Anyone running a business knows how difficult it can be to stay on top of finances. Other matters can take up most of a worker’s time and attention, but finances are still a major part of a business, so it is important to know where the company stands financially at all times.
Overhauling expenditure in the year to come can be a good idea, as it is essential to know what is coming in and going out.
Look at costs
How many business owners really check the bills they receive? The answer is not many, yet when utility companies send in bills, they are often for more than anyone needs to pay out. Get into the habit of reading the bills and seeing exactly where the money goes. If another provider can offer a better – and cheaper – deal, then it is worthwhile to switch. Getting into the habit of glancing over company bills will not take up a great deal of time and will benefit the business in the long run.
Automatic payments and direct debits can take the headache out of paying bills. There are plenty of people who forget to make payments, which can have a negative effect on credit ratings, so paying automatically each month means that there is no need to worry about remembering deadlines, as everything will already be taken care of each month. This may not be the best solution for small businesses that do not have a lot of money coming in every month, but it is worth considering, as it will also free up time to focus on other aspects of the business.
If business owners take the effort to organize their paperwork, then when it comes time to file tax returns, the whole process will be much easier. Receipts and invoices should be filed properly so that the accountant can access them quickly, and subsequently the business owner will not lose out on any potential tax deductions.
Detailed records should be kept of payments from customers and clients as well as expenses that have been incurred while the work was taking place. Passing on all of this information means that the accountant is better prepared to deal with issues such as IR35 and other tax paperwork when the time comes.
Having a proper filing system in place is essential. There will be no need to stop and waste time searching for missing paperwork. A simple filing cabinet is a must, but if space is limited, opt for document wallets that can be stored in a drawer. Keep all paperwork in one place and avoid the last minute scramble to find what is needed.
Organizing finances is an administrative task that most business owners prefer not to do. Having someone on hand to deal with these tasks is often a good idea, but if it means paying an extra wage, then careful consideration needs to be given, as this approach may not be cost effective. There are some basic bookkeeping courses available as well as some great online accounting software to help business owners learn the basics of organizing finances in the New Year so that they understand the fundamentals of what needs to be done and why it is important.