For a small business getting your accounting perfect is vital, but can often be a challenge. Here, Rebecca Trudgett, accounts manager at Alliotts Accountants, provides 10 good accounting habits for getting it right.
As a small business owner, do you find that your accounting deadlines come around too fast? Are your accounting habits not good enough?
Time flies when you’re running your own business and your accounting records are likely to be low on your priority list. But a monthly routine will keep your business on the right track and will give you the information you need to make better business decisions. Here are 10 tried and tested great habits practised by successful small business owners that will help you to grow your business and keep it on track:
- Write up your accounting records regularly
Whether you complete a simple spreadsheet or use a cloud-based product will depend on your circumstances and preferences, but creating and maintaining decent records helps you know how you are doing.
- Bank and cash balance
Do you have enough cash in the bank to survive the next few months? If not, make sure that you build up a reserve to see you through any rocky patches.
- Sales invoices
Have you chased all your late or slow payers? Be consistent with credit limits and deadlines; have you invoiced for all the work you have carried out? Make sure you keep a record of late payers and follow them up.
- Purchase invoices
Organise and retain in folders or consider scanning in and attaching to cloud based software. Try to keep a list of items purchased where you haven’t received an invoice. Consider using purchase orders to help you monitor this more easily.
- Value for money
Is it time to look for new suppliers or negotiate with your current suppliers? You could save a lot of money. Review your contracts (e.g photocopiers) and make a note of renewal dates.
Ensure all staff members including the directors produce expense claims where they pay for items on behalf of the business. Set time limits for claims to be made. Make sure you reclaim VAT.
Review the schedules produced monthly and ensure your staff and HMRC are paid on time. Regularly review your staff contracts and employment documentation. If in any doubt speak with your advisors as it is easy to get this wrong, and the implications can be expensive. Consider your company pension commitments and your auto enrolment start date.
Ensure these are only paid out where your company is in profit. Remember to produce and retain board approval minutes and dividend vouchers for your for your personal tax return.
- Statutory accounts
These need to be submitted to Companies House within nine months of the year end; if you are late Companies House will fine you. You need to be aiming to get your records to your advisor ideally within three months of the year end.
- Talk to your advisors
Ask questions as they arise and don’t leave them until the year end. Regular contact with your accountant or bookkeeper is encouraged. Use their knowledge and experience to get the best value from your relationship.
Adopting these accounting habits will help you to stay on track and in control will make a positive difference to your business.
Rebecca works with SMEs, helping them to set up practices and controls for their businesses. If you would like advice on accounting software, credit control procedures or employment documentation, please get in touch with Rebecca at www.alliotts.com or call 01483 533119.