Monday, April 18, 2011

5 Bookkeeping Tips for a Startup Business

Not all business owners have knowledge in financial management let alone the basics of bookkeeping. This can inhibit the success of a new business if not dealt with in the early stages.

Bookkeeping mistakes can be prevented by

1. Using good accountants or bookkeepers

Business owners frequently undertake the bookkeeping themselves or instruct an untrained employee. This diverts the key leader from focusing on business aims. Did you know that it's more profitable to outsource your bookkeeping needs to professional accountants than to do the accounting yourself? Hiring a professional firm with bookkeeping services can improve accuracy, speed and proactive tax planning.

2. Make sure to keep proper records of financial transactions

Proper record keeping will not only ensure smooth bookkeeping, it will also alert a new business about a profitable metrics such as easy identification of the biggest and the smallest buyers. Know that proper record keeping will help you determine profitability, debt to income ratio, bad loans, tax dues, and even employees' profitability. Applications for business financing also require the provision of a coherent financial record.

3. Have well ordered filing system

To be of use (in audits or in a dispute with a customer or supplier) an efficient filing system has to be maintained and should delineate between payables, receivables, and bank statements and tax information. A good way to file receipts like purchase orders, invoices, quotes, etc. is according to job done. And at year end, these records must be kept in a secure vault that can be accessed when needed--they should never be thrown away.

Maintaining a structured ledger of accounts that is tailored for the business ensures you'll have record to
check anytime you want.

4. Proper archiving of bank statements
Don't make a common mistake mixing together your personal bank transaction records and your business' bank transaction records. Needless to say that your personal finance transaction records be separated from your business' bank transaction records. A good practice, particularly for an audit, will have a London bookkeeping firm reconcile your bank statements with your books to eliminate mistakes.

5. Have a set of rules to handle your financial transaction records

Appropriate accounting procedures maintain consistency and accuracy in transactions. Embed procedures with in-built checks to ensure they are adequate and are followed. They must be written down and endorsed (e.g. in job descriptions, office manuals) to engender responsibility. Employing these accounting rules from the get go ensures your business is poise to achieve its financial goals without major hitch.

At the end of the day, good North London bookkeepers will make sure your financial transaction records are properly recorded filed, archived, and backed up for smooth business.


Anonymous said...

Thanks for this tips. It helps me a lot because I am now starting a business.


Lilia Costales said...

You can't blame business owners for sometimes doing the bookkeeping themselves or asking employees to do it. The main reason for this is to save money. If the business looked good throughout the year and it seems that the upcoming year will be the same, there’s no reason for the owner not to hire a professional bookkeeper for a fast and reliable assessment that will not delay business operations.

Lilia Costales

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