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How to keep a proper account as a small business owner
Record keeping is an essential aspect of any business – small or large. But most business owners do not know anything about it, except they started as an accountant or bookkeeper. Spending so much time in balancing records or analysing receipts is no small job, but it is necessary for a new business.
You cannot afford to be disorganised and push this aspect aside, else you will run into serious financial problems in your business. You cannot also afford to leave it with the hope of piling them up for a long time, the longer you leave it, the more difficult it is to balance. Keeping a proper record helps you sustain a healthy cash flow in your business, and also allows you to know if there’s any problem that needs to be fixed in your finances.
The first step to solving a problem is recognising the problem, so once you can identify where the problem lies, then you can take steps in solving it. A proper record-keeping helps you to spot financial problems before they become major issues for you.
Since record-keeping is an essential evil that you can’t neglect in your business, we have compiled some basic things you need to know and do as a small business owner.
- Keep your accounts clean
As a small business owner, you might be tempted to think you can’t separate the business’ money from your personal money. They are not the same, and should not be treated as such. Even if you are still the only one running the business, you should learn to separate the company’s money from your personal money. Do not spend the company’s money on your personal purchases. Keep your accounts clean by separating your business and personal finances.
- Set time aside to do your record keeping regularly
When starting a business, you can be tempted to leave your bookkeeping till evening, but you might be stressed by then and mistakes will set in. You should make it a regular duty to do your bookkeeping, whether on weekends or before work starts each day. You can also take advantage of technology by using a software package that eliminates stress.
- Get a receipt for every purchase made
Cultivate the habit of keeping your receipts anytime you make a purchase for the business. You will need them for VAT or tax investigation as your business grows. It will be stressful if you have to be looking for them when the need arises. Always have them handy at all times.
- Check bank statements
Endeavour to check your bank statements monthly. It will help you know where you’re spending money and where the money is coming from. It will also help figure out mistakes from the bank, or any fraudulent activities. It also helps you to control your spending in the coming months.
- Hire a professional accountant
As a small business owner who has no understanding of accounting, it is not too much for you to employ someone to help with that. A good accountant will save you more money than the salary you’ll pay. Investing in a professional accountant for your business will save you from financial problems in your business.