When it comes to running your own business, it’s essential to keep your record keeping and accounting organised and as with all aspects of business, maintain good systems. Let’s have a look at some simple steps you can take to help keep your accounting organised.
- Structure your bank accounts
Mixing up business and private transactions in your bank accounts is a recipe for disaster. Always use a separate business bank account for your business transactions whilst private bank accounts should be kept wholly for private transactions. Always carry both bank cards with you so you can use the correct bank account.
Open a business savings account as well to save for your tax bills. If you put away 20% for tax initially you will at least have the bulk of any tax monies available.
Instead of spending money privately from your business bank accounts, get in the habit of making regular transfers of drawings from your business to your private bank account.
- Cash expenditure
It’s best not to use cash for your business transactions, but if you use it in an emergency, then reimburse yourself using a simple expense claim (which analyses the expenses between expense categories) so that again, all business transactions are captured and any VAT element is safely recovered.
- Credit cards
If you use a credit card for your business always pay your business credit card bills from your business bank account. Again, this ensures that no business transactions are omitted and all VAT is recovered. if you use your private credit card by mistake, reimburse yourself using a simple expense claim.
- Accounts receivable
Always ensure you have a system for recording whether your accounts receivable have been paid. It’s also important to track how old the debts are so you can chase them up promptly. Your system should also record any arrangements to pay over time or the excuses given for non-payment. It doesn’t have to be sophisticated and if you’re not using accounting software, just write on the face of the invoice when they’re paid, filing separately those paid from those awaiting payment. It’s surprising how many business people do not know who owes them money, which is just plain crazy considering how hard it is to earn the money in the first place!
- Accounts payable
Similarly, always have a system for your accounts payable so you don’t pay the same invoices twice or forget to pay any therefore alienating key suppliers. Regularly pay your bills every month on the same day which means you don’t waste time having to deal with suppliers chasing you for money or paying bills individually. Research shows that the most successful businesses pay their bills on time.
- Organise your paperwork
Keep all your business paperwork in an orderly fashion. Nowadays you can scan on the paperwork and keep this electronically, either on your accounting software or in a simple electronic filing system using the US date system so that everything is filed in chronological order. Keep a separate e-folder for each month and year.
Keeping your record keeping and accounting organised will save you time and money and make your business more successful. We are experts in accounting and systems so contact us for help.