When you are just starting your business, it is useful to set up your administration right away, but even if you have been in business for a long time, it is good to check whether you are keeping your administration up to date. Here are 8 more tips for starting your business.
Good administration is vital for your company. I mean this literally; without administration you do not know what your profit is and how much tax you have to pay. If the tax authorities then come to check later, you could get into trouble. Fortunately, it is not that bad how much you have to do, as long as you keep up with it regularly.
You must keep the administration for seven years. Not only your purchase and sales invoices and bank statements, but also your agenda, your notes, your contracts, correspondence and software/data files.
First of all, it is important to take a business bank account. This is not legally required but looks more professional than a private bank account.
An additional advantage is that you can create a bank link with an accounting package so that you do not have to log in to the banking environment every time and download transactions.
Do it yourself or outsource
Think carefully about whether you are going to do the administration yourself or whether you are going to outsource it. Many starting entrepreneurs do not want to spend money on things they can do themselves. I am guilty of that myself. Now, after 2 years of being annoyed by my self-made site, I outsourced the graphic part this year. I am now very proud of my website.
If you decide to outsource your administration, you can earn a lot of money, because you can never know all the rules and keep up with all the changes in the law. For example, I read a composite email every day with all the new legislation and rulings of legal cases of that day. This way I can also give you tips and inform you if something changes.
If you want to do it yourself, but would like some support, I now have a service where I check the administration for you every month in your own accounting program.
If you are going to do the administration yourself, buy a basic administration book such as Administration for Dummies or take a course. This way you will learn the basics of administration and bookkeeping.
You can google a lot, but I wouldn’t do this. A lot of information is outdated or simply wrong. For example, if you search for ‘food and drinks deductible’, you will see that everything from before 2016 assumes a deduction percentage of 73.5%, while it is now 80%.
Setting up administration
Buy/make the following items:
- a folder to archive your administration
- tabs so you can keep the different diaries separate.
- a number of postal boxes where you keep your receipts/tax letters that you still have to do something with so that they have a fixed place at your workplace.
- a folder structure on your computer to store all digital stuff
- a time registration program (or template in Excel)
- a mileage registration program (or template in Excel)
- Find an accounting program that suits you (not Excel, where errors can easily creep in that you often only notice later).
The diaries
An administration consists of the following journals:
- The sales book
- The purchasing book
- The bank book
- The cash book
- The memorial
In addition, you must of course submit your VAT returns and your income tax return after the end of the year.
The sales book
You enter all your sales invoices in your sales ledger.
You can read what a sales invoice must comply with in this article.
The purchasing book
This is where you put all the invoices that come in, that you have to pay. I often see that starting entrepreneurs only put the costs in the bookkeeping when they have paid. This “cash system” is only allowed if you have one of the following professions:
- retailers (including online stores)
- market traders
- shoemakers (for repairing shoes)
- hairdressers
- window cleaners
- laundries
- bicycle repairmen
- beauty care companies
- wallpaper hangers
- upholsterers
- catering companies
- driving schools
- lawyers who practice alone
- entrepreneurs who supply goods or services for more than 90% of their turnover from an establishment intended for the supply of goods and services to private individuals
- or if you do not belong to one of the above professions, but you have sold goods or services to private individuals for at least 80% of the time for more than 1 calendar year (then submit a request to your tax office to be allowed to do so).
All other companies must use the “invoice how to build telemarketing data system”: as soon as you send or receive an invoice, you book the invoice on the invoice date. So even if you pay an invoice in quarter 2, if you received it in quarter 1, the VAT is included in the VAT return for quarter 1.
The bank book
In the bank book you enter all bank statements and debit card receipts. Without the debit card receipts you cannot deduct VAT because you have no proof that VAT has been charged. You have a bank book for each bank account, so also for your savings accounts. If you have a mixed private account from which business payments are also made and business income is received, then you do not need a bank book but a “journal book”. Here you only enter the payments that are related to the business.
The cash book
A cash book is mandatory as soon as you chinwa tankou alipay receive cash and often pay business cash. So if you make a cash payment every now and then, you can book this in the journal book: Put the costs on the business, the counter-booking is “private withdrawals and deposits”. You will then need the receipt of the cash transaction in any case.
If you have to keep a cash book, do so in the following way:
Keep all receipts by date in the physical folder under the tab “Cash”. Give each receipt a consecutive number, the newest always at the top.
Create a template in Excel to keep track of all transactions. This template contains the following:
- an opening balance (this is the closing balance of the previous month)
- a closing balance that must match the physical contents of your cash.
- a count of everything in your physical cash register (per coin and banknote separately)
- For each row, fill in the following:
- voucher number
- date
- description of what it is plus store name
- possibly a comment
- whether it is a receipt or an expense
- how much the amount is, VAT specified separately
- the balance after this booking
- which general ledger account this should be posted to.
Later you enter this entire cash book into your accounting program.
The memorial book
This is a journal where all “other financial changes” are entered. You can enter the following changes here:
- your mileage allowance for your private car
- anything you accidentally paid for via private
- the depreciation of, for example, your inventory
- the year-end closing entries (for example, the VAT closing entry if your accounting program does not do this automatically).
Costs of booking
The most difficult thing about an administration is: what can you declare as expenses? The tax authorities say the following about this : Only the costs that you incur for the business interests of your company are deductible: the business costs. Business costs are therefore the costs that are necessary within reasonable limits for the exercise of your company and the costs that directly relate to your company.”
So as long as you have a justification you can reasonably deduct a lot as costs for your business. There are exceptions, below the most common:
Office furnishings
The furnishings, furniture, of your home adb directory office without its own front door or sanitary facilities are not deductible from your business. The tax authorities see this as personal furnishings. However, you can deduct your PC, printer and office supplies.
Workwear
You can only deduct clothing for your work from your turnover if there is either a 70cm2 logo on the outside of the garment or it cannot be used privately (such as a painter’s overall) or you leave it behind at work (which is often not possible because as an entrepreneur you are often all over the place).
Representation expenses
This includes food and drinks that you consume on the road and promotional gifts. You may not deduct VAT from food and drinks that you consume on the road and may only put 80% of the total costs on the business. How you book promotional gifts is different every time.
Two examples:
If you want to give something to someone who is not (yet) a customer or supplier of yours, then this is not a business gift but other sales costs. You may deduct 100% of the costs and you may also reclaim the VAT from the tax authorities. If you buy flowers for an existing relationship, you may not deduct the VAT and you may only deduct 80% of the costs from your turnover.
Depreciation
All physical items you buy (including your website) that are over 450 euros excluding VAT, must be depreciated over 5 years (except in your first start-up year, when you can choose to expense the entire amount at once). You can, however, include the VAT in the VAT return in the year of purchase.
You come up with a reasonable “residual value” for the product, you put the remaining costs on the balance sheet. At the end of each year you put 1/5 of that product on expense and you take that 1/5 off the balance sheet. The residual value remains until you have thrown away or sold the product.
Karen van Staalduine is an accountant from her company KVS Administraties. Do you need help setting up your administration or do you want to outsource the entire bookkeeping?
