One important thing that a business owner should have a firm grip on, is the accounting of business.
This will go a long way, in ensuring that, you have an overall and transparent picture, of how your company is faring and performing.
Setting up the accounts of your business, will enable you to keeping track of every financial transactions carried out and calculate your profit or loss, as well as determine your assets and liabilities.
In setting up the accounts of your business, you need to choose the right accounting system that suits the need of your type and level of business.
This is because, accounting systems vary and should be structured, in such a way that, it meets up with the specific accounting needs of the organization.
Some business organizations require an elaborate accounting system, while some need not be elaborated.
Below are 4 tips, on how to set up a simple business accounting system:
Open A Business Bank Account: You need an efficient and organized way of accepting payments and also paying for services.
A business bank account, ensures that you carry out all these functions, efficiently and it keeps records distinct, which are quite handy, when it comes to tax and other matters.
Create A Bookkeeping System: This ensures that, all day to day financial transactions carried out by the business organization, are recorded.
It also arranges, categorizes the type of transaction, whether a capital or operating expenditure, as well as assists in the reconciliation of bank statements.
There various computerized bookkeeping accounting systems that business organizations can choose from and these includes, QuickBooks, Peachtree, Quicken, etc.
Monitor Your Expenses: Monitoring your business expenses, helps you to keep track of the growth of the business, arrange financial statements, prepare tax returns, etc.
To monitor your expenses, you can, either, use the old school method Filofax, or, the more sophisticated Shoeboxed.
Have A Clear Understanding Of Tax Obligations: The way that a sole proprietor’s tax will be computed, is quite different from that of a Limited Liability company’s tax.
Have a clear understanding of the category, that your business falls into and carry out extensive research, so, you can have adequate knowledge of it.