If you are a small-sized business owner, it might seem challenging to manage your accounting at first, given the myriad of rules you are expected to follow. Add to it the fact that a lot of business responsibilities may fall solely on your shoulders which can make managing accounts seem like a burden. Do not be anxious! We are here to help. By taking a methodological approach to accounting, you can breeze through the accounting process without any fear.
Here we have listed five tips that will help you manage your accounting with ease :
- Budgeting is paramount
Any business invariably involves spending good amounts of money. However, you can easily lose track of your spending if you do not plan well in advance.
First and foremost, anticipate expenses known to you, such as spending on marketing, paying electricity bills, communication expenses, etc., and arrange adequate funds accordingly. By doing this, half of your budgeting is done
Now it is considered a given that certain expenditures, depending on the nature of your business, could be unforeseen. Nonetheless, you can set aside part of your funds for such expenses which will help you weather any storm.
- Know when payments are due
It is crucial that you adopt a payment policy that is fairly easy to follow so your client is aware of both :
- When the payment is to be made
- How the payment is to be processed
The former can be made clear with a well-defined credit period that is mutually agreed upon and suits your requirements. The latter can be made simple with the help of easy-to-use payment channels. Timely receipt of payments is a cause of great concern for most business owners, and not paying due attention to it can seriously jeopardise your business.
- Separate business and personal accounts
One terrible tendency among small-sized business owners is to mix their personal and business accounts. Here’s three reasons why that is a strict NO –
- It creates needless confusion over what your real business expenses are when you look back
- You risk being taxed the wrong amount
- It will ensure that no business transactions are omitted
- You could be prone to dip into your personal funds for business expenditures or the other way round
Therefore, ensure that you clearly have two different accounts so as to keep your business running smoothly.
- Maintain proper records
It is imperative that you maintain a book of accounts. Now, this could be in multiple forms such as ledger, journal entry, profit and loss account, etc.
Keep in mind that all records you maintain must have corresponding proof of documents. This will help to –
- Avoid any form of confusion during the time of the audit.
- Go back and view the records at any time.
- Assess the business and devise better strategies
For these purposes and others, maintaining records is a healthy business practice that must be done religiously.
- Make use of accounting software.
As a business owner, you may not necessarily be good with accounts. If you are one of those, you may want to make use of any of the countless accounting software available on the web.
Using the right kind of software will help you with everything – right from how to download gst certificate to maintaining inventory records. Some of the boxes that need to be ticked when choosing an accounting software package are :
- It must be affordable.
- It should take less time than using traditional methods.
- It must be user-friendly and fully integrated with your business.
- The software must be trustworthy and ensure your privacy is maintained.
Take your time in choosing the right software the first-time by scouring the market for the best option given your business requirements.
By keeping the above tips in mind, you can smoothly manage accounting even for a new business or as a first time entrepreneur. Keep yourself abreast with the latest developments in accounting rules and taxation by reading essay on gst, business newspapers, etc. so you are perpetually in the know.
Lastly, even seasoned entrepreneurs sometimes make mistakes but what is important is that you learn from them and keep sharpening your accounting skills.
So keep your head high, set sail, and make your business a roaring success!