The first step to sustaining your startup is to have an organised and detailed record of your financial statements. These statements will allow you to track your assets, liabilities, and expenditures, as well as monitor your business’s cash flow. With the correct data, you will be able to make informed decisions that are vital to the long-term success of your business.
Follow these tips to help get you started on proper bookkeeping and give your business a solid foundation to work with:
1. Keep Accurate Financial Records
The first step to make sure you are making wise choices is to keep track of your finances, especially in the beginning where it’s mostly expenses. At the very least, you should have a ledger or spreadsheet to track all expenses and revenues. Without tracking your expenses, you will not be able to claim all of them as business expense when it’s time to do taxes. If you do not track your revenues, you will not know your profit margin and how much your products and services should be valued..
2. Use a Good Accounting Software
Purchasing and maintaining a proper accounting software program will help you to stay organised, track your business’s progress, and keep up with your accounting records. While there are many options available, make sure you choose one that is easy to learn and has a wide range of features. You want a program that is easy for you to use and helps you maximize your time. Try getting one that is cloud based, so you can keep track of expenses, projects, and products while on the go.
3. Plan a Budget
A budget is a vital tool that allows you to plan how you are going to spend and allocate your revenue. While you can use your revenue, expense and profit margin information to develop a budget, you should also consider your business’s future growth and outline a plan to accommodate it. Doing so will help you to meet your desired goals, be it a certain profit margin, a certain net worth, or any other goal you have.
4. Keep Business and Personal Expenses Separate
Separate your business finances and personal finances. Many small businesses are set up as sole proprietorships, which is different from being incorporated. Income and expenses are only recorded in the business’ books and then taken out at the end of the year and recorded in your personal income tax return. If you run your personal and business finances together, it can lead to an audit by the HMRC and many other problems.
Bookkeeping is a necessary part of being a small business owner. Without proper bookkeeping, your business will not have a solid foundation to grow from, and you will not be able to make informed decisions about your company. Incorporating bookkeeping into your daily processes can be challenging, but you will be glad you did it in the long run. By following these tips, you will be able to use your bookkeeping to stay on top of your business’s finances, plan for future growth, and stay organised.
Our team of accountants offer bookkeeping services for small businesses in Bristol. Plan for the future of your business by getting a better understanding of its present state. Run the numbers with us and achieve your financial goals!