When you’re starting your own business you aren’t going to be able to handle everything yourself. Nobody has all of the skills that they need to successfully run a business so it’s likely that you’ll need to consult others. The area that people tend to struggle with the most is accounting. The majority of small businesses end up doing one of two things; They either outsource the accounting to an outside firm, or they buy accounting software to do it for them. There are benefits to both of these solutions but they cost a lot of money. When you’re trying to build a new business cash is in short supply so you don’t want to be wasting it unnecessarily. Sorting out your own accounts, at least for the first few months, is a brilliant way to save a bit of extra cash. When you’re dealing with your own financial matters, you need to ensure that you are doing everything by the book otherwise you could land yourself in some serious legal trouble. These are the main things you need to learn if you’re going to handle your own accounts.
Bookkeeping
Bookkeeping is the foundation of your business accounting program and if you don’t get it right, there will be no way to track how well the business is performing and how much money you have left. If you don’t realize you’re running out of cash, the business could fold without warning. The first thing you need to monitor is your cash flow; that means all the cash that you are taking and spending. However, that doesn’t give you a solid idea of your position on its own. You also need to consider any outstanding payments that you are owed, as well as any repayments that you owe to other people. Finally, you need to factor in your staff costs. Once you have totaled all of those incomings and outgoings, you’ll be on top of your finances.
Payroll
If you get this one wrong, you’ll have a lot of angry employees on your hands. You need to ensure that all hours worked are documented properly otherwise you won’t know how much you owe your employees at the end of the month. When you pay them you need to give them all of the proper payslips and other documentation. One of the main reasons that people turn to accounting software is that they don’t think they can do this themselves, but they’re wrong. You can use a pay stub template to write your own payslips without having to pay an expensive subscription for accounting software.
Annual Accounts
Another financial requirement is the publication of annual accounts. If you miss deadlines or make mistakes, even honest ones, you could find yourself in trouble. It needs to be presented in a clear format and include information about your sales and outgoings as well as all of your assets. Make sure that you go over everything with a fine tooth comb so you don’t miss anything out.
These are just the basics of accounting and you’ll have a lot more to learn, but this is a good place to start.
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