When entrepreneurs launch their new businesses, they tend to keep a lot of financial information swirling in their head. They tend to perceive this as convenient and even secure, for there is no hassle of learning how to use accounting software, or risk losing all that data on an unfortunate system crash.
What they fail to realize is that inevitably unanticipated surprises will chance upon them, causing them to overlook details in the ledgers, forget tax filing deadlines, or even lose track of the company’s cash flow status. These are the implications of a lack of a system, and if unattended it can spell danger to the business. Here are five easy tips for entrepreneurs to manage their company’s accounts effectively.
Forecast major expenses
Like it or not, your business is going to go through a roller-coaster ride of ups and downs. These are seasonal effects of the market on your business and your must be prepared to ensure that your business stays afloat even in lull periods. Apart from that, your company will eventually require some capital injection to upgrade software or to acquire an attractive business opportunity. It is pragmatic of an entrepreneur to thus forecast such large expenses, so that golden opportunities will not be missed because of a shortfall in capital.
Oversee company’s expenditure
When running a business, the small costs that are unmonitored often snowball to become a sizeable amount. In order to avoid such an accumulation, the use of a credit card is strongly encouraged to entrepreneurs. It can be utilized categorically for business expenses, and helps track the expenditure ranging from stationery to business lunches.
Essentially, the credit card plays the role of a bookkeeping system that accounts for the cash outlay, which comes in very handy when filing tax returns. Above all, its hugely convenient as the use of credit card eliminates the necessity to handle large amounts of cash.
Make accurate records
True story: Entrepreneur mistakes some deposits of money in the records as income, and pays more tax than he should have. One very good way to avoid this type of mistakes is to ensure there is a structure in place to make accurate documentation of your business’s financial activities. It could be a notebook or an Excel spreadsheet, but preferably comprehensive accounting software like Quickbooks. The reason why this is paramount is because entrepreneurs are highly likely to be confused amidst their frequent deposits of money into their corporate bank accounts. This money could be revenue, loans, or even personal injection of funds and should not be erroneously mistaken due to incorrect documentations.
Allocate money for taxes
No business owner wants to mess with taxes. Unpaid taxes can present a myriad of problems to entrepreneurs and by adopting a pattern of organized allocation of money just to pay taxes can allow entrepreneurs to heave a sigh of relief. Otherwise, companies can face punitive measures from the IRAS such as penalties and additional interest that are clearly avoidable. Apart from ensuring there is sufficient money for taxes, entrepreneurs should also caution against missing tax deadlines. Making a mark on the calendar for tax filing deadlines has been known to save many companies from the danger of penalties.
Pay attention to invoices
It has already been mentioned on how important it is to track the company’s expenses. Similarly, the company’s invoices also require adequate attention. Ideally, someone dedicatedly needs to track the billings so that no bills go unpaid or paid tardily. This is however overlooked in many companies as entrepreneurs often think that sending out an invoice is tantamount to taking care of billing. It is not, as sometimes entrepreneurs need issue revised, multiple invoices at times, and sometimes even chase up on invoices. In circumstances, payment deadlines are not met, entrepreneurs should impose late payment fees depending on whether it is 30, 60 or 90 days late.
Bookkeeping and accounting tasks need not necessarily be worrisome burden for entrepreneurs. By ensuring that these five fundamental tips are in place, entrepreneurs can be sure that they can channel more attention to growing their business instead of rummaging through piles of accounts.
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