The life of a business owner is filled with ups and downs, as we have all experienced over the past twelve months! The past year there does seem to have been quite a few downs for many businesses but, there is still time to change direction to an upward trajectory by taking our accounting top tips onboard.
If you follow our advice, we guarantee you will most definitely increase your potential for success while avoiding unnecessary (sometimes costly) mistakes…
Stay on top of the everyday money management
There are a few main day-to-day areas where you can concentrate your efforts:
- You can employ local accountants to keep a close eye on your revenue and expenses.
- Keep track of all of your business expenses. These can add up quickly, and regular review allows you to fine-tune where your money goes.
- Make projections. Having precise economic forecasts is essential. Your financial strategy will help you to prepare for and address possible future hurdles.
- Do not get slack on invoicing; Send out invoices as soon as possible after completing a project or providing goods, set your payment terms out clearly, and follow up on unpaid invoices.
It’s not personal it’s business
Mixing business and personal finances is a sure-fire recipe for disaster! To avoid any cross-over, make sure you define which is which:
- Keep your personal and business bank accounts separate, mixing your household and commercial money is the route to unexplained losses and tax-headaches. Keeping your business’s money separate will make predicting profitability easier and help you keep track of your expenses far more easily.
- Take a salary and ensure you pay yourself first. We are not saying that you should hoover up all available profit, but getting into the habit of taking a small regular payment will mean you are less likely to claim expenses, that may not necessarily be business related and it is a good way to set aside money consistently and to test the profitability of your business.
- “Look after the pennies, and the pounds will take care of themselves”, is a very true statement! Staying frugal. Even though you pay yourself, don’t get sucked up in the benefits of business ownership even if you can afford it. Set your salary as low as possible and offer government-mandated benefits only. What you save now will give you more flexibility in future lean months.
- Something that may not be a huge concern at the moment, but will hopefully be back to normal soon, is travel and the related expenses. Try to keep travel costs to a minimum. Hotel and travel costs are really just for necessity, a means to get yourself to a meeting and a place to rest your head, don’t be tempted to push the boat out on the luxury option, not only is it a waste of money, it sets a bad example for your workforce.
Look at the bigger picture
Don’t get bogged down by the little things, make sure to keep an eye on the bigger picture:
- Are your premises suitable for the long term? Do you need to consider moving or even look to buy somewhere more suitable? Thinking about this sooner rather than later will ensure you get a more cost effective solution.
- Where can you save on spending? Do you regularly review your; energy bills, broadband contracts, vehicles and equipment leasing?
- Take care when thinking about expansion, and ensure business development is done steadily and sensibly.
Embrace the cloud and move to online accounting software
Ditch the spreadsheets and get onboard with online accounting software, the digital world makes staying on top of your finances so much easier!
- Use mobile apps, such as Receipt Bank to keep track of expenses and you will eliminate the need for piles of crumpled paper receipts.
- Accounting software provides the ideal digital tool to keep your incomings, outgoings and taxes organised. The user-friendly nature of packages like Xero are perfect for even the least tech-savvy business owners.
- If you already have a small business accountant, using accounting software in tandem is an ideal way to save them the job of tidying up your mess, leaving them more free time to focus on other financial aspects that could potentially increase your profits.
If you feel that these accounting top tips aren’t enough and you need more support then do not delay in contacting us. At Together Accounting we can take care of the boring stuff while you get on with what you do best. Contact is on 01603 627963 or hello@www.togetheraccounting.co.uk, we’re always happy to talk business.
