Taking care of the business basics - part 3
Owning a business can be slog, but it can also be joyful. Seeing money coming in is one of the rewards of your hard work. But it’s not only about the 'cash in the bank' column in a ledger. Taking care of your numbers means having a reliable book keeping system to record all your financial transactions.
It isn’t the most exciting of ventures, compared to the thrill of a sale or winning that big contract, but it is one of the most important parts of your business’s success.
What is 'Cloud Accounting' anyway?
Most companies have computerised booking systems that help easily track what is coming in and going out of the business, what’s being earned versus what you are spending. Online packages make life even easier for you and your accountant, as you can both log in to the system from anywhere and update your books.
Quickbooks and Xero are two of the market leaders, and are also set up to file digital VAT returns to HMRC (which is about to become mandatory in April 2019) . The software connects to phone apps which track expenses receipts too, so you can record all those little purchases on the go. Both packages also link to your bank accounts, so they download all your bank transactions so nothing gets missed. It makes monthly reconciliation of bank statements a breeze!
Get into a routine
Of course, having a timely routine for your book keeping really improves the benefits you get from which ever software you have. Recording regularly helps your business run smoothly and affords you insight into how productive your business is now and will be in the future.
It really helps to organise your tasks into those you do daily, weekly, monthly, quarterly and annually. Stick to your routine and your accounts become much easier to handle. If you leave everything at the last minute you risk losing sight of how healthy your business is.
Daily tasks should include recording every transaction as it happens, invoicing your customers, monitoring daily cash flow and keeping account of cash on hand and getting it to the bank.
Weekly tasks include tracking supplier invoices and their due dates and making sure you pay on time, protecting your credit rating and your reputation.
Every month, reconcile your accounts, send out monthly statements to customers if that is your practice and pay your staff and contractors if you have any.
You should be filing VAT returns quarterly, and you may want to take the opportunity here to visit your accountant to reflect on the last quarter. They will help you to answer important business growth questions like, “how has my business been performing?”, “are costs escalating compared to the money coming in?” “how does the state of the economy affect my business?”
At the end of the year you will need to start prepare annual accounts and set up a new budget for the year. You accountant may need you to provide more information on some transactions in your accounts, so don't leave this too long - otherwise finding what they need will be much harder.
Good book keeping is good for business
Not only does keeping track of your accounts give you a deeper understanding of your business and its potential, it also allows your potential clients and contractors to trust you. Not to be ignored is the very fact that having these processes in place, you being a proactive and responsible business owner is a very attractive prospect to lenders and investors should you want to expand.
Now, couple that with the peace of mind and sense of satisfaction you get from completed tasks, and you have a unbeatable combination to making your business truly successful.
If you want to know more about cloud accounting solutions, or how we can provide book keeping and accountancy services for you, take a look at our range of services.