Why is Bookkeeping Important for Fashion Businesses?

Bookkeeping isn’t just about compliance; it helps you:

Step 1: Choose the Right Accounting Software

Modern bookkeeping doesn’t mean piles of paper receipts. Cloud-based accounting software can help you automate tasks, track inventory, and manage sales seamlessly. Popular options include:

Step 2: Set Up a Business Account

Separating your personal and business finances is crucial. A dedicated business bank account:

Step 3: Track Your Income & Sales

Step 4: Record Business Expenses Properly

Fashion businesses have a variety of expenses, including:

Keep all receipts and invoices, ideally in a digital format, using accounting software or apps like Hubdoc to scan and organise them.

Step 5: Stay on Top of VAT & Tax Obligations

If your fashion business exceeds £90,000 in annual revenue (as of 2024), you must register for VAT. Common VAT schemes for fashion businesses include:

Filing VAT returns on time is crucial to avoid penalties. If unsure, seek advice from a chartered accountant.

Step 6: Monitor Inventory & Cost of Goods Sold(COGS)

Fashion businesses must track inventory carefully to manage cash flow and profitability. Calculate your Cost of Goods Sold (COGS) using:

Step 7: Reconcile Bank Statements Monthly

Check your business bank transactions against your bookkeeping records at least once a month. This ensures:


Step 8: Prepare for Tax Season

Stay organised throughout the year to make tax filing easier. Key tax deadlines for UK fashion businesses include:

Missing deadlines can result in fines, so set reminders or work with an accountant to stay compliant.

Bonus Tip: Work with a Chartered Accountant

While bookkeeping can be managed in-house, an accountant can:

At Pennyhills, we support fashion entrepreneurs with expert bookkeeping, tax planning, and business advisory services.

Need Help Managing Your Fashion Brand’s Finances?

Reach out to our team on WhatsApp today for a complimentary consultation. Let’s discuss how we can enhance your bookkeeping processes and support the growth of your brand.