Accurate bookkeeping is critical for small businesses that want to enjoy success. When first forming a firm, you may handle the bookkeeping by yourself, but as your company expands, you might require a professional service. In the next sections, we’ll explore some useful tips for better business bookkeeping that can set you off on the right track.
Retain records of all payments
Always track each payment you receive or make in your books, so you can quickly locate them whenever necessary.
Select an accounting method
Bookkeeping will be the foundation of your accounting, so choose your preferred method from the start. While traditional accounting methods record expense and income by invoice date, cash accounting will record them on the exact date when you pay or receive money. The benefit of cash accounting is it can help you avoid paying tax on payments you haven’t received if you have a turnover of up to £83,000.
Stick to deadlines
Avoid any late payments and issue payment deadlines to clients to ensure you can effectively chase unpaid invoices.
Record all expenses
Always record your personal and business expenses separately. Firms can claim back tax back from certain business expenses and reduce their overheads. Keep all your receipts safely to substantiate any claims you make.
File your invoices and bank statements in the correct order
Ensure all statements and invoices for sales and purchases are accounted for and organised in date order. This saves time in bookkeeping and ensures you avoid fines for late filing. Establish separate files for unpaid and paid purchase invoices and file them alphabetically. After you pay invoices, move them to the paid file immediately.
Always number your sales invoices sequentially, ordering them by when they must be paid. This allows you to chase late payments more efficiently.
Create monthly reports
By generating monthly reports, you’ll have a much better chance of remaining on top of your company’s finances and you’ll avoid being subject to any unwanted surprises. The monthly reports you create should always include, as a minimum, a profit-and-loss statement and balance sheet. This process will give you an informed overview of your financial situation and provide an ongoing commentary on just how well your firm is performing.
Understand when it’s necessary to outsource
Finally, when your company starts small, taking charge of bookkeeping duties yourself might seem sensible. However, as your business grows, assess how much time you must spend each week on the task. Next, look at how much money you generate for the company per hour to work out the sum total it costs you to handle your bookkeeping. Compare this amount to the expense of hiring a bookkeeping service and you’ll soon see that your time is better spent growing the business and leaving the books to the professionals.
If you need an accountant for a small business in Goole, you’ll find our services at Adaptive Accountancy a convenient option tailored to the way you operate. Contact us today for expert bookkeeping services.