Whether you work as a sole trader or you are the director of your own limited company, it is a dream to be on top of finances and keep your business channelised through it. Now, most of you must be wondering what could possibly be the easy ways and how to keep your accounts organised? Well, here is just the basic simple guide for you that will cover three important factors to make it possible in cheap ways.
It is important for a businessman to have a clear picture of how much profit he makes? what amount is to keep aside for the tax purpose and what is left for the business valuation in this process. You must have heard about keeping the books, it is just as same as keeping your accounts maintained.
Further, in the discussion