Most businessmen would heartily agree when told that maintaining accounts for your transactions though vital becomes difficult keeping in mind the day-to-day demands of running your operations. Accounting gives us an overview of a business and helps us make important financial decisions based on it.
In most small businesses, the number of transactions and other details are manageable and does not justify hiring a full time bookkeeper to maintain your accounts. So maintaining that accounts mostly falls on the owner himself.
Hiring an Accounting Firm
Running a small business is a task that requires donning many hats. The most important of it would be the accountant’s hat. But if your business involves a lot of transactions, though, in smaller amounts, hiring an accounting firm helps. The accounting firm would ideally need your documents pertaining to all financial transactions like your receipts, invoices and payment vouchers and they maintain the details of it on a spreadsheet or other various accounting software packages that are available in the market. You would probably need to update them every week or bi-weekly depending on the volume of your business.
They would be charging a fee for their service in proportion to the size and volume of your financial operations. It would also be advisable to maintain your bookkeeping to avoid hassles
There are a few accounting software applications that can be customized to suit your business needs. Though they might seem like a big investment in the beginning, they make life much simpler in the long run. They help in maintaining your records, give less chance for foul play and provide an easy retrieval of records.
It would be a good idea initially, to maintain dual systems for the first few months. Confirm that both the systems have the same total before you drop the paper.
All small business owners will find it very beneficial if they follow a few basics to keep a tight overrun of their business activities. Acquiring a bank statement every month end helps in reconciling records. They prove to be a ready reckon for outstandings. A thorough check is advisable to check against unauthorized transactions.
Deposit all cash at the bank immediately to get a bank to ensure all incomes are properly recorded. Cash accounting system is much simpler but keep in mind the maximum turnover in sales allowed by the taxation board. Being consistent is very essential for successful business bookkeeping. Follow the same column heading every month for the year while maintaining records. There will be less confusion at the year end.