Balancing your books can be difficult every month. You may have too much paper work or you just might not have the knowledge required.
If this is true then here are some helpful tips that will make the book keeping process a lot easier.
The following tips will help you to take back control of an important part of running a business. The whole process can be one that is fraught with fear and stress; however this can be changed by using the following advice:
- Keep work and life separate
All spending in your personal life and business life must be kept separate. Boundaries have to be put in place because if the two should mix then things can become complicated. Separate bank accounts are a great place to start.
- Retain Everything
Remember to keep hold of everything. This means that you and staff receive receipts for all forms of expenditures and expenses. Copies of receipts should be attached to expenses claims and all records should be kept for a minimum of 6 years. The authorities may require information so having it there to revert back to is extremely useful.
- Getting Filing and Invoicing right
All invoices relating to sales and purchases should be kept separately. All invoices linked to sales should be raised and then filed in chronological order. If you keep your system in a format that is logical, everything will be ok.
- Stay on top of Everything
It can be a timely task attempting to keep on top of your books. Putting a routine in place and a slot in the diary will ensure that you give yourself a chance to keep on top of your books. Staying organised is key and it will ensure that you keep hold of all of your paperwork. Stay on top of invoices by raising them as soon as you can and as soon as you receive the goods or services. By keeping on top of things it will allow you to spot issues sooner and remembering vital information is easier on a week-by-week basis as opposed to every three months or so.
- Do not underestimate the importance of petty cash receipts
Keeping records of petty cash receipts should be considered an important part of the process. Every time petty cash is used a record must be made so you can keep track of what has been spent. A petty cash account should be settled on a regular basis. This will allow you to pick up on anything that stands out as different and will allow you to minimise the chance of theft.
- Cash or Cheque
If you handle cash or cheques as a form of payment, do all you can to bank it on a daily basis. This limits the chances of lost payments or even theft.
- Stay on top of those who owe you money
Managing those who owe you money efficiently can make a huge difference. Those customers who are slow or late with payments can cause damage to your company in a way that may not be retrievable.
- Think Ahead
A fine from HM Revenue & Customs is never a good thing. Think ahead about possible expenditures such as tax payments and VAT. Open a separate bank account for keeping these funds so that the money is there to use when the bills have to be paid.
- Think Simple
Having a small amount of knowledge when it comes to bookkeeping can make a difference. A basic understanding will allow you to take a control when an emergency occurs or when you need to speak with your accountant or bookkeeper.
- A professional can be worth every penny
The experts have the knowledge and experience to take control of your accounts. This will help them to maintain the part of your business that matters the most. Using a bookkeeper will give you more time to spend on running your business and you can even have accurate accounts to hand should you need them. A bookkeeper will also help you to save money when the time comes to produce your year-end accounts.
Javeed Baig is the Managing Director and Senior Chartered Accountant at Leicester Accountants Gower Accountancy.