If you have just started a new business, or are considering it, you need to know that the paperwork is probably going to start accumulating quickly.
It’s important that you know the basics about bookkeeping for your new business in order to avoid major headaches in the future when you may be so busy that you really don’t need the stress!
Inattention to your bookkeeping could result in:
· Penalties and interest from unpaid tax or overdue returns
· Cash flow problems due to unpaid invoices
· Grumpy suppliers who refuse you a line of credit
· An inability to secure finance due to poor records
· An end of month or tax year nightmare that take you away from productive activities
Good accounting processes are an essential part of running a profitable business. Whether you are big or small, you need to keep your daily bookkeeping organised so you can get a more accurate picture of where your money is being earned – and spent.
Good bookkeeping practices include:
· Separate business bank accounts from personal bank accounts.
· Not using your personal funds on company expenses and vice versa.
· Keeping receipts and invoices well organised (not just randomly thrown into a box!)
· Keeping your bank statements and reconciling them each month.
· Investing in accounting software to help you keep on top of your accounts.
· Keeping an eye on the numbers even if you don’t do the books yourself.
· Keeping track of your income and expenses so you can immediately see when areas need attention
· Having good credit control processes in place to follow up on overdue invoices – this can seriously benefit your cash flow, or adversely affect it if not in place.
· Having a trusted bookkeeper to call on for advice and support.
It is often well worth the initial cost to get professional help in setting up your systems and processes, and in training you in the best use of it as it pertains to your particular business. You may also want to consider outsourcing your accounts to a trusted professional so that you can concentrate on more productive areas of your business.
A key point I cannot stress enough is that it’s far easier, even if it may not seem so at the time, to get your bookkeeping processes sorted up front right from the get-go than it is to fix it, or pay someone to fix it, later on down the track when things have got messy.