Running a business has many challenges, from building clientele to employee relations. However, one of the biggest challenges a business may face is keeping abreast of important accounting practices. This is vitally important because without the proper practices in place, your entire business may be placed in jeopardy.
- Keeping records
The most important thing regarding your financial records is keeping everything in one place so you don’t have to worry about meeting a request, and it is also to keep everything simple. To make matters easier, you can try using online banking.
With online banking, you can track simple debits and credits to your account. However, when it comes time to accurately state how things were spent or earned, separate bookkeeping records should be kept. Perhaps you should consider investing in an easy accounting software, which you can use to track money coming in and out daily.
Invoices are more than just prompts for your clients to make payments. They’re records of the terms of a transaction, and because of this, it’s critical that you enter information that is accurate and complete. It’s also important to understand what the difference is between invoices and receipts.
Reworking or adding to an invoice, creating multiple versions, or cancelling an inaccurate invoice will only confuse the accounting process and make matters difficult. Furthermore, accurate invoicing ensures that if your clients ask any questions regarding a payment, you will be prepared with a record of previously-agreed-upon terms under which you and your clients operate.
- Collecting taxes
Taxes need to be taken out at the time of sale or at the time payroll is generated. Just like with receipts, the longer you go between a transaction and proper accounting, the more room for error there is and the more risk you expose your business to.
You need to collect (or apply) taxes as soon as a sale is made or immediately upon payroll generation. That will ensure that you don’t incur penalties for delayed tax payments. This will also help your accountant keep as much profit as possible.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)