This week (14th – 20th Nov) is Global Entrepreneurship Week, a week that celebrates all types of entrepreneurs and supports every stage of the journey of starting a business.
Next up in our series of business articles, Anne Heaney, Chartered accountant at M.B. McGrady & Co, an accountancy consultancy service, shares her top tips for getting your business accounts in order.
“Having your finances in order is so important in any business…don’t let yourself become stressed at the last minute because you weren’t prepared from the get-go!”
1. Separate Your Accounts
It can be tempting to start a business account as a mere extension of your personal account with the aim of separating them in the future; don’t.
Start your business account separately and it will save you hours of having to go through receipts and sieve out personal and business expenses. This will help you stay more organized in the long run and have a clear distinction between working and personal practices.
2. Take Advantage of Accounting Software
If you want to experience ease and convenience in keeping your accounts in order, make sure to take advantage of accounting software. The good thing about using accounting software is that it allows you to track the transactions of your business easily. Although you can hire an expert to track your income and expenses, the use of accounting software offers more precise and quicker solutions for your business.
Accounting software also maintains all of your records in one place. Some software can even file taxes for you, which helps you reduce the likelihood of missing filing deadlines. Depending on your chosen accounting software, pick the one that’s rich in features and provides excellent customer support.
If you want something that you can use anywhere and anytime you want, choose accounting software that comes with a mobile app and cloud-based. With this kind of software, you can easily track your accounts while on the go or while you’re far away from your office.
With a specialised Making Tax Digital department, we can work with you to migrate your accounts online or help you to choose the best software for your business.
3. Create a Budget for Your Business
Creating a budget does not help you earn more profits, but it keeps you focused on incomings and outgoings. Most businesses fail because owners skip budgeting and cost savings from the beginning.
Budgeting is the foremost step toward meeting financial goals in a business. It can help you build a strong foundation and make your business sustainable.
Budgeting is a continuous process that needs to be updated regularly to prevent debt, late payments, and other financial problems.
It’s also important to budget for your tax bill on a month-by-month basis. This will help you stay on track of your budgeting overall, be prepared for your end-of-year bill, and hopefully save you from any nasty surprises.
4. Don’t use cash for your transactions
If you’re a business owner, try not to use cash for transactions if you want to keep your accounts in order. The reason behind it is that spending cash without proper documentation will just make it hard for you to maintain and keep financial records. Moreover, it’s easy to forget where and how cash was spent without proper documentation.
If possible, use a debit or credit card instead of cash because this can help you monitor your expenses effectively. Once you use cash rather than other payment methods, you may miss write-offs because there’s no documented proof.
5. Track every Transaction You Do
Never miss any transaction if you want to keep your accounts in order. Tracking all transactions is also crucial to know your financial status. Besides, you can’t make good business decisions with incomplete or bad data. So, keep a record of every transaction you do.
6. Digitalise your paperwork (if possible)
Keeping your business paperwork in an orderly manner can help you stay organized. However, it’s best to digitalise your important paperwork. Keeping it digitalised on your filing system or accounting software can ensure that everything is filed chronologically. It’s also much easier for you to have another copy of a document if your paperwork is digitalised. Plus, having a separate folder monthly and yearly may also come in handy for easy tracking.
7. Follow a Healthy Billing Plan
Managing cash flow in a small business reflects healthy business operations. You must pay your employees and suppliers on time to retain their trust and reliability. But to pay people on time, you also need to ensure getting paid on time.
Creating a systematic way to bill your clients can prevent cash flow problems. To do this, you can:
- Create a net-30 period to ensure getting money by the last day of every month
- Take advanced payments to cover a certain portion of bills you need to payout
- Make strict contracts that include charging a fee for late payments
- Continually monitor amounts owed to you and focus on balances in the 30 day+ period
- Suggest giving discounts for getting paid before time
Get a good accountant (That’s why we’re here): Can’t handle it all on your own? That’s what we’re for. We take pride in helping our clients and enabling them to be the best they can be! Our team of experts have got it covered. Also, it is important to note that even if being organised isn’t one of your strong suits, we are here to help you every step of the way- never hesitate to ring up and ask for advice.