In business, accounting is, and forever will be, an essential component that must never, ever, be overlooked, no matter what. Despite this, there are a number of business owners, and freelancers for that matter, that, unfortunately, overlook the importance of having their accounts in order, and sadly, they end up paying the price.
If they’re lucky, it simply means that they perhaps receive a small fine and have to redo everything or hire an accountant to do their accounts for them. In some instances though, things are more serious and they may find themselves under investigation and be facing potential criminal charges for fraud.
Now, do you see how important it is to get your accounts in order? As daunting as it may seem, with the correct tools, systems, and assistance in place, keeping tabs on your business accounts is a fairly simple process.
To ensure that you get a handle on your accounts, have a read of the following and take a look at these 5 things to know about business accounting.
Receipts should always be kept and filed properly
When it comes to your finances and business accounts, no matter how small you consider your business to be, you are still a business and you should still adhere to the rules and laws just like everybody else. This may seem like a pointless and time-consuming job, but it is a necessity nevertheless, and it will make life so much easier for you in the future.
If for example, you run out of paper and need to buy a new notepad, even though it will only cost a few bucks, don’t throw the receipt in the trash, keep it and file it correctly. You should also make sure that you have an efficient filing system in place.
A lot of business owners hold onto their receipts, but fail to file them properly. They often simply cram them into a drawer or envelope and then shut them out of sight. Sure they’ve kept them, but if they’re then audited and they’re asked to produce a specific receipt, sorting through endless piles of receipts can take an age.
The system you use will depend on you, though you could consider making use of accounting software such as SlickPie, which will let you track, file, and organize your receipts in seconds.
Accounting software is virtually essential
As we previously touched upon, accounting software can make life much easier for freelancers and small business owners alike. Accounting software is a fantastic example of how automation in the workplace can be beneficial. Software such as SlickPie has been designed specifically to help businesses and workers organize their accounts and finances.
The software basically provides all of the benefits of having your very own accountant on your team, with the added bonus of guaranteeing that there are no mistakes made due to human error. The software saves time as it organizes your finances and accounts, it performs simple calculations and formulas for you, it helps you to send, receive, and manage receipts and invoices, and much more besides.
Whether you want a general overview of your accounts, or if you’re searching for one specific invoice or receipt, accounting software will help you find what you’re looking for in seconds.
You must ensure you keep accurate and reliable records
Another thing to remember in regards to your finances and accounts is that you must make sure you keep reliable and accurate records at all times. By this, we don’t simply mean you should keep bank statements whenever you remember, we mean pretty much everything should be kept and organized, which again, is another reason to invest in accounting software.
The records you keep should not only display direct debits and standing orders, they should tell you where your money is being spent, where your incomings are incoming from and when, which items you purchased with which cards, and much more besides.
You basically need to know where your money is coming from and where, where it is going, and how it has been used to help expand the business. You can try to do this on paper, though ideally you should get with the times and do things digitally.
Invoicing must be accurate
In the business world, invoicing is an incredibly important component that must never be overlooked. If you thought an invoice was just a technical way of reminding your clients to pay you, you are very much mistaken. Invoices serve as important records detailing the specific terms of each transaction you have made with each of your clients.
As these are important records you must make sure that all of the info you have entered is correct, as the last thing you want to do is get onto the wrong side of the taxman. An accurate invoice should state the services you have provided, the agreed upon amount you are due to receive, when the payment should be made by, and any other terms and conditions you would like to include.
Accurate invoices are also important because they help to clear up any discrepancies regarding payments between you and your client. If you previously agreed upon a specific sum, and your client is adamant that it is too much, you can simply refer back to a previous invoice and amicably clear everything up.
Profit and loss statements should also be scheduled
To help give you a general overview of your business finances and to see just how well you’re doing, profit and loss statements are ideal. These statements show you which areas of your business have yielded a profit and how much you have made, plus they show if you’ve made any losses, and again, where these losses were made.
Now, these statements could be quarterly, they could be annual, they could be bi-annually, or they could be monthly. The thing to remember is that they must always be kept because you can see where you’re doing well, and you can see where improvements may be required.