Entrepreneurs keep a lot of the financial details of their business in their heads. Doing so has its advantages: No new software to learn, no danger of a system crash that loses all your data, and you can tweak your budget as often as you need without sitting down at a desk.
But when you don’t have a system in place, surprises can pop up, goals can be missed and paperwork forgotten.
Getting a better handle on money can help you to make and keep long-term goals, smooth out the seasonal ups and downs of your cash flow and maybe improve your profits. It can also help you to stay out of trouble with SARS.
Here are five book-keeping tips:
1. Plan for major expenses
Why it’s helpful: You’re less likely to miss business opportunities or have to scramble for a loan.
What to do: Put events like a major computer upgrade on the calendar at least a year in advance. Acknowledge the seasonal ups and downs. This helps you to be honest about the fact that it’s coming and plan for it.
2. Track expenses
Why it’s helpful: You’ll avoid missing tax write-offs.
What to do: A credit card that you use solely for business can be a basic accounting system. If you always use your business credit card for business expenses, you’re less likely to pay cash and lose the receipts, forfeiting tax-time write-offs.
Routinely jot down business trips, lunches, coffee dates and other events with cash outlays in your electronic or paper day planner. This will substantiate those items for your tax records in the event of an audit.
3. Record deposits correctly
Why it’s helpful: You may be less likely to pay taxes on money that isn’t income.
What to do: Adopt a system for keeping your financial activities straight, whether it’s a notebook, an Excel spreadsheet or software such as Pastel Accounting. Business owners typically make a variety of deposits into their bank account through the year, including loans, revenue from sales and cash infusions from their personal savings.
At the end of the year, you or your book-keeper might erroneously record some deposits as income, and consequently pay taxes on more money than you’ve actually made.
4. Set aside money for paying taxes
Why it’s helpful: SARS can levy penalties and interest for late filing.
What to do: Systematically put money aside throughout the year for tax. Diarise tax deadlines and prep time to make sure you make payments when they’re due.
Payroll taxes that go unpaid can be problematic. Cash-crunched entrepreneurs might dip into employee withholdings that they should have sent to SARS. If you mess with payroll taxes, you haven’t paid taxes due and you’ve taken money that belongs to your employees.
5. Keep a close eye on your invoices
Why it’s helpful: Late and unpaid bills hurt your cash flow.
What to do: Assign someone to track your billing. Then put a process in place for issuing a second invoice, making a phone call and levying penalties such as extra fees at certain deadlines.
Have a plan for what happens if they’re 30, 60 or 90 days late. Some entrepreneurs believe that once they’ve sent out an invoice, they’ve taken care of billing. This isn’t the case. Every late payment hurts your cash flow.
The Importance of Outsourcing Your Payroll
One of an organisation’s biggest overheads is that of salaries and wages. And yet, if these are not processed on time, it can negatively impact staff morale and create the impression that the company is not financially stable.
For a small business, payroll is normally the responsibility of an accountant or bookkeeper, but even administrators can sometimes be roped in to do the job, even though they have no expertise in the matter. This is where the value of outsourcing your payroll comes in.
When should you outsource?
- If you want to grow your business but are not aware of ongoing legislative changes that could pose a risk to your company, then it is better to get professionals to assist.
- Accountants and bookkeepers are not specialists and do not keep up with the compliance environment. If you outsource your payroll, you enable them to focus their core duties and not get bogged down by legislative complexities.
How to choose an outsourced service provider
Understandably, payroll is a sensitive subject dealing with highly confidential information.
This is often the last thing a small business owner wants to outsource. It is therefore vital that the company does its homework and researches the potential outsourcing partner thoroughly.
Instead of going with the first available service provider or the cheapest one, here are some questions to ask:
- Is the service provider a one-man band and, if so, what backup resources are available?
- Is the service provider a recognised payroll provider belonging to a professional body?
- Do they have the necessary training and skills on payroll?
- What does the service provider do to ensure it stays up to date with legislation?
- How secure is the payroll data and can the service provider take on historic data?
- How easy is it to recover your payroll data in the event of a disaster?
- What value-adds can the service provider offer? These can include anything from leave management and third-party payments, to employee self-service, time and attendance management, and any other related human resource service.
- Can they process salaries and/or wages hourly, weekly, fortnightly, or monthly?
- Can the service provider accommodate your growth requirements if you open new branches?
