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Good Accounting Practices to Develop

Craig M. •

Do you need an accountant?

As a small business owner, you are slowly figuring out a routine that will work for you. You may be the only employee or have someone to help you around. Either way there are a few things that will help you manage better without yielding too much control over your business.

Accounting is one of the major areas of business that you always want to keep in check. We are all in business in order to make money. You wake up every morning to make an extra coin. As you do this, you’ll also want to ensure that nothing goes to waste. There’s a lot that you can do to ensure this.

Keep a file of receipts

  • You’ll come across many receipts when you start running your business. You can be issued a receipt from your purchases of stationery, raw materials, and services from others. You’ll also issue receipts to your customers for products sold and services rendered. Try and keep your receipts in a file specific to certain transactions or certain customers.

Record everything

  • As a small business owner, make it a habit to record everything that you do. When you buy something, record it in a ledger book. It does not have to be elaborate. Examples of ledger entries would be:
    • 1/6/15 Bought a stapler at $2 from B. Supplies.
    • 2/6/15 Sold Smith two books at $5 each. He paid cash for one.
    • 3/6/15 Sold 25 books at a discount price of $4.5 to Blueberry Preparatory.
  • These are simple recordings that you’ll be able to use to make journal entries later. Your bookkeeper will also have an easy time using these.

Check the accounts receivables

  • Make it a regular practice to review your accounts receivables. These are the customers that you have sold items to on credit. Ensure that you review their records and monitor how well they are paying. This can be done on a weekly basis. By the end of the month, you will know who you should be concerned about. You can then make the necessary follow-up.

Check on your payables

  • You will also need to monitor your account payables. These are the funds that you owe to others in the course of running your business. It is important to keep track of this because you always want to keep in the good books of those who are willing to extend you credit. Always pay as soon as you have money available.

Tax depreciation

  • Always be aware of what you depreciation you can list as an expense for the purpose of tax depreciation. Depending on your location, the law will describe the items that are allowed to be tax depreciated. This mean that you can list the depreciation as part of your expenses and thus have lower tax deductible income. You’ll want to reduce your tax payments as much as possible.

Review you monthly profits

  • This is something that you should regularly do . As a business owner, deliberately set time aside to study you income statement for the month. Look through your sales, your expenses, your profits and losses. You’ll be able to spot when sales increase or decrease, how much your expenses are growing, your tax payments and whether your profit is increasing.

Always remember that you are in business to make money. Accounting practices will help you manage our money better so that you return a profit. If at the end of all of this, you are still having trouble make sure you consider hiring a professional. Contact an accounting firm can put you in touch with specialist accountants. Camberwell company accountants specialise in tax, xero, and franchise accounting.