So you’ve decided to take the plunge and start your own business – or perhaps you’ve been going for a while? Either way, you will be engaging in transactions on a daily basis. You have an accountant (who is probably quite far removed from the day to day operations of the business) and you’re pretty sure that he’ll be able to write up your books without a problem at all when you give him all your slips and bank statements etc at the end of the month / year – after all, that’s what you pay him to do!
Year end comes and goes and you decide to have your accounts put together. You set up an appointment with your accountant, start putting all the information together and quickly realise:
- Bank statements are missing
- Those receipts have faded in your wallet
- You know you spent money on this and that – but where are those receipts ….. PANIC!!
You delay the appointment with the accountant thinking you’ll find them – and time marches on! Sound familiar? Don’t worry – you are not alone – literally hundreds of entrepreneurs are probably in the same boat!
So – what can you do to remedy the situation? Here are my tips for making sure you take the critical steps to getting your finances in order :
- First up – speak to your accountant to understand what information they need from you. Bookkeepers rarely use ALL of the information that is provided – and unnecessary info just wastes time and pushes your fee up!
- Have a filing system … whichever filing system you decide on is ok – provided it gives you access to all the information you need. Keep it orderly – and stick to it!
- Bank statements in date order
- Payments in supplier alphabetical order
- Payments in date order (to match bank statements)
- All VAT / PAYE returns grouped together
- Sales invoices in sequence
- DIGITIZE! – Ask your bank to email your bank statements to you in a csv or similar format. Ask Suppliers to email invoices to you. Take a photo of that coffee receipt and email it to yourself…… Keep electronic copies where possible. Use a system like Dropbox (or our free online vault at www.beadvised.co.za) The cloud is much safer than your shoebox! That way you will always know where to look first (and so will your accountant).
- If you are not using an accounting system, record all your non-bank expenses and income on a spreadsheet. This together with your bank statements should give your accountant 95% of the information required to do your accounts.
By taking these steps – and making it a habit – you will see that your admin becomes less of a nightmare, your records are more accurate and you will save money on bookkeeping and accounting fees!
Also, more importantly, you won’t lose expense claims and thereby pay unnecessary tax!
Knowing that your admin is sorted, you are claiming all your expenses and the “house is in order” frees you up to do what you do best: Run your business!