The success and stability of any business depends on its financial performance. Even though this is one of the essential parts of running a business, financial records are often neglected by managers and owners. This can happen because business leaders don’t have time to manage their accounts or are unfamiliar with relevant laws and regulations. Although this is understandable, you can’t keep your business up and running without managing your financial records properly.
Keeping your business’ accounts organised will save you money in the long run. Furthermore, doing so doesn’t have to be a huge amount of work. Take a look at these 7 tricks to keeping your business’ accounts in good order!
1. Have a Separate Business and Personal Account
One of the biggest mistakes any business owner can make is combining their personal and business accounts. You should always keep separate accounts for your personal and business expenses, no matter how small your company is. Without a separate account, it’s impossible to keep good records and accurately assess your business’ financial performance.
Furthermore, mixing accounts means a lot of work to separate your household expenses, revenues from other sources, and other personal transactions from your business’ accounts. And there’s no excuse for not opening a separate business account. Opening a bank account is relatively affordable and managing two accounts is super convenient.
2. Keep Track of Every Financial Transaction
Recording every transaction in your financial records will help you keep track of funds that go in and out of your business. Therefore, you should maintain a ledger where you record every financial transaction, whether you use accounting software or a simple spreadsheet. This also makes it easier for your accountant to prepare financial statements at the end of the financial year.
This is particularly important if you accept cash, as you won’t be able to check bank statements later to confirm past transactions. There is no way you can remember where you spent the money or how you got the cash if you don’t record the cash transactions.
3. Install Small Business Accounting System
Accounting software has become a necessity for modern businesses. The days when you would record transactions in a ledger and spend hours working in physical books are long gone. Most companies now use accounting software that streamlines financial management by recording each transaction.
You can also integrate this software with your payroll software to sync data between these apps. Using software to manage your financial records instead of doing everything manually is easier, more efficient, and more reliable. Furthermore, cost does not need to be a barrier, as you will find plenty of software systems available at a reasonable price, some even for free.
4. Hire a Professional Accountant
However, even with the best accounting software, you will need help to manage your accounts. Just about every business can benefit from an accountant to balance their books, manage their tax, and produce financial statements. Hiring a professional accountant like Hodge Bakshi will ensure that you comply with all regulations and meet your tax obligations as a business.
5. Schedule a Day for Bookkeeping Every Week
A good way to make sure you don’t fall behind with your bookkeeping is to set aside one day a week for accounting. This will greatly help to keep your records up to date. Checking your financial records every week is also a good way to gain ongoing insight into your business’ performance.
This will help you identify the best ways to cut expenses, grow your income, and expand your business, while also keeping you up-to-date with accounts receivable and payable. Even if you have accountants managing your financial records, you should take some time to review your financial statements and check how your business is doing.
6. Digitise Bookkeeping
There’s never been a better time to switch to digital accounting systems and reduce the burden of manual work. Organise your paperwork by keeping everything in separate accounting files and try to digitise your systems as much as possible. Digital accounting tools are extremely helpful in preparing your tax returns, storing financial statements, and keeping your books organised. The best part is these tools can help you compare your business’ financial performance over the last few years.
7. Avoid Cash Transactions
The financial tools and a wide range of payment methods have made it easier for businesses to process transactions, but there’s no way a business can go cashless. You will receive customers that prefer cash payments. Similarly, your online banking apps and credit cards may not work all the time. You can’t avoid cash, but the least you can do is limit the number of cash transactions. Use cards, payment apps, online banking, and cryptocurrency for day-to-day business transactions. This will make accounting easier.
Contrary to what some people believe, organising your financial accounts does not have to be expensive or challenging, even if you are a South African living in the UK. You can hire an accountant such as SA UK Tax Advisor, install the latest financial accounting software, and set aside some time for managing your accounts, and you’ll be good to go!
You may also like: Completing An International Merger: Why An Accounting Audit Is Essential
Image source: Shutterstock.com