Accounting strategies for small businesses to save time

If you're beginning a business, you'll need to learn at least the fundamentals of bookkeeping and accounting. We go over the primary jobs, some time-saving tips, and where we fit into the picture.

What is accounting, exactly?

Accounting is involved with keeping track of money as it enters and exits a company. Some of the data is reported to the government for tax purposes, but the majority of it is used to assist the business owner in managing the company.

The three fundamentals of business accounting

Accounting is a broad topic, however typically boils down to the following for most small businesses:

1. Keeping track of company transactions is essential (basic bookkeeping)

2. Creating accounting reports to aid with business management

3. Filing tax returns for businesses

Keeping track of all commercial dealings (bookkeeping)

Making money is a crucial goal when beginning a new business. And you won't know if that's the case unless you have a clear picture of your revenue and expenses. When you keep good records, you'll be able to:

• tell you if you're profitable, or if you're on the right track

• tell you if you're on the verge of running out of money (even profitable businesses sometimes do)

• Make tax season much easier by having all of the information you'll need to file your returns.

Bookkeeping is the term for this type of record-keeping. It's crucial for small-business accounting firms, and it's a science in and of itself.

What is the best way to perform bookkeeping for a small business?

You'll need a technique to correctly and rapidly record transactions. For this type of activity, some businesses keep a logbook (a cash book). They keep track of every sale and expense in it. There are, however, fewer manual alternatives.

Invoice income is recorded.

Keep track of any invoices you send and check bank deposits to ensure you are paid. Alternatively, you can utilise accounting software to issue invoices and the rest will be taken care of automatically.

Keeping track of sales revenue at the time of sale

Data on sales should be downloaded and transferred to your accounts. Alternatively, invest in a point-of-sale system that can transfer data directly to your accounting software.

Keeping track of expenses

Transfer bank data to your accounts and use a specialised bank account for business purchases. Alternatively, have your bank deliver the data directly to your accounting software.

Keeping a record of your purchases

Keep your receipts (photograph them on your phone before they go missing) and enter any additional information into your accounts. Alternatively, you can download an app that will scan receipts and enter the information for you.

Cash accounting allows you to base your small business accounting on money received and spent. You can also include any money you're waiting on or planned to spend to get a more realistic view of your finances. Accrual accounting is the term for this type of accounting.

Checking your numbers a second time

Bank reconciliation is a job that many business owners do not anticipate when they first start out. It's when you compare your business books to your business bank statements to ensure they're in agreement. It can take a long time, but there are some clever methods to speed things up.

The early days of bookkeeping

You'll need to keep track of your expenses as soon as you start incurring them during the start-up of your firm. It's easiest to open a separate bank account for your company and utilise it for all of your business transactions as much as possible. This keeps your business expenses and income separate from your personal finances.

Make sure you save your receipts and keep track of what you spent your money on. Printing bank statements and making a note beside each item is one method. Then, once you've set up accounting software, all of the information will be in one place, ready to be pulled into it.

Do I require the services of an accountant?

Accountants are frequently associated with tax preparation, and we can absolutely assist you with your taxes. But we can also assist you with a variety of other tasks, such as preparing and understanding accounting reports, identifying which data are most important, and recommending next steps for your company.

• Filing tax returns for businesses

• Corporation tax or income tax

• VAT

• Taxes on employment

lowering your company's tax burden

Make sure you account for all of your business expenses because they reduce your taxable income and, as a result, your tax burden. The importance of good bookkeeping cannot be overstated.

To calculate all of your costs, you'll need basic accounting understanding. You can, for example, claim wear and tear on assets and the depreciation of intangible assets if you follow certain requirements.

obtaining the services of a tax professional

Many fledgling businesses put off hiring an accountant until tax season. However, you should not wait too long. Before you start, make sure you have thorough, well-organized records of your income and expenses. Before we know it, tax season will be here!

Accountants in Croydon help small businesses and startups with their accounting and taxation matters, to keep their business running smoothly.