Keeping your books in order is an essential part of running a successful business and whilst your accountant can help you get to grips with all the numbers that matter, it helps to know the basics to ensure you don't get any nasty surprises at the end of the tax year. For small enterprises, start-up companies and entrepreneurs, business finance can take a bit of getting used to but with these handy tips you can ensure your bookkeeping skills set you on the path to success...
The first and most important step is to get organised, after all planning makes perfect when it comes to getting your paperwork in order. Ask your accountant for their recommendations for devising a system that is organised and easy for both of you to understand so you can make the balancing of the books a real breeze. They will be able to advise you on the methods that will compliment your business' size and activity levels, as well as devise a system that grows with the company.
Taking bookkeeping week-by-week is also vital, this 'little and often' approach will ensure that you are not left with a headache every payday and the building pile of paperwork, invoices and receipts doesn't get too monstrous. Instead keep it manageable by setting some time aside in your working day to update your books and keep track of expenses each week. Just 30 to 90 minutes could be all you need to review your business outgoings and manage your finances. Use this time to enter that week's invoices as well as planning your expenses for the coming week.
Keep an eye on your cash flow by requesting monthly statements from your bank; however, make sure you keep your personal and professional finances separate so that it is easier to identify discrepancies in spending. If your cash flow tends to fluctuate from week to week, as it does with the majority of small businesses, review your cash flow statement as often as you can.
As well as defining your procedures for organising paperwork and books, you must also ensure that issuing invoices is also kept on top of, which isn't always easy! Make sure you set the precedent for prompt and efficient invoicing so you can keep your cash flow steady and maintain the paperwork you need to keep your company accounts manageable.
Conclusion
Whilst keeping your company finances in order may never be a pleasure, it is an extremely important practice for businesses of all sizes. Use these tips and a little help from an accountancy service to ensure your accounts are managed efficiently.
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