Some Tried and Tested Tips for Proper Business Accounting

Some Tried and Tested Tips for Proper Business Accounting

Having a small business of your own is definitely exciting. But for a manager, the day-to-day operations of running a business are sometimes overwhelming and it’s easy to lose track of the bigger picture. There’s always something that needs your immediate attention, there’s always one person who needs to be supervised, there’s always that unexpected expense or that unforeseen change of plans. Here, then, are some helpful hints to ensure you keep your mind focused on what’s really important – the bottom line. These tips can help people to manage their accounting more easily. However, if you still find that you’re struggling with your accounting, it might be better to consider using an accountancy firm to sort this for you. You could always look at this one here, for example.

  1. Keep records of expenses and income, no matter how small

Keep records of everything – it’s incredibly important. No matter how small, it’s essential to keep records, because little expenses left and right can add up to a large chunk of loss at the end of the month. Record-keeping is crucial because only then 1can you truly appreciate the flow of money at the end of the month, quarter, or year. A manager or business owner should be able to plan and execute, and only with meticulously-crafted financial statements and reports can you do that. A business owner or manager could look to use various software packages and systems similar to Chaser, Credit Control Automation for Xero, QBO and Sage that can help them automate and improve the billing of outstanding payments to avoid financial losses. This can also help refine their monthly, quarterly, and annual reports as well.

  1. Mind the legal aspects

It’s tempting to have your own way of doing your accounting – for instance, you can simply store all receipts in one folder and all invoices in another, and you can more or less gauge how your business is doing. At least, many individuals and business owners think so. But mind the law, and be sure that your accounting procedures are done according to the prescriptions of the government. Not only will this avoid fees for late or inaccurate reporting – you might actually save money in tax breaks as well.

  1. Classify

Rental costs are not the same as transportation expenses – one is part of your business overheads, the other is most likely a variable cost, depending on your day-to-day activities. Electricity and gas are probably stable and predictable depending on the season, but salaries usually remain constant for longer periods of time. Having ledgers and being able to classify does not only allow you to understand the expenses and income of your business in a much better way – it will also help you when it comes to predicting future money flow.

  1. Deadlines are important

Whilst the general rule of thumb is: “pay as late as you can, collect as soon as possible”, you have to be sure to meet the deadlines. Missing these deadlines can mean extra fees or punishment for being late – too many hassles. Make sure you pay your creditors on time and offer discounts to your most valued customers if they pay earlier than expected. It’s just good, sensible practice to keep the cash flow of your business quick and clean.

  1. Project the future

The future can’t always be predicted, but you can prepare for it. By having a detailed classification of your expenses and your income and organising this in a comprehensive way, you’ll have an advantage: you’ll be able to project. A manager or business owner who knows that their heating bill will go up in the months of November to February knows they have to put money aside – or at least find ways to increase their income. A salesman who understands the traffic situation can cut expenses down. Detailed records will allow you to project – and prepare for – the future.

Accounting is not just about numbers – it’s about understanding where those numbers come from and developing tools to reduce your expenses and increase your income. It’s the analysis of cash flow. It’s about avoiding headaches and optimising profit. And when it comes to the proper accounting advice, you should turn to central London accountants such as the ones from established firms like GSM & Co.

Image attributed to Pong/

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