Finances - bookkeeping and forecasting
Bookkeeping
In order to maximise your profit for your holiday home, you will need to keep a record of all your expenses and income so that you can put all your allowable expenses against tax.
This is best done using a spreadsheet, which will be useful when you come to completing a tax return, or can be passed to your accountant. To help you, we have prepared a simple bookkeeping spreadsheet to get you started.
Bookkeeping spreadsheet for 2009-2010
This simple bookkeeping sheet, which you are free to use and edit, has sheets for recording income, expenditure, capital costs, phone and office costs. It comes with sample data and a notes sheet.
If you are just starting up and are looking for help estimating income and expenditure, then visit the 'Finances' page of our 'Startup Up' section.
Financial forecasting
As well as keeping a record of income and expenditure you will probably also want to know what this means in terms of profit, and what your tax liability will be at the end of the financial year.
In addition, although your holiday property will make a profit over the year, you will want to know how this affects your cashflow, i.e. you will want to know how much money you will have in the bank at any time.
For example, if you started your business during the quiet months you will still have overheads such as a mortgage and heating costs, so you will want to know how this will affect your bank balance. A cashflow sheet will help you do this.
Because of the vast differences in personal finances, financial forecasting spreadsheets or other forecasting tools are outside the scope of this website. However, there are organisations around to help with this kind of financial planning and forecasting, and also to provide other practical business advice and help.
The most obvious one is HMRC. We would also recommend Business Link and the Scottish equivalent Business Gateway. The latter two organisation are designed to assist new businesses and may also put you in contact with a local business advisor to help you.
Financial planning software is also available from BusinessByNumbers to assist you in your tax, cashflow and profit and loss calculations.
