Financial records are one of the most crucial records to have, particularly for small businesses. Most startup companies and small business owners frequently overlook this part of their business record keeping, due to either being unsure of how to do it right or because they find it difficult to find the time to complete it.
Many business owners believe doing it themselves will save them money since they believe it will be too expensive to hire an expert to assist them. Unfortunately, this way of thinking can lead to issues because businesses must keep accurate and up-to-date documents to comply with legal record requirements.
As a business owner, you are responsible for your company’s financial success. For most small businesses, it’s not uncommon for the business owner to play the role of bookkeeper, accountant, and controller. For this reason, it’s important to have a strong handle on how your business is performing financially.
Below are seven tips to help with business financial record keeping.
Open Business Bank Accounts
A business must be distinct from its owners, and the simplest method is to open bank accounts just for the enterprise. Not only does this identify the business from the owners, but it also distinguishes commercial operations and expenses from personal ones. Having a business bank account makes tracking your company’s income and expenses simple.
Avoid Paying with Cash
It is particularly challenging for business owners to preserve and maintain accurate business financial records when they spend money without the necessary documentation. If there is no good record keeping, it is simple to forget how and where money was spent. Instead of using cash, it is advised to use a credit or debit card or a checkbook since these methods leave a paper trail that may be used to track expenditures.
Because there is no proof to support a write-off when you pay with cash as opposed to another means of payment, you can also miss out on taking advantage of them. If you require cash, use an ATM to withdraw the required amount, and mark the reason for the transaction on the receipt.
Set aside a specific time every week.
If you’re handling and monitoring your company’s records, be sure to set aside a certain amount of time each week to keep them up to date. Review your earnings and outgoings and keep track of your accounts payable and receivable each week.
Setting up a regular plan will enable you to maintain control over your cash flow, provide you with essential insight into how your business is doing, and help you keep track of your financial records.
Use the Right Accounting Software
Get the best accounting software for your company by making the appropriate purchase. Consult with your accountant for advice if you’re unsure about the software you should buy. Your accountant will be able to give you qualified guidance. Investing in online software allows you to view your accounting data from any location with an internet connection.
Your accountant will have easier access to your files as a result. Nevertheless, business owners are advised to save a paper copy as well, even though an online tool will continuously back up your files to cloud storage.
You’ll need to habitually back up your information with a desktop accounting program to ensure no data is lost. You’ll also have to pay for the program’s initial purchase and ongoing upgrades to keep it running.
By keeping accurate accounting records, you may fulfill all of your tax duties and timely filing requirements without worrying about accruing fines or interest for missed or late payments. You must maintain receipts and records for all purchases made for your expenses to back up the claims you are making.
If you pay employees, you must sign up for payroll tax, often known as Pay As You Earn (PAYE), and make monthly payments. When filing monthly Value Added Tax (VAT) tax returns for a business that deals in taxable goods, accurate accounting records are helpful.
The availability of all of this necessary information will enable you to optimize and automate your business procedures while also assisting you in maintaining compliance. Having dependable accounting software proves to be beneficial.
Maintain a Full Record of Accounting Documents
Businesses are expected to maintain accounting records in line with legal recordkeeping standards; the records must not only be kept, but they must also be sufficient to demonstrate and explain the business’s operations. The following information must be included in the accounting records for your business:
- a complete inventory of the company’s assets and liabilities;
- daily entries of all money received and spent by the company, and;
- the items for which the transactions occurred
Businesses must also keep the following records on file and make them available upon request:
- Receipts and invoices you issue for transactions involving your company’s products or services
- Invoices for the products, services, and other transactions you made for your company
- Statements of bank accounts
- Statements for credit cards
- paperwork for business tax returns
- Every financial statement, including balance sheets and profit and loss statements
- Records of employee payments as well as payroll source deductions reported by workers
- Asset register and records of stock acquisitions at the end of the fiscal year
By law, businesses must maintain all accounting records for a minimum of six years.
Hire a competent bookkeeper
You might consider hiring a professional and experienced bookkeeper as your company expands. Hiring a bookkeeper to help you with record-keeping offers several advantages. For one, you can deduct the cost from your business taxes. Second, by not having to worry about maintaining your business documents, you’ll have more time to concentrate on expanding your enterprise with the assurance that your data will constantly be updated.
The key to successful business financials is a good record-keeping system.
Having a system that keeps track of all of your financial transactions will make it easier for you to keep up with the books, and make sure that you’re not missing any important information.
If you haven’t started thinking about how to keep your records organized, now is the time to do so. At Savvy Financials, we’ve created a process for keeping your records organized and easy to find. We also have competent bookkeepers who can help you with this process. Our goal is to help you keep your finances in order and make it easy for you to find the financial information you need when you need it. Contact Savvy Financials today and see how we can help you grow your business.