Managing your financial accounts is hard enough if you are doing it for your personal finances – what more if you are doing it for your business? And if you are running and operating your own enterprise, you may quickly feel that you can’t keep up with your financial records and before you know it, your bookkeeping obligations are already taking up too much of your precious time.
If you would like nothing more than to be up to date with your bookkeeping and accounting responsibilities, then don’t fret just yet – there are some things you can do. With these tips, managing the financial accounts for your business should be easier than ever.
The importance of balancing your bank account(s) and accounting records
The first thing you have to make sure of is how much money you have in your bank account(s) for your business. You have to know – and keep track of – the cash in your bank account before anything else, as this cash will ensure the smooth operation (and growth) of your business. What you can do to make this easier is set up a type of automatic feed which pulls your bank account data straight to your accounting program or software. Then, check your account daily (or once a week, at the very least) to see if you have recorded all your business’ financial transactions. If your bank account balance doesn’t match your records, then you have to check everything again – so prioritise this from the beginning.
Make sure of your invoices
Another way to ensure that you are on top of your business’ financial records is to make sure of your invoices. What does this mean? This basically just means that you should make it a point to look over all your invoices – which ones you have sent out, which ones you still have to send out, and which ones haven’t yet been paid. These ‘open’ invoices are especially important, because you have to take action on them right away. And, if you know how much you should be expecting in payment from your customers, this will also help you make better financial decisions for both the short- and long-term.
Keep a record of ALL your expenses
It’s easy to lose track of what we spend each day – that pack of gum from the corner shop, for instance, or those paper clips from the office supply store. But if you are running your own business, you have to keep track of ALL your expenses, especially those that you pay for out of your own pocket. If you bought a memo pad and paid for it with your personal funds, then you have to list this down as a business expense. It may seem to be too inconvenient to list down each and every out-of-pocket expense, but think of it this way – if you don’t list it down as an expense for your business, then the amount of tax you have to pay for your business may increase as well.
List down your expenses in specific categories
When you are listing down your expenses, it will also help if you categorise them properly. For instance, if you visited a client in another city, then classify this expense as a ‘travel’ expense. If you bought a ream of paper, then this should be categorised as an ‘office supply’ expense. With this, you will also be able to claim the correct amount when it comes to tax relief on your expenses. If you need help categorising your expenses (as some expenses can be potential pitfalls for taxes, such as subscriptions and legal fees) you should seek help and guidance from an expert accountant, like the accountants central London offers, such as GSM & Co.