- Is the service provider able to assist with payrolls in other African countries, manage their currencies, and deal with their regulatory environments?
- What processes are in place to ensure the timeous processing of payrolls?
The advantages of outsourcing your payroll
One of the most obvious benefits of going the outsourcing route is freeing up your resources to focus on your core strategic objectives. This ensures you provide quality of service and control costs while an experienced partner takes care of your payroll.
Here are a few other benefits:
- Reduce operating costs.
- Statutory compliance and consistent service delivery.
- Access to the latest technology, as well as skilled and dedicated payroll resources.
- Access to a secure, risk-free and confidential payroll environment.
- Increased flexibility and responsiveness.
- Streamlined internal processes and procedures.
This article was originally posted on Entrepreneur.com/sa.
Wilting Away – How To Boost Your Financial Management Team After The Big Financial Year-End
Is your finance team wilting after a gruelling financial year end? Here are some great ideas to help them bounce back.
Your finance team has put in long, back-breaking hours lately to ensure your business could close off the financial year. Aside from saying ‘thanks a lot’ here are some great ideas to breathe some fresh life into them, reconnect them with each other and with the business, and let them have some much-needed fun in the process.
Before we start, let’s clear up some misconceptions around team building events. When you think of team building, you probably think of awkwardly passing an orange squeezed between your chin and your neck at school, or awkwardly falling backwards into the arms of an embarrassed colleague at work.
This is why most people shy away at the thought of doing team building, because they fear embarrassment, or even worse, wasting their time. The source of the problem is that most HR departments and management view team building days as an activity-based agenda that will have a productivity-based ROI. Almost like a once-off fix – play games equals 12% increased productivity. However, they are mistaken.
According to the University of California: Team building is an ongoing process that helps a work group evolve into a cohesive unit. The team members not only share expectations for accomplishing group tasks, but trust and support one another, and respect one another’s individual differences.
So, we understand now that team building is:
- A regularly recurring thing, not just a once-off activity
- A combination of work, leisure, collaboration, problem solving and projects
- Can be anything from a small picnic at work, to a weekend retreat.
When done well, team building is shown to make employees more co-operative, collaborative and, generally, more engaged in their work. According to Gallup’s findings on employee engagement in America, only 34.1% were engaged – which means a shockingly high percentage (nearly 70%) just couldn’t care less about their work.
While team building has its flaws, it is still one of the best ways to drive employee engagement. With that in mind, here are some great ideas to improve your finance team’s engagement for the remainder of 2019.
1. Accounting game show
Use a popular game show format to share and quizz information in an engaging format.
1. Split the department into teams.
2. Use questions that the team can use in their everyday work. You can even throw in interesting facts about employees (with their permission of course), particularly positive stories about their finance careers or accomplishments.
2. Idea-sharing lunches
Dial it down a notch and take the team out to a restaurant of their choice, or – if you are choosing – to a place that serves good food, for a casual staff lunch.
Use this time as a general catch-up session as well as a platform for creative conversation. You can also use this time to have a SME (subject matter expert) share some insights into relevant topics that will empower the team, but this should not be the sole purpose of what is meant to be a relaxing lunch.
3. Shape it up
In this fun exercise team members need to arrange themselves to form shapes as they are called out.
- Divide the team into groups of 10 members.
- A game coordinator shouts out a shape (for example, a diamond) and the teams must form the shape quickly within a limited time frame (eg 5 seconds).
Begin with simple shapes get everyone comfortable, then start calling for more complex shapes like “an oval on top of a rectangle” or “square inside a triangle.” Communication and cooperation are vital here to successfully form the shapes.
Ofcourse, the team that forms the shape first wins. The larger the group the more challenging the game is.
4. Guess the word
This tried and trusted game is where team members must guess a word that is pinned on a hat that they are wearing and cannot see, while the other members of the team try to explain it to them without saying the word.
- Bring a hat or cap, slips of paper, tape, marker.
- Write several mystery words on slips of paper, each word big enough to be read from two meters away.
- Split the teams into two.
- Start with the first team. One member wears the cap with the word taped onto the front.
- The one wearing the cap must guess the word by asking a series of questions within a minute.
The ones who know the word can only answer yes, no or maybe.The one wearing the cap must be able to deduce the word within the allotted time.
The team that gets to answer a mystery word fastest wins. Mystery words can be related to the company’s business, staff or completely random items.
5. Game of possibilities
Laughter, bonding and problem solving are all part of the team building experience. This game is ideal for both.
But first, it’s the rules of this game that make it fun! They are:
- The person may not speak while making his or her demonstration
- The person must stand while demonstrating
- The demonstration must be original
Here’s how it works:
- Give a paperclip to groups of 5 to 10 participants.
- A person from each group takes turns to demonstrate a novel way to use the paperclip that has nothing to do with its intended purpose.
As you can see, this game can be used with other office items as well, instead of a paperclip (e.g., pen, water bottle, telephone, etc). Hopefully, your team will think up new and unusual uses for everyday objects and translate this experience to creating new ways to solve problems, use resources or motivate a team.
6. Campfire stories
This classic activity inspires storytelling and improves team bonding. Storytelling is at the heart of the community experience, and can get a large group to loosen up and share their experiences, and know each other a little better. Here’s how:
- Gather teams of 6 – 20 participants into a circle.
- Use a set of trigger words to kickstart a storytelling session, words like “first day”, “work travel”, “partnership”, “side project”, etc. Add these to sticky notes.
- Divide a whiteboard into two sections and stick all the sticky notes from above on one side of the whiteboard.
- Invite a participant to choose one trigger word from the sticky notes and use it to share an experience. They then stick their sticky note on the other side of the whiteboard.
- As the participant is sharing his/her story, ask the others to note words that remind them of similar work-related stories. Add these words to sticky notes and paste them on the whiteboard.
- Repeat this process until you have a “wall of words” with interconnected stories.
Always have a clear ‘why’
Whether you take your team away for a retreat, or simply do an on-site breakaway, be sure to have a clear understanding as to why you are doing this, and what goals you want to achieve through these activities. Otherwise you might fall into the ‘doing activities simply for the sake of activities’ trap. Remember, it’s always about making your team feel more connected to each other, and to the business.
You could consider involving some team members in the planning process, and over time, you’ll find which strategies are the best fit with your team. Schedule team-building exercises on a regular basis to maintain a more content and productive team. These activities will become a part of your office culture, and can help to promote retention.
How To Strategically Minimise Accounting Costs As A Start-up
“Financial Compliance can be a costly exercise when approached carelessly”.
As a practicing accountant one of the most common phrases uttered by clients is that “I will get to my accountant when I can afford one”. The reality is your accountant costs can be minimised when you applying some simple tricks to avoid being charged an arm and a leg.
I have compiled a few areas where you can streamline your business to minimise your businesses accounting fees. Please bear in mind these are guidelines and a consultation with your accountant will still serve you best.
1. The ‘Shoe Box’ strategy is dead and gone
The shoe box is a box filled with all your company and supplier invoices jumbled into one box. As an accountant when faced with the shoe box we smile because now we get to charge our hourly rate doing admin that could have been done by either you the business owner or one of your employees. Accountants make a large portion of their turnover from doing admin that could have been avoided if business owners had more foresight.
2. Separate personal from business transactions
Nothing is more time consuming for an accountant then having to comb through a business income and expenses only to realise through consultation with the client that personal items were accounted for as business income or expenditure. As a rule of thumb remove all personal income and expenditure from your business in totality.
3. Record keeping! Record keeping! Record keeping!
Simple record keeping can be your best friend in reducing costs. Here are a few guidelines to live by:
- As pointed out in Number 3 have a separate bank account for business and another for personal
- Date and Number your invoices, sounds simple but very few start-ups put emphasis on this administrative function.
- Provide complete statements for the period requested by your accountant for your credit card and bank statements.
- Keep supplier statements as this will aid your accountant especially during the financial year end of your business.
- When submitting your debit/ card receipts and there is no accompanying invoice list on those receipts what was purchased.
4. Ask your accountant for a Retainer Agreement
A retainer agreement is a great way to ensure your monthly accounting costs do not fluctuate. With a traditional agreement your fees may spike when it is your company’s financial year end or when your taxes are due. With a retainer agreement your able to budget for a set figure payable monthly. This also translates to an attractive for your accountant who can now rely on a guaranteed cash flow injection monthly.
The bases for an accountants pricing will involve what their hourly rate is , the longer they spend on doing record keeping and deciphering what activities took place in your business the more you will be charged. Remember regardless of how close you are with your accountant or how simple you feel your business structure is your accountant will need as much information as possible to represent your business activities accurately on your financial records.