Accurate, tidy, up-to-date bookkeeping records are vital to your business. And here's why…
Rubbish in, rubbish out
Not only will you be able to see spending and keep tabs on it, you will see your revenues and their growth (or lulls), you'll be able to see who owes what and to whom, and you will have an accurate picture of your business in the here and now. Leave it and you just get a horrible and untidy mess where you don't know up from down; which is not funny when you want to know where all the money is.
Once that accurate data is in your accounts system, you will be drawing your summaries and understanding about your business from what you see in the accounts. If its accurate in the first place then you get an accurate picture of your business when you start to work with looking at cash flows or your financial position, or where you want to start planning based on what happened before.
Softwares make it simple. Sometimes too simple.
Processing the data of transactional movements can get messy if left and so it remains best practise to uphold regular (daily?) processing of all transactions so they are done. The worst is when purchase receipts are lost or not accounted for at all. Leaving too much time between having a ‘sort out' will make the task arduous and hard going, you will hate it along with anyone who is working with you. And yet, there are some beautiful pieces of software that make the process as easy as it can be and relatively painless, but ONLY if you keep the processing of it all up to date.
However, unless you are a trained bookkeeper, you won't necessarily get it right and you likely won't know ‘what should live where' and this can cost you dearly in the long run. We have done many tidy ups of accounts in the past and found significant errors and often to the detriment of the business owner. For the relatively small outlay of a high quality bookkeeper it just isn't worth it. Here at Brilliant Numbers, we offer a supervisory service for those business owners who are bootstrapping in the early days and we provide training too. Once the business gets underway in earnest and there is a little bit more cash available there is no excuse not to have someone managing those transactions regularly and well. There just is no excuse for not having squeaky clean accounts which are going to serve you massively.
What does it mean?
- Recording every single movement of of incoming and outgoing transactions
- Reconciling those activities against the bank statements and making sure that it all matches up; this flags up errors or late payments and even fraudulent activity!
- Payroll journals and payments to employees and HMRC and then those payments matched up and reconciled with your HMRC account and the bank account.
- Applying tax and separating payments and incomes due in the relevant frame of time; in the right accounting period
As the business gets bigger then the task gets more complex and you need ever more transparency on your business so that you can manage it well. Automating your processes can really help with the speed and ease of data control. However, when that goes wrong for whatever reason, then you need someone who really understands bookkeeping and accounting to hep you put it right. Software and automating can make your life much easier but again, it can create a real mess if not applied in the right way.
The most important element of data and running your business is in being up to date. Once you are up to date, you will feel the sheer relief of knowing where you are at. Then you just need to stay up to date by simplifying the data processing itself, making it so easy that you enjoy it and have some help to cover off the complexities.