Good bookkeeping and accountancy are as vital to a business’s success as having a good product and knowing how to market it. If you aren’t keeping track of your income and outgoings, and managing the flow of money efficiently, then the chances of business growth and sustainability are greatly reduced. Yet for small businesses, maintaining clear, ordered and up-to-date financial records is often seen as an afterthought, something to be undertaken in a spare moment.
This attitude has obvious drawbacks. Treating bookkeeping as a chore, one that is constantly put off in favor of other tasks considered more immediately important, can result in falling behind in your accounts and documentation being lost or incorrectly filed – and ultimately it may cost you far more money than it should.
Poor Bookkeeping Can Lead To Fines
If you’re not taking advantage of tax breaks, regularly analyzing your finances to see ways to cut costs or operate more efficiently, or keeping to a planned budget, then you’re not running an effective business. At worst, poor bookkeeping can lead to fines for getting your taxes wrong or making late payments and paying a professional accountant over the odds to come in and sort out your mistakes.
Small business owners often end up doing their own bookkeeping in the evenings or at weekends. Not only does this eat into your personal time, but it also increases the chances of mistakes being made. You’re tired, you don’t want to be doing this, and you probably don’t have any formal accountancy training. Doing your own books is fine in some cases, but it’s important to approach it in the right spirit and to set aside a regular time every week or month to take proper care over this essential task.
Get Expert Help
When your business is starting out, you may feel that having your own accountant is an unnecessary expense. After all, you aren’t even making any money yet! However, bringing in a financial advisor of some sort to make sure that your business is set up in the right way and your recordkeeping is effective from the start is a good idea that will save you the expense and hassle of having to go back and fix mistakes and underlying flaws later on.
For example Alex Friedman has two decades of experience in helping financial and non-profit companies to grow, as a former chief executive officer of GAM Investments, chief investment officer at UBS and chief financial officer at the Bill & Melinda Gates Foundation. He is also a co-founder of the Jackson Hole Economics think tank.
The importance of expert advice in managing your business finances and strategic growth cannot be overestimated, and it’s equally essential that you work with an accountant suitable for your business size. They should be able to keep up as your business grows.
Work With Your Accountant, Not Against Them
Your accountant may be able to handle all your bookkeeping, payroll, tax returns and so on in one package. Find out if they can offer you a deal if they take complete control of your finances: the savings they help you achieve may make this the most cost-effective solution.
For foreign tax filing it’s vital to note that, due to the complexities of the US tax laws, it is essential to consult with a CPA (especially when it comes to more complicated filings like the FBAR and FATCA).
Keep It Simple
Unless you are a professional bookkeeper yourself, avoid using double-entry bookkeeping. You could end up paying your accountant more to go back and fix your errors. As a general rule, avoid overcomplicated recordkeeping and streamline your accounts as much as possible. Set up a dedicated business account and use that for transactions as much as possible, keeping cash and credit card use to a minimum.
Make Use Of Technology
Spend some time finding the best software for your purposes, if your accountant has not already recommended a program. There are some great bookkeeping and accountancy apps available, including receipt capture apps that let you send receipts directly to your accountant or your records.
Apps can be connected, and you can sync to a bookkeeping platform on the cloud where your transactions will be automatically updated and safely stored. A good cloud-based bookkeeping program can organize your outgoings by category, recognizing suppliers, insurance providers and so on.
If your recordkeeping is disorganized, it will take your accountant longer to sort it out, and so you’ll have to pay them more. While paperwork should be digitized wherever possible, physical invoices should at least be filed in alphabetical and date order and kept safe and separate from other documents.
Managing your books accurately and regularly will let you analyze your company’s finances and plan for the future. Good accountancy is the key to successful growth. Getting it right from the start will save you time, money and headaches down the line.