One of the hardest aspects of any small business is balancing the books. In fact, it’s the single biggest reason for business failure. Lack of accounting knowledge and due diligence is always going to end badly. When you’re just starting out, your business requires careful budgeting and accounting. Every penny counts, and fixing your business costs is essential. Yet, too many entrepreneurs approach this with a laissez faire attitude.
We know that looking at spreadsheets gives you a headache. But, trust us, it’s the most important thing you’ll do for your small company. Look after the pennies, and the pounds will look after themselves!
DIY or use an accountant?
The first big decision to make is whether or not to bring in help. When you’re getting things off the ground, it is possible to manage the finances yourself. For freelancers or small online companies, the accounts are simple enough. However, as you start to grow, it’s often worth consulting the experts. A company like Accounting People will audit your existing structure, and help make your money go further. Sometimes, it just helps to get the accounts off your plate, and into the hands of the pros.
Keep business and personal separate
This piece of advice is a no-brainer. Unfortunately, some entrepreneurs seem to forget this point entirely. When you’re running a small business, it’s easy to mix up the personal and business accounts. Let’s say you run a boutique store in town, and you need to buy tea bags for the staff. It’s easy to put this on your personal card, and forget about it. We understand this is a tiny example, but it’s a bad precedent. If it’s business, keep it well away from your personal accounts.
Keep a copy of everything
If you’re not sure what invoices or papers to keep, file it all. It might seem like an effort, but you’ll thank yourself in the long run. Let’s say you invoice a client, and never receive the money. If a copy of the invoice is in your files, you can quickly go back to check the date you sent it. If the tax man asks to see a copy of your entire accounts, you need to have everything. This request isn’t uncommon, so don’t leave anything to chance.
Make time for it weekly
Accounting isn’t something that takes care of itself! It takes active time and effort. We suggest making time at least once a week to check in with your accounts. That might mean a simple call with your accountant every Tuesday morning. It might mean spending a couple of hours filling in spreadsheets if you’re doing it yourself. However you’re managing your money, make it a priority.
Make sure you’re getting paid!
When you’re running a business, it’s easy to forget when and where the money is coming in. If you keep an accurate table of accounts, you know exactly what you’re owed, and when it’s due.
Accounting is a headache, but there’s no getting around it! Follow this advice, and put your money first.