
Maintaining good business records is crucial for you as a business owner, as not only is it a legal requirement (HMRC require that you keep ‘adequate’ business records for 6 years) but also allows you, or your accountant, to produce accurate financial reports.
Having accurate financial reports lets you:
• Know how much profit you have made
• Whether you’re hitting your targets
• How much money you can pay yourself legally from your business
• How much tax you will owe and so on.
So, you can see how important it is that you get into the habit of, or continue, keeping ‘good business records’.Having been an accountant for over 17 years, I have seen my fair share of accounting records.
Most are good, where every piece of paper is filed away properly and records kept electronically. Some are bad, where paperwork is shoved into a carrier bag or box and then delivered to me to make some sort of sense of!
You will probably guess what I prefer. Here are my tips on keeping good business records for pharmacist and locum pharmacist accounts:
1) Keep ALL of your invoices (sales and expenses) and ideally file away in date order;
2) If you pay for business expenses personally (cash, personal bank/credit card), then you’ll need to keep these also;
3) Keep all bank/credit card statements; a. All of the above are crucial if you are VAT registered; b) The above can also be kept in electronic formats, such as PDF or JPEG etc;
4) Think about maintaining electronic records, such as Excel spreadsheets or accounting packages like XERO;
4a. You will be surprised how useful this becomes, as you will be able to tell quickly how much profit you have made to date, what your potential tax liability is, how much you can withdraw from the business etc
5) If you’re not IT literate, think about keeping a manually written ‘cashbook’, which logs sales, money owed by customers, business expenses/payments etc.
6) Think about outsourcing the bookkeeping to your accountant or a bookkeeper, as this will leave you with the time to do what is more important, such as growing your business;
7) Use apps that allow you to take photos of your receipts and upload them to cloud-based bookkeeping systems (XERO allows this function);
8) Try to separate your business finances from your personal finances, for example, only use your business bank accounts to receive money from customers and to pay for business expenses. It is easy to use the business bank account as a personal account but it can lead to problems down the line;
9) Regularly check your business bank statements, it’ll give you an idea of your cash flow requirements and also spot erroneous errors;
10) And finally, keep a record of any other income you receive outside of your business as this will have an impact on your self-assessment tax return.