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With the end of the HMRC 2024-2025 financial year now over, look forward to the rest of the year by staying on top of your books – not simply to maintain compliance but also to give your business a strong financial foundation for the coming year. If you are already using a good accounting system, like Xero, you are already on the right track, but even with good accounting software, a system is only as good as how well it is maintained.

In this article, we’ll look at four practical tips to keep your business books in excellent shape as we move into the 2025-2026 financial year.

1. Reconcile Your Bank Accounts Regularly

Time strapped SME owners may be forgiven for only syncing their bank account with Xero when their quarterly VAT return is due. However, this undermines the value of accountancy software as a tool for day-to-day cash flow management and forward planning. So, one of the most important habits you can adopt this year is to reconcile your bank accounts more frequently. This helps to ensure that your accounting software reflects your current cash position, and gives you a clearer understanding of what is available for investment and outgoings. Set a regular schedule to reconcile transactions – whether this is daily, weekly, or month-end. Taking a proactive approach will help you catch discrepancies early, address unaccounted-for transactions, and usually save time when it comes to your end of year accounts.

2. Review and Chase Customer Balances

Outstanding customer invoices can quickly put pressure on your cash flow, even if they are only a few days late. Make it a priority, therefore, to review the money owed by your customers regularly. Most accounting platforms now have reports you can run to immediately see overdue invoices, and these will be accurate as long as you keep your bank transactions up-to-date. It’s important not to wait too long to chase overdue funds. A polite but firm reminder is often enough to prompt payment – it won’t be seen as rude. Often, a platform lets you set up an automated email reminder to save time, and a consistent approach to following up will help ensure that late paying customers don’t become a recurrent issue.

3. Pay Your Taxes On Time

Missing your payment deadlines for PAYE and VAT can lead to unpleasant letters and penalties from HMRC, taking unnecessary money out of your budget. A good accounting software platform can help you simplify tax management – set up alerts or calendar reminders for your upcoming deadlines and use the platform’s automated VAT return capabilities to save time when available. Working with an accountant can also help you stay on top of your tax commitments and save you stress and money long term. And remember, if you pay VAT by direct debit, it comes out automatically on the 10th of the month after you filed your return (not the 7th, which is the deadline for manual payments). This is easy to lose track of, so it’s worth setting up a transfer from savings into your current account as soon you file your return, so that the payment doesn’t bounce.

4. Run Your Payroll on Time

Payroll is another area where many SMEs fall foul of HMRC, and in which delays and mistakes can cause significant problems. Whether or not you handle payroll in-house or outsource it, doublecheck that your payroll processes align with your filing and reporting requirements. Most accounting platforms now integrate payroll functionality, which simplifies compliance. Late and inaccurate submissions are a sure way of upsetting your employees and can lead to fines, so it’s worth investing the time to get it right.

Find Out More

Start the new 2025-2026 financial year on strong foundations with outsourced accounting services from Vanilla Accounting. Make an enquiry by clicking here, or to find out more, please download a copy of our free Cloud Accounting Guide for small businesses.