As a business owner you surely have a very busy life and accountancy may not always be front of mind. But your accounts are crucial to your business. Here are some tips to help you manage your business accounts painlessly.
What is accounting and why is it important?
According to the Cambridge Dictionary, accounting is “the skill or activity of keeping records of the money a person or organization earns and spends”.
When you strip out all the jargon it simply means keeping information tidy. Much the same way as your contacts are organised in your phone, you can use apps and software to help you to do the same with your accounts. The Starling Business Toolkit is one such helpful piece of kit.
Accounting is important to provide good quality financial information to:
- Run your business better.
- Know how much money you have available to reinvest in your business, or to take out for yourself.
- Pay the right amount of tax.
How to manage accounting for a small business
If all your business transactions go through a separate bank account then you’ll find it easier to organise everything. In its simplest form banks such as Starling have helpful categories on the bank app.
If your business is a little larger then you might find it more helpful to set up a bank feed to a cloud accounting app such as Xero or Quickbooks, so that the bank statement information appears there painlessly. Starling offers integrations with both Xero and Quickbooks through the Business Marketplace. We also have our own Business Toolkit, with all kinds of helpful accounting help.
Luckily, these days you don’t need to type in data any more than you need a quill pen and an old-fashioned ledger. Optical character recognition within the accounting software and apps such as Flux help to record your costs with minimal manual intervention and they will keep an electronic copy of the invoice or receipt in case HMRC ask to see it.
Online software makes it easy to raise invoices from anywhere; it not only records your sales, but is the first stage of getting paid. With the Starling Business Toolkit, you can create invoices directly from your desktop.
Pain free accounting tip for small business owners
The best way to keep your accounts in order is the little and often approach. Bookkeeping doesn’t need to be onerous but it must be done frequently. Like cleaning your teeth every day; it’s painless and avoids bigger problems later. Doing your own bookkeeping can help you to understand your business more fully and is a learning process. As you become familiar with your numbers, you will soon see whether business is performing better than usual, or if you need to take some action because you have spotted a dip.
It’s a good idea to talk to an accountant about the best way to do your bookkeeping to minimise time and cost. They should be able to help you choose the best method for you and your business, so that you feel comfortable and in control as well as making best use of your time.