Your finances are pretty much the heart of your business. To keep it throbbing at a healthy rate, clean record keeping is absolutely necessary to not only make referencing easier but also to convince funders or investors that your business is an organised one. Besides, the practice just instills the discipline of keeping your transactions clean and transparent. Remember that every sen counts when you are operating your own business.
It’s easier to just pass on the work to an accountant, but when you are first starting off, you are your own accountant and book keeper and it’s important for you to keep a record of everything you do, buy, keep or sell.
Among the first things that you need to is manage your cash flow and there are simple accounting software (with simple guides or online tutorials) that can help you keep a check on your inflows and outflows. Such practices will help you keep track of any inconsistencies or justifies your big expenditures. Also, do cash flow planning and analysis from time to time to ensure that your outflow and inflow are balanced and generates profit after a few months of starting a business.
Apart from purchases or investments, salaries are among the biggest expenditures when you have people working for you. Always have a record of salary payments or payroll record as this helps with tax calculations.
Invoices – purchase, sales and services – should be maintained because these are your liabilities and they help you record your earnings and spending. Keeping invoices organised can help you track monies and services owing and owed. The same thing applies to receipts, bank transactions, sales and stock records.
As a business, keeping debts in check is extremely important. Assess you borrowings, loan rates and repayment schedules. It helps to get your debts reviewed every now and then to assess the needs for refinancing and rescheduling, especially when you have issues with cash inflows.
A lot of experts also suggests to not neglect minor matters like paying your bills on time and spending time to check on hidden fees or taxes before making payments or borrowing any money.
Good record keeping identifies the strengths and weaknesses of your business. Whether you are maintaining it manually or online, finance recording is absolutely necessary to ensure a smooth flow of your daily operations.