Believe it or not, most business owners like to have control of everything, or at least learn as many things as possible that happen in their business. While this can work with projects in marketing and advertising departments or public relations, it is sometimes not feasible with regards to accounting.
Sure, manually taking charge of a lot of the financial details in your business has its advantages: no software to learn and no danger of a system crash or loss all data. But there are more risks involved.
When it comes to accounting, you need other people to support you, plus backup plans and automated systems. Although it sounds contradictory, avoid putting all the responsibility on yourself, which will therefore help you to keep more control of the finances.
Plan higher expenses
It allows you to stay ahead of the bad times in the market and reduce the chances of losing business options. To do this you must put some events such as updating equipment on the calendar, at least a year in advance. Recognise the ups and traditional market declines, something that many entrepreneurs do not.
One of the best ways to keep track of expenses is to have a credit card exclusively for business. Its basic accounting, you can leave a person in charge of the movements that you verify, regarding the account records.
The good thing is that you include both small and large expenses. Nothing, no matter if it’s a pencil or a desk, should remain unrecorded.
Properly record deposits
Business owners often make a series of deposits into your bank account throughout the year, including loans, sales revenue and cash infusions from their personal savings. The problem is that at the end of the period, your business or your accountant might record some mistakes and deposits as income and therefore pay taxes on more money than you need.
To fix this, you should ask someone (or yourself) to adopt a system to maintain financial activities; either on a notebook, a spreadsheet software Excel or as “Quickbooks”. Furthermore, the documentation of all accounting information (expenditure and revenue), should always be backed up with evidence or receipts for evidence. If this isn’t done, then it can become impossible to account for all the incomings and outgoings.
Save money for the tax
The company may receive penalties and interest for failure to file tax returns on time. To avoid this, you can leave some of the money aside throughout the year for taxes. Also, you should note the deadlines on a calendar to make sure you make payments when due.
Never use the account or your company money for personal expenses; you will end up getting confused. It is best to have your own salary, as if you were a regular company employee. In fact, you can ask the manager to load it to your account monthly.
Keep a Tight Ship
If you do not have an emergency fund, it would be advisable to have several sources of income or opportunities to reduce potential risks. You must also counter in and save for the cost of purchasing new materials, implementation of new contracts, payment of bonuses etc. Try not to have outgoing expenses that are not covered by the general budget. Lastly, pay employees on time as any payment in advance may be an unwise move.
It may seem obvious, but many businesses still don’t fully utilise the power of computers and the internet to aid their growth and management. They are a vital component in helping order work, time management, data acquisition and pull together a raft of useful resources. This is just the tip of the iceberg – with PR, social media and other communication avenues, being fully computerised is essential to any progressive business out there today.
If you need some free advice, get in touch with us today to see how we can help. The Cheap Accountant is a leading accountant offering a professional service at an affordable price.