Bookkeeping is crucial for any business, large or small. Not only from an accountancy point of view but for general business efficiency, planning and insight.
Getting the bookkeeping basics right is fundamental, especially when you are relying on timely information to make decisions and assess actual performance against strategy.
We share some tips to help make your bookkeeping more efficient:
Keep personal and business finances separate
From the off you should set up a business bank account to keep personal and business expenses separate. Maintaining a boundary between your personal and business spending and finances is crucial and can help to reduce problems. For some businesses, separating funds might not be possible. If your business is an PLC of a corporation, you must open a separate account for business.
Keep all of our receipts and invoices for all expenditure, including employees’ expenses. You should keep all records for at least five years after 31st January submission deadline of the relevant tax year.
Records need to be kept in an orderly fashion that helps to ensure that they are complete and accurate, and capable of timely retrieval. You should also follow the rules on data protection wherever personal information forms part of your accounting records.
Keep an eye on invoices
An invoice is a request for payment and a receipt is proof of payment for goods and services that you have provided. It’s important to keep track of your payment receipts and always pay invoices on time. Also, make sure you send invoices immediately to customers as soon as services or goods are provided to help keep track of money owned to you. Late and unpaid bills can affect your business credit and your tax payments as well.
Conduct regular reviews
At the end of each quarter review your bookkeeping and accounting records. This allows you to look for trends in sales, growing or declining, year-on-year revenues or an increase in late paying customers. They also help you to prepare for future growth or changes in the business.
Bookkeeping software can help to streamline your records. There is a wide range of software available for bookkeeping and it’s important to use one that suits your current business needs. Multiple features of bookkeeping software can perform complex functions related to the cash book, general ledger, accounts receivable and payable, as well as tracking business bank accounts. Every business is different and has different requirements, so it’s important to do some research of different packages and if you’re unsure, ask for some advice from your accountant.
Stay on top of tax deadline by setting yourself reminders to avoid getting caught short. Plan ahead and set aside money for tax bills in advance.
An audit trail is a set of documents that back-up the transactions that you record in your books. Your trail can help track down transactions and verify that they are correct. Audit trail documents can include things like purchase orders, invoices and estimates.
Creating audit trails can help to prevent fraud, improve accuracy, find missing transactions and can ensure your business records are as accurate as possible.
At M&K we help you to look after and maintain your accounts in an efficient and cost effective way.