Basic business accounting
Every business, no matter how large or how small, needs to keep accounts and review them at regular periods in order for them to known how much profit or loss they have made. They will also be able to use these figures to help predict the future of their business and if any financial problems are looming. This is why every figure should be recorded and accounted for, down to the last penny. Here are a few tips for you to set up some basic business accounting.
Choose a basic business accounting system
Be consistent with your accounting system. Choose one system and stick with it. If you run a number of different accounting systems, things are in danger of getting missed and lost. It does not matter whether you use a manual system or automated software, just keep everything in one place.
Keep records up to date
It is all too easy to leave sorting out your records and accounts until a later date but the longer you leave it, the more difficult and cumbersome it will be. Keep track on a daily basis if possible of everything you have spent and earned in that day. As an absolute minimum, book out time each month to collate your figures. The longer time period you leave, the more difficult to remember what those odd expenditures relate to. Have a system for keeping your receipts and invoices in order until you come to the time of recording them.
Balance the books
Each month, print off your bank statements and double check the money in and out against your accounting records. This is where you will be able to identify if you have properly accounted for everything coming into and going out of the business. Again, don’t leave it longer than a month to check or it is all too easy to forget what has happened where there may be an error.
Have a backup in place
You may swear by a manual paper system but think what would happen in the worst case scenario and your office suffered from a fire. Also, paper is easy to lose. Log all your paper entries on to a computer database and ensure you carry out a regular backup. Alternatively, you may wish to use one of the many cloud based accountancy software packages which will prepare accountancy reports for you and have inbuilt backup in case of disaster.
By getting a basic business accounting system in place from the start will save you time and effort when it comes to your end and the preparation of your financial accounts. And your accountant will thank you for it too.