It is an undeniable fact that accounting plays a great role in every business. No matter whether you are running a small company or a big business empire, you need accounting as it helps you to plan for long-term goals and increase the profits you earn.
So, how do you handle your accounting tasks? If you have just started (Also see Steps to Take for Startups) running your own business (Also see How to Start a Business in Malaysia?), your small company may not be able to hire an in-house accountant. Some would choose to do the accounting-related tasks on their own, but they may find this challenging, particularly if they do not have any prior knowledge in accounting. In this case, hiring an accounting firm in Johor Bahru is a better choice because, with the help of the experts, business owners do not need to spend much time on this task. This way, they can have peace of mind too as they let the professionals handle their books or accounts.
For business owners who still prefer doing the accounts on their own, here are some accounting (Also see The Importance of Accounting) tips that may help to smoothen the process.
First and foremost, business owners need to make sure that they stay organised for the whole year-round. They need to develop a systematic way of managing their business records as well as review their cash flow and bank statements every month. Keeping the receipts of every business transaction is a good habit they should have as this ease the process of record keeping. To prevent the documents from piling up, they need to allocate some time to manage the paperwork every week.
If business owners wish that they can get paid punctually, they should ensure that the invoices they issue are accurate. They need to spend some time on setting up their company’s invoicing system. In this process, the issues they should look into include the frequency of invoicing, the methods of making payments, as well as the design of the invoices. Clear and accurate invoices help to ensure that the customer knows when, how much and the items they are paying.
Accounts receivable is probably a part that most business owners may neglect after they have completed a deal. However, this is the sum of money that their company should collect from its clients for the products and services they have provided, and this is the money that ensures that the company can run smoothly. Late payments can bring serious consequences to the business’s cash flow. To solve this problem, business owners should establish a reliable system to keep up with the company’s accounts receivable. They should also review their credit policy and adjust it if necessary.
Apart from that, tracing for expenses is crucial too, as this helps in increasing the profit margins pf the business. Some business owners will only calculate how much they have spent every two weeks when they are accounting for payroll. However, this is not a good habit as it can easily cause confusion and unintentional omissions. Business owners should trace their expenditures every day so that they know how much they have spent. Based on the figures, they can establish suitable strategies or system that helps to manage their funds too.
Major expenses may be one of the events that hit small businesses the most as they have rather limited resources and funds. Thus, if business owners want their business to run smoothly, they should never forget to plan for big-budget expenses. They need to make budget plans for the purchase of machinery, equipment or expansive office supplies. Also, it is mandatory to set aside some funds to settle the taxes according to the monthly sales.
Here are some accounting tips that may be helpful for business owners who want to manage the books of accounts on their own. They need to handle this task with care as errors in record-keeping may affect the accuracy of their financial statements. Also, they should manage their accounting (Also see Work in Process Accounting) tasks on a daily basis to prevent the tasks from piling up.