Every year after starting a small business, you always plan to keep your accounts in order. It lasts a week or so and then it all goes wrong. When it comes time to give your paperwork to your accountant it’s a huge chore that you put off until the last minute making it even worse.
Or maybe you have done something through the year that maybe you’re not sure is correct and your accountant may have to tell you in hindsight.
Does that sound familiar? Here are some New Year Resolutions that may make your life easier through the year with regard to your accounts.
# 1. I will keep my paperwork all in one place
Have five box files ready and marked “Purchases”, “Sales,” “Bank Statements,” “Expense Receipts” and “Miscellaneous.” You may need others that relate to your business, eg. Purchase orders, Sales orders, etc. These boxes can be stacked somewhere neatly if you don’t have a home office.
When you open the mail, have the boxes handy to put the paperwork into the relevant box.
When you get home from a meeting or trip, empty your briefcase/wallet/pockets of receipts and paperwork into its ready and waiting box.
When you send out a sales invoice make sure you put a copy into the Sales box.
# 2. I will ensure I get a receipt for every expense
Think of each little bit of paper you get as a receipt as a money note. If you are registered for VAT in Europe, there could be VAT on it for you to claim back. If it is a relevant business expense this can be used against your income to reduce the amount of taxes you pay. Hopefully, that explains why that little receipt can be worth money to you – it makes sense to keep it and put it in that safe box when you get back.
# 3. I will check with my accountant before doing anything I’m not sure about
Accountants have to study their stuff and keep on studying it, keeping up with tax changes constantly. Therefore they often know the best way to deal with business scenarios to save money in taxes and possibly other areas they have seen in their training or other businesses. So it makes sense, therefore, to consult your accountant before you make any big decisions or changes within your business.
Your accountant may know ways to tweak your finances slightly to save you money or a different way of achieving the same result but more cheaply. Accountants are often good with logistics and putting a process into place to simplify matters so if they know in advance they could help your business run smoothly.
Depending on your relationship with your accountant, her advice may already be included in your annual fee, therefore, costing you nothing extra to run it by them. Or it may just be a couple of hours work to pay for which could save you money.
# 4. I will keep to my budgets
Presumably (I hope) you have a business plan with budgets that you have set up with your accountant’s help. If you go outside these budgets it means that the final outcome will be changed – maybe for worse, hopefully for better. Therefore the budget may need to be altered to incorporate this. It is helpful to justify extra expenses by the possible increased income they will bring in, therefore consulting your budget first.
# 5. I will make my accountant’s life easier and save myself some money therefore
Once you have all your paperwork in one place, why not spend a couple of hours every month just filing them into files, organizing them chronologically? Then go that bit further and list them on an Excel document? I’m sure your accountant would be happy to provide you with the blank spreadsheets and point you in the right direction to fill them in.
For the Sales and Purchases invoices the most important is to list Date, Supplier/Customer, Total amount, Net – and if you’re feeling even more adventurous, list the net amount in a column explaining what it’s for, eg Stationery, Goods, Rent, Heat & Light, Insurance, etc. You can do the same with the expense receipts.
With your bank statements, the information needed is all on the statements so you’re basically copying directly from there to a spreadsheet. But you yourself will know what each payment in and out is quicker than your accountant – especially if you do this monthly.
If you spend a few hours with your accountant understanding the information that is needed and the layouts too, then you should find it easy enough.
If you really don’t have the time or incentive to do this monthly then hire a bookkeeper to do it – it works out much cheaper than your accountant doing this type of work.
Get everything to your accountant with plenty of time for her to work on it ready for your filing date. Remember she will probably have lots of other clients handing everything in late so her time is limited. Why not surprise her and get everything in a few months early? You may get a discount for being so good.
The pay off for keeping to your resolutions
Just think of that panic and stress every year to get your accounts in order ready for your accountant. If a small bit of organization and a couple of hours a month will help that it would be foolish not to.
If your accountant has less to do then you can hopefully negotiate a lesser fee from her. Believe me that she will be happy to do this if it means not getting a box of mixed paperwork they have to plow through and decipher.
Please do consult all this with your accountant before forging ahead on your own though. Every business is different and will have different paperwork or account requirements.
Of course these tips are relevant for a small business only – any bigger and hopefully, you will have a part-time or full-time accounts person looking, after all, this for you. It’s still handy to remember what you need though.
Do you have any tips you’d like to share to make your accounting life easier?
I hope you can keep to these 5 resolutions – I’m off to buy some box files now……and I’m an accountant. :)