Accountancy may not be the most riveting subject in the business world, but it’s certainly one of the most important. Starting a new business isn’t easy and handling your own accounts not only takes up valuable working hours, but makes the whole operation a lot more difficult. If you’re having trouble keeping on top of your books, these tips will help you get your finances in order.
1. Keep Your Expenses Separate
Having a business bank card is always handy. Whether it’s running into a potential client and paying for their coffee or buying a piece of office equipment that’s on sale, you never know when you might need it. However, do not under any circumstances pay for personal expenses, even if you plan on paying them back immediately – things will get complicated very fast. Keeping your business and personal finances separate will allow you to have all of your deductible expenses in one place, which will prevent a major headache when you need to fill out your tax return.
2. Hire A Professional
Accountants aren’t cheap, but they can save you far more than their fee. From their point-of-view, if they can save you money you’ll use them again in the future. While it can be tempting to do your own accounting, you’ll have to spend time learning about tax laws and filing all the paperwork. These working hours could be better spent doing something else.
3. Take A Bookkeeping Course
To cut down accounting costs do your own bookkeeping.. You can complete accredited ATT courses in London for just a few hundred pounds. By learning how to balance your books professionally you’ll not only make the job of accounting easier (and cheaper) but will free up more time for revenue generating activities.
4. Regularly File Your Paperwork
Carry around a pen and pad at all times. Whenever you make a purchase, write it down. At the end of every week set aside 15 minutes to complete your paperwork. Taking a little time out of your schedule won’t affect business and will give you a better idea of where you stand with your finances. This will not only reduce stress, but will lead to better short-term financial planning.
5. Track Your Labour Costs
When you’re filing your paperwork always track your labour costs. Whether you have one person on the payroll or an entire team, make sure you track their wages, benefits, overtime and business expenses. Failure to accurately track labour costs could lead to serious problems. For example, you may think you have more excess than you actually have, which could lead to over-spending and serious accounting errors.
6. Chase Up Payments
When you invoice a client, don’t forget to get paid! You’ll be surprised by how many small businesses lose track of their invoices. By keeping all of your records in order and setting aside copies of unpaid invoices, you’ll be able to figure out exactly who owes you money and when it’s due. It’s also a good idea to take note over how long it usually takes a customer to pay, or whether they’ve had problems paying in the past. Use this information to decide whether or not they’re clients worth keeping.
According to Business Insider 50 to 70 percent of businesses fail within the first 18 months of trading. By taking these accounting practices on board, you’ll significantly reduce your chances of falling into this category. So if you think you’re lacking in the accounting department, start taking action from today.