Most small business-owners are so eager to jump behind the wheel of their business and start doing things “my way” that they often overlook the process of record keeping.
It usually isn’t until the time their self-assessment is due that they begin piecing together the events of the last months. Until then new business owners widely believe that keeping track of business revenue and expenditure will be easy because they’re “just running a small business”.
That attitude is wrong and it takes more than a spreadsheet to keep track of the comings and goings within a business. You need to grasp some accounting basics if you’re going to keep track of everything and make a success of it.
So where do you start? Simple: record keeping. This is one of the most basic but most fundamental skills required for successful accounting. It might seem simple but, like all business owners, you underestimate the discipline needed for record keeping at your peril.
In this post we’ll show you how to avoid bad mistakes by picking up some good habits that you should bring into every working day.
The (In)Famous Spreadsheet
We already mentioned the spreadsheet and yes, this is an invaluable tool that you should set up in your office as soon as possible before you even think of doing anything else.
Set up a system where you regularly transfer data from your financial dealings into the spreadsheet. This means bank accounts, receipts, invoices etc. Before long your spreadsheet should hold enough information to allow you to make informed financial forecasts for your business.
Keep All Paperwork
You never know when you might get asked to prove certain things. For example, you may be asked by the revenue service to prove you really did buy a printer for your business. So keep all receipts and paperwork.
The longer you are running your business the higher the chances that you will eventually be investigated by the revenue authorities. Remember that you no longer need to keep physical copies of everything anymore. If you bought something online you’ll probably have an email receipt or a receipt in the form of a PDF attachment.
If you bought something in an actual shop you can always just photograph the receipt and upload to the cloud along with your other digital receipts.
Quality Time With Accounts
Schedule some quality time for just your accounts and you. Yes, it may be a boring chore but it’s one that you need to develop discipline for because it is essential to the well-being of your business.
Don’t do it as a last minute activity at the end of a long Friday when you’d rather be relaxing. You need to be alert when you’re doing over your figures. A misplaced decimal point can easily turn into a costly mistake that can quickly impact projected revenue, savings, forecasts and result in tax issues.
Separate Business From Personal
Make sure you get a bank account dedicated to just your business operations. If you are running a limited company it is a requirement that you cannot ignore.
The same account should not be used for your personal finances and business. If checks are made by the authorities they will ultimately find that you have been using business finances to fund your personal life and that is not good.
Don’t pay business cheques from invoices etc. into your personal account. Instead you should be paying everything into the business account and subsequently transferring a regular salary from that account to your personal one.
- Keep An Eye On The Figures
Keeping an eye on your business bank account will ensure that you are always fully up-to-date on expenditures as well as income. This will be a great help when it comes to investigating anything unusual or unexpected.
And with easy access online nowadays there is no excuse to have no accessibility to this information for a quick check or a more detailed download and interrogation.
On and Off the Record
Therefore as you look at getting on top of the record keeping for your business or organisation, then don’t let the detail slip away and cause you problems further down the line.
On the record, get it all organized and make sure you have plenty of data to hand, and all of the time. Off the record, at least have a regular check of the basics whether every week or even month.
You’ll then start seeing the records work for your business, not you're for the records.
Able Accountants have a helpful blog with accountancy and financial tips and tricks to support all private individuals and larger business interests.