If you are self-employed or running a small business, you know that proper bookkeeping is essential for the smooth functioning and success of your business. It can be a time-consuming and daunting task, and without proper financial and office management, you can expect stress and problems in the long run.
While everyone has their own way of keeping track of their financial records, seeking professional help is a wise decision to ensure accuracy and avoid mistakes.
Professional accountants can offer a variety of services to help with your bookkeeping needs. They can provide simple but effective advice on how to manage your finances and offer more in-depth services such as preparing financial statements, managing payroll, and filing taxes. Hiring an accountant can also help streamline the process of organising the piles of paper that come with running a business.
Despite the importance of proper bookkeeping, many individuals still do not take the necessary steps to ensure their records are accurate and up-to-date. It is important to not take for granted the basic advice given by professionals and to seek help when needed to avoid any potential issues. By taking the time to manage your finances properly, you can avoid the stress and difficulties that can arise when bookkeeping is neglected.
Let’s start with a few “do’s”
As a small business owner or a self-employed individual, there are several important things that you need to keep in mind to ensure the smooth running of your business. One of the most critical aspects of running a business is proper bookkeeping. Here are a few “do’s” that you should follow to manage your financial records efficiently.
- Firstly, digitising everything is essential in this digital age. Keeping track of piles of paper can be a tedious and time-consuming process. By digitising all your records and storing them in the cloud, you can ensure that they are easily accessible, and you reduce the risk of losing important information.
- Secondly, setting aside the correct percentage of money for taxes is crucial. Failing to do so can lead to a lot of complications and fines. To avoid this, you should make sure to calculate the tax percentage for every transaction and set it aside accordingly.
- Thirdly, keeping track of your invoices is essential to ensure that you receive payments for the goods or services you provide. If you find that an invoice has not been paid, take immediate action to follow up with the client or customer.
- Fourthly, updating your records regularly is essential to avoid errors and discrepancies in your financial statements. You should update your records at least once a day to ensure that you have an accurate and up-to-date picture of your financial situation.
- Finally, reconciling your accounts every month is vital to ensure that your financial statements are accurate. This process involves comparing your bank statements with your financial records and identifying any discrepancies or errors that need to be addressed.
Now let’s look at a few “don’ts”
While there are several things we can do to smoothen our business, you need to be aware of the common mistakes that can be detrimental to your business as well. Here are a few “don’ts” to keep in mind when managing your financial records.
- Firstly, mixing personal money with business money is a common mistake that should be avoided. It can be challenging to differentiate between personal and business expenses if you mix the two, and it can lead to inaccurate financial records.
- Secondly, keeping all your records in a single place is not advisable. In case of a fire, theft, or any other unfortunate incident, you could lose all your records. Therefore, it is essential to have a backup of your records in a secure location to ensure their safety.
- Thirdly, leaving receipts in a big box is not recommended as it can be time-consuming to sort them out later. To avoid this, it is advisable to file your receipts and other financial records as soon as possible.
- Fourthly, never assume that major expenses are manageable without proper planning. It is essential to plan ahead and ensure that you have sufficient funds to cover major expenses. This will help you avoid any potential financial difficulties that may arise.
- Finally, ensuring that you have a logical audit trail is vital for proper bookkeeping. This means that you should have a systematic way of tracking your financial records to ensure that they are accurate and up-to-date. This will help you avoid any errors or discrepancies in your financial statements.
We all know how challenging it can be to manage all aspects of our business, including bookkeeping. Seeking the help of a business accountant can be a valuable investment for the business. They can provide you with detailed advice and assistance with various aspects of your finances, from daily advice to end-of-year accounts. Although this advice may come at a cost, the benefits it can bring to our business are invaluable.
By hiring an accountant, you can remove the stress of bookkeeping and streamline your finances, freeing up time to invest in developing your business. A professional and knowledgeable accountant will know the industry inside out and provide insights on how to reduce tax bills and find tax reductions and exceptions to utilise. This can save you money, and with any business, but especially small ones, every cent counts.
Investing in a reliable business accounting service can help you maintain accurate and up-to-date financial records, ensure timely payment of taxes, and help you make informed business decisions. Additionally, it can help you identify potential financial risks and opportunities for growth, allowing you to plan for the future of your business.
There is no downside to exploring the benefits of hiring an accountant for your business. Even if you decide that their services are not right for your business at the moment, you will have increased awareness of their services. By seeking out the advice of a business accountant, you can benefit from their expertise and knowledge, which will enable you to focus on growing your business.