Tips To Save Time And Money On Accounting And Bookkeeping
Accounting and bookkeeping are without doubt essential to run a compliant and effective enterprise irrespective of its size. Bookkeeping involves recording your financial transactions, while accounting involves interpreting and summarising the data gathered from bookkeeping.
As a business owner, you are required by law to keep accurate records. Still, the benefits of proper accounting and bookkeeping extend far beyond compliance since you can obtain a genuine impression of your company's performance and take critical business decisions. Below are some helpful tips you can rely on to save money on accounting and bookkeeping.
1. Separate Your Personal And Business Finances
Setting up a different bank account for your business is crucial to proper accounting and bookkeeping, so keep this in mind. A business bank account will allow you to draw a distinct line between your personal and company finances.
This way, you can easily and quickly record business expenses without much confusion over whether your cash prevents you from seeing your company's genuine financial standing. As such, it is much easier to know if your enterprise is making a profit.
Additionally, recording your business expenses via a separate bank account makes tax filing more convenient, saving you significant time and energy.
2. Automate Your Bookkeeping With Accounting Software
Automated business processes are undoubtedly worth considering to save time and money. So using accounting software is necessary to streamline your company's accounting and bookkeeping.
This is typically cheaper than hiring a bookkeeper, and this software can automate several accounting
processes. You can track business expenses, create invoices, and access financial reports whenever you need them.
Xero, Quickbooks, and SAGE are three of the best and most popular accounting software in the UK that you can consider for your enterprise's accounting and bookkeeping needs.
3. Reconcile Bank Statements Regularly
It isn't uncommon to notice discrepancies between your accounting books and bank statements regarding your bank balance. Often, this difference is because clients are yet to deposit their cheques at the bank, and these banks can also take a few days to clear cheques before balances are reflected in your accounts.
However, these differences can also be due to fraudulent activities and accounting mistakes. Therefore, it is crucial to reconcile your bank accounts often to identify any errors and prevent fraud. Also, it is always best to resolve any errors you come across while reconciling right away, especially if you are in charge of your bookkeeping.
This way, you can avoid carrying the error for longer than necessary, circumventing penalties, wrong tax bills, and inaccurate financial statements in the process.
4. Consider Hiring A Professional Accountant
There are reportedly over 300,000 accountants in the UK and Ireland, all of whom can make a big difference when seeking to save time and money with your accounting and bookkeeping. A financial professional can help you keep up-to-date records and help identify loopholes, potential fees, and tax deductions for which you may qualify.
However, it is crucial to find the right accountant for your business, So pick one who can communicate with you in a way that you understand. Also, choose highly-trained and experienced accountants that demonstrate dedication to helping your company navigate all challenges that arise when handling business accounts.
They should take the hassle of accounting and bookkeeping off your plate, allowing you to concentrate on business development.
5. Plan For Significant Expenses Like Taxes
Many business owners dread receiving their annual VAT bills because discovering their bills' sizes pushes them to calculate how hard up they will be for the next few months.
However, you can avoid the element of surprise by keeping track of your financial records to anticipate your tax bills. For this, you can set aside some money for tax every month, corresponding to your monthly income.
This way, you will always have the funds necessary to pay your tax bill, avoiding the single huge outlay and many months of financial hardship.
6. Track Your Daily Expenses In Detail
Many entrepreneurs approach their accounting and bookkeeping from an overview perspective with little focus on their daily operations. However, not tracking your daily expenses in detail can interfere with your accounting and bookkeeping accuracy, so it would help to keep tabs on even the most minor costs you encounter daily.
These expenses can add up in no time and can eat into your company's finances quickly. As such, tracking them can help you know what you are spending on and whether you can eliminate or cut back on certain daily costs to save money.