Get your accounts over the line
Well a new school term is underway and my 3 kids have returned to all their sports. I taxi them around and continue to be in awe of their endless energy. Meanwhile, many clients have used the return to the “normality” of the school year to get on top of their business affairs which, inevitably, means getting to grips with their accounts.
Preparing your accounts is very much a marathon rather than a sprint. Late night cramming tactics might have been useful for school tests of uni exams but that last-minute approach is of little value when you are trying to keep on top of your business affairs. A “little and often” approach is much more appropriate and will allow you to stay on top of your financial information on a much timelier basis. The key is to prepare well. Just as you would be rash to set off on a long race without your trainers and water, you should not begin you accounts without looking out your sources of income and backup for your expenses.
If you are way behind for the moment and overwhelmed by the thought of preparing your business accounts, or being chased for information by your accountant, where should you start?
1. Look out your bank statements. It is best to you use standalone accounts for your business transactions as it will make your record keeping much easier as you will not need to separate the business v personal transactions. Your bank statements will form the foundations for identifying your business income and expenses.
2. Identify and income not banked and explain what happened to it ie. did you use it to make cash purchases, did you put it in your personal bank account or is it sitting in a petty cash tin?
3. Pull together a list of any items paid for from other sources such as your personal bank account or small sundry purchases from your wallet. Make a note if you think you will have mileage to be reimbursed for or perhaps you should consider whether you are entitled to a reimbursement for using your own home as an office.
4. Gather any finance documents such as loan statements or leasing documents.
5. Have you any amounts owed to you or owed by you at the end of the year?
6. What is the cost and likely selling price of any stock that you hold in your business?
7. Do you have back-up for your sales and purchases? Electronic copies are fine (you no longer need mountains of paperwork). Software such as Receiptbank helps to process the invoices if you have a large backlog to catch up on.
Obviously, this list is not exhaustive but pulling together these documents will ensure you are well underway. Your finish line goal is to ensure that you have a set of accounts that are fit for purpose for filing with the relevant authorities. Your aim is to ensure that you have accounted for all of your income while taking deductions for everything that you are entitled to. The easiest way to do this is to stay on top of your accounts admin day to day and to put in place a good systematic approach to dealing with the money side of your business.
Remember that, while you can likely get from the start to the finish alone, it may be quicker and more efficient to use a trainer (in the form of an accountant) to guide you and give you tips on your way. We have run the race many times before….