Book keeping can be frustrating sometimes, it consumes much time and does not contribute directly with a tangible good, but anyone with some experience in the business world will understand how important effective bookkeeping is in order to keep an organised register of income and outcome, and based on that, plan useful strategies to increase profit.
Adequate filing and organisation of financial records can consistently reduce the complexity and tediousness of management activities. But many times the most difficult part about bookkeeping is balancing the books.
You may have hired a bookkeeper for your business and he has a normal 9-5 routine in your facilities, or you may have hired the services of an external bookkeeper whom you provide with all your bills and invoices. Either way, these steps will guarantee your books have all the relevant information required for proper planning based on all the proofs collected:
- Software is not optional but required
Knowing how much you earn and how much you spend is extremely important in order to find out the true profit your business is creating. Even though we can be very well-organised and severe with important documents such as bills and invoices there is always a margin of error and that’s exactly what we should take into account before trying to do this job by ourselves.
Nowadays there are systems that make these tasks way easier while giving you extra options for a better management and to control your expenses and revenues. These systems will also allow you to have more precise reports and projections of past and future activities.
- Keep a record of income
One hundred years ago there weren’t many different ways to make and receive payments, it was pretty much cash all around and sometimes, for people from a higher class, signing a paper. However, technology has also arrived to payment methods and now apart from cash you can pay with debit card, credit card, cheques, etc.
Regardless of the method, keeping track of the payments is always very important. Said records should have customer’s name, contact information and be filed chronologically.
- Keep a record of your expenses
This can be even more important than keeping a record on revenues. Expenses are those operations that can take your business to bankruptcy if you don’t pay close attention to them. Therefore, businesses looking for improvement should put as much effort as required in order to break those expenses down and know how much impact is caused by each one of them.
A great idea is to have them listed and categorised; these are some categories that may be helpful to break down expenses:
- Marketing expenses
- Sales costs
- Office costs
- Facilities and buildings (in this one you should put anything related to rent and money spent on basic services such as water, energy, telephone and internet.)
- Cars and other vehicles
- Legal fees
- Any payment made for any kind of service
- Investments and patent registrations
- Insurances and quotes
- Banking expenses and financial expenses
- Payment of wages and social security costs
- Tributes and taxes
It may be a big list but there’s no need to use each category. The main purpose of having so many different options is to break down and organise expenses in an effective way and be able to see which part of your monthly expenses consumes more of your income.
These expenses should also be filed taking months and transactions into account.
- Keep a record of taxes and fees
All kinds of financial activities pay taxes. There are many kinds of taxes and depending of your business you should investigate what kind of taxes you should pay. Actually paying a consultant for these cases is also a very good idea. Either way, taxes are a very delicate thing, not paying them on time is punishable with prison and infractions caused by tax evading represent an extra strong hit to business finances.
It is very recommendable to keep a folder with copies of all your files related to taxes and tributes. Ordering them chronologically, grouped in months, semesters and years.
- Saving time means saving money as well
Take some minutes of your time in order to organise all the paperwork from the day. Don’t leave everything to the rest or it may be more difficult to complete the task in time.
Mistakes in balances have real effects in a business’ budget. Balancing a book is a hard task, especially when you don’t have a real copy of an invoice or bill you delivered or received in a transaction. All these extra hours working mean an extra cost to your business, reducing income as well.
This will also be helpful for you to have a clear idea on the kind of activities that bookkeepers perform. Activities that are very close to your business, same that can be impressively useful for management in case of being taken into account.
Bookkeeping is such an important task that should try to have a professional in charge of it. Here at Elite Finance we know all that and more, 15 years of experience position puts at a place where we can provide a personalised process that will not only help you build a great business but it’ll also help covering customers’ needs and making sure there is an effective strategy based on real results in order to improve the amount of income.