Bookkeeping Practices You Should Be Doing But Are Not Doing
We all know very well that running a business constantly needs your effort and attention. As your business grows, managing your finances becomes extremely important. To achieve success in your entrepreneurial endeavors, one thing that must be given priority is your finances. No matter how skilled you are in handling your business, the returns you earn will slip away from your fingers if you do not know how to manage your cash flow. Poor monetary supervision can lead to failure on so many levels. To avoid such a situation, most entrepreneurs outsource this to bookkeeping services. Good bookkeeping practices enable you to:
- know the flow of your trade records;
- see if you are earning or losing money;
- know if there are some expenses that appear to be too high for your production and sales;
- make informed decisions based on the accurate financial information;
- make plans or budgets more accurately;
When it comes to bookkeeping, below are some good practices that we all should be doing but are not:
- Keeping all the source documents – To be organised you must be able to get your hands on your source documents at all times.
- Maintain audit trail – Have an audit trail for every transaction that you post. Through this way you can track the details of any transaction, should the need arise.
- Prepare detail accounting reports: Make sure that the computer software program you are using has the ability to generate detailed accounting reports containing information that you need to move forward.
- Make Reconciliations: Reconciling your bank statements and credit card statements and vendor statements every month will make sure that your accounting record is on track.
- Comply with regulatory requirements – maintain records in such a form to comply with all document retention requirements of your respective country. Similarly, you should also be able to file all of your revenue remittances on-time, payroll security taxes and of course corporate taxes or installments in time.
- Keeping your business and personal expenses separate- it is quite possible to pay back your company for business expenditures. Keeping separate bank and credit card account will save your hours of work and help you keep track of all your tax – deductible expenses in one place too.
- Do not make the mistake of doing your own taxes – Business owners frequently try to save money by relying on themselves to take care of their taxes. This may seem costs effective in the short term but not hiring a professional can cause business owners to miss claiming deductions or under payments which can lead to audits or penalties.
- Expect the unexpected: when starting a business, it can be difficult to predict future expenses such as equipment repairs or software upgrades. Try to leave a solid buffer for expenses in the long term.
- Do not underestimate employee costs: Employees are very likely to be one of your biggest assets as well as expenses. When hiring remember to consider the cost of the payroll taxes, insurance and health coverage.
Going forward, if you follow these practices, you will have a plan in place for when cash flow gets tight and you’ll also be able to use your financial reports to grow your business and make more accurate financial decisions. For good bookkeeping and accounting services, hire a professional accounting firm in Singapore.