Accounts preparation is essential but often involves a series of challenges that can slow progress, increase errors, and lead to compliance issues. For digital, creative, and media businesses, where operations can be fast-paced and unconventional, common obstacles include handling high transaction volumes, navigating specific industry regulations, and keeping up with deadlines.

In this post, we’ll outline common challenges businesses face in accounts preparation and practical ways to overcome them, ensuring your financial records stay clear, compliant, and ready for action.

1. Managing high transaction volumes

One major challenge for businesses, especially those that are digital-first or deal heavily in e-commerce, is handling a high volume of transactions. With data from various sources—like multiple bank accounts, payment platforms, and subscription services—sorting through and categorising transactions can become overwhelming.

Solution: Streamline your transaction data by integrating accounting software with payment and banking platforms. Many tools today, like Xero, Sage, and QuickBooks, offer robust integrations that automatically pull data from various sources and categorise them. This integration can cut data entry times significantly, reduce the risk of errors, and allow more time to focus on analysis. For instance, according to QuickBooks UK, businesses can save up to 8 hours per month by automating transaction categorisation.

2. Staying compliant with tax requirements

Compliance is non-negotiable, but staying current with the latest tax legislation, particularly around VAT, income tax, and corporation tax, is a significant challenge. For the 2024/25 tax year, VAT registration remains mandatory for businesses with taxable turnover above £85,000, but evolving guidelines, particularly around Making Tax Digital (MTD) compliance, add complexity.

Solution: Use software that supports MTD compliance to ensure you’re prepared for digital record-keeping requirements. HMRC-approved software automates VAT calculations, integrates with HMRC’s systems, and generates audit-ready records, making it easier to comply with regulations.

For added assurance, engage an experienced accountant to review your accounts periodically. This can be especially valuable for fast-growing businesses as your turnover and compliance requirements change.

3. Accurate cashflow management

Cashflow problems remain one of the primary reasons why UK businesses struggle, with the British Business Bank reporting that nearly 30% of small businesses cite cashflow as their most significant financial challenge. For businesses in creative sectors, cashflow can fluctuate due to project-based income or seasonal trends, making management more complex.

Solution: Implement cashflow forecasting within your accounts preparation process. Many accounting tools offer forecasting features, allowing you to predict cashflow issues before they arise. Reviewing forecasts monthly can help you plan for quiet periods, set aside funds for tax bills, and avoid unnecessary borrowing. Also, consider setting up a business savings account to accumulate reserves for quieter months or unexpected expenses.

4. Managing irregular income and expenses

Digital and creative businesses often have irregular income, from project-based work to fluctuating client demands. This lack of consistency makes budgeting and forecasting challenging, which can lead to under or overestimating revenue and expenses.

Solution: Break down income and expenses into predictable and variable categories. For example, retainers and ongoing contracts can be classified as predictable income, while project-based work or ad-hoc services go into a variable category. This method helps you create a more accurate budget that reflects realistic cashflow expectations and allows you to adjust spending based on upcoming projects. Leveraging financial analytics tools in your accounting software can also help spot trends and seasonal fluctuations.

5. Errors in data entry and reconciliation

Data entry errors are among the most common accounting challenges, from misplaced decimal points to skipped transactions. With the pace of digital and media sectors, these errors can quickly multiply, leading to financial discrepancies and delayed reporting.

Solution: Regular reconciliation is crucial to keep your records accurate. Automating parts of this process can significantly reduce the risk of human error. Bank feeds, where transactions automatically pull into accounting software, allow for real-time reconciliation, making it easier to detect discrepancies early. Review all automated entries periodically to ensure accuracy, and consider using a checklist to verify all reconciliation steps.

Additionally, involve your team in routine reconciliation checks, particularly for high-value accounts, as a second set of eyes often catches issues that might be missed initially.

6. Meeting deadlines

Failure to meet deadlines for VAT returns and corporation tax submissions can have costly implications, including penalties and interest charges from HMRC. For busy businesses, these deadlines can add pressure to already stretched schedules.

Solution: Set automated reminders well in advance of all filing deadlines. Many accounting systems allow you to schedule reminders for VAT returns, PAYE payments, and other key dates. Setting deadlines in a project management tool shared with your team can also ensure everyone knows of upcoming obligations.

Additionally, aim to prepare documents for these filings regularly rather than as deadlines approach. Monthly or quarterly reviews of your accounts will make gathering documents easier, reducing stress and ensuring you’re always prepared for tax obligations.

7. Understanding and applying relevant deductions

Claiming all eligible deductions is vital for managing expenses and reducing tax liability. Still, it can be challenging to understand which deductions apply, particularly in creative sectors where expenses may include freelance payments, software subscriptions, and even certain travel costs. Misunderstanding allowable deductions can lead to missed savings or, worse, tax audits.

Solution: Stay informed on tax-deductible expenses for your industry by consulting with a qualified accountant or using HMRC’s guidance on allowable expenses. For instance, subscriptions to industry-specific software, costs of training, and certain professional fees can often be claimed as deductions. HMRC offers an A-Z list of allowable expenses for businesses, which can help to clarify things. Having a tax adviser review your claims periodically can help ensure you’re making the most of your eligible deductions.

Final thoughts

By taking a proactive approach to these common challenges, businesses in the digital, creative, and media sectors can streamline their accounts preparation and reduce stress around tax time. Automating processes, staying informed on compliance changes, and maintaining regular cashflow reviews are just a few ways to ensure accounts remain organised and reliable.

Proper accounts preparation is key to business success — laying the groundwork for informed financial decisions, accurate reporting, and effective planning.

Experiencing challenges with accounts preparation? Then you have come to the right place – contact us today.