How many of these accountancy top tips do you know about?
As we have all seen over the past couple of years, the life of a small business owner is full of ups and downs! Many small business owners have experienced a number of setbacks, but there is still time to turn things around by implementing our accountancy top tips.
Some of them may already be familiar to you but we can guarantee you others will definitely increase your potential for success while avoiding unnecessary (sometimes costly) mistakes…
Keep track of your finances on a daily basis
There are a few primary areas where you can focus your efforts on a daily basis:
- You can hire an excellent accountant or bookkeeper to keep track of your income and expenses.
- Keep a record of all company spending. These can quickly pile up, and reviewing them on a regular basis helps you to fine-tune where your money is spent.
- Make forecasts. It is critical to have accurate economic forecasts. Your financial strategy will assist you in anticipating and addressing potential future challenges.
- Do not procrastinate invoicing; send bills as quickly as possible after completing a project or delivering items, clearly state your payment terms, and track outstanding invoices.
It’s not personal it’s business
Combining personal and business funds is a formula for catastrophe! Make sure you define which is either to avoid any confusion:
- Separate your personal and company bank accounts; combining your personal and corporate funds leads to unaccounted losses and tax difficulties. Keeping your business’s money separate will make it much easier to estimate profitability and keep track of your spending.
- Get a job and make sure you pay yourself first. We’re not suggesting that you gobble up all available profit, but getting into the habit of setting aside a small amount on a regular basis will make you less likely to claim expenses that aren’t necessarily business-related, and it’s a good way to set money aside consistently and test your business’s profitability.
- “Take care of the pennies, and the pounds will take care of themselves,” as the saying goes. I’m trying to be as frugal as possible. Even if you can afford it, don’t be seduced into the perks of business ownership just because you pay yourself. Set your pay as low as possible and only provide benefits that are mandated by the government. What you save now will give you more flexibility in future lean months.
- Something that may not be a huge concern at the moment, but will hopefully be back to normal soon, is travel and the related expenses. Try to keep travel costs to a minimum. Hotel and travel costs are really just for necessity, a means to get yourself to a meeting and a place to rest your head, don’t be tempted to push the boat out on the luxury option, not only is it a waste of money, it sets a bad example for your workforce.
Consider the big picture
Don’t get caught up in the minutiae; instead, focus on the bigger picture:
- Are your premises adequate for the long term? Is it necessary for you to contemplate relocating or maybe purchasing a more suitable property? If you think about it now rather than later, you’ll be able to find a more cost-effective answer.
- Are there any areas where you can cut costs? Do you evaluate your energy bills, broadband contracts, vehicle and equipment leases on a frequent basis?
- When considering expansion, take care to guarantee that business development is done progressively and rationally.
Make the switch to online accounting software and embrace the cloud
Get rid of the spreadsheets and switch to online accounting software; the digital age makes managing your finances a breeze:
- You won’t need stacks of crumpled paper receipts if you use mobile apps like Receipt Bank to keep track of your costs.
- Accounting software is an excellent digital tool for keeping track of your incomings, outgoings, and taxes. Packages like Xero are designed to be user-friendly, making them ideal for even the least tech-savvy business owners.
- If you already have a small company accountant, using accounting software in conjunction with them is a great method to relieve them of the task of cleaning up your mess, giving them more time to focus on other financial issues that could boost your profitability.
If you feel that these accountancy top tips are great but you need some hands-on help, please do not hesitate to contact us.