Accounting in a small business is like many business decisions; a weigh up between saving costs and the opportunity cost of your time. In a fledging business when cash flows aren’t able to support a bookkeeper it may be necessary to grit your teeth and do it yourself. But hey, you may even learn something in the process. Here are a few ways to help you out:
1. Keep it in the cloud. As a business owner by signing up to online accounting software, of the likes of Xero, many of the hassles will be taken out for you. Many of those niggly accounting practices including GST and depreciation are all automated and make the whole process a lot more user friendly. They will keep track of your invoices and customer payments so any that are unpaid will be brought to your attention. The information is presented in a logical, easy “to keep track of” manner and all the traditional financial statements are self generated. By investing just a small amount of time to come to grips with these programs you will save endless hours in the future.
2. But don’t throw out ALL the receipts. Having paper records (receipts and invoices) of all business expenses is a necessity if any problems were to arise with your tax department. Use an old shoebox or paper sleeve to put all your receipts in. These receipts can also help you out when it comes to tax time. Expenses that you may think are tax deductable put aside; given the opportunity your accountant will maximize these tax benefits. When in doubt though don’t use business cash for personal expenses, remember to keep business and personal finances separate.
3. Get help. If bookkeeping is new for you, getting help and creating efficient work practices will save you time, money and a few greys. With a little knowledge the majority of accounting work in small businesses becomes an automated and straightforward process. Consulting a bookkeeper or even hiring an accounting student for a short period (for not much too) to help you standardize your processes can help keep your books clean and lead to less billable hours for your accountant.
4. Mark relevant transactions with a highlighter, pencil or whichever you prefer to use. By setting aside about 15 minutes every week to organise your finances you’ll have a better insight into your business, be able to make more informed financial decisions and have everything organised when tax time approaches. Although something always feels more pressing than your finances, when you find the time every week you’ll feel your stress levels, now and at year-end fall fast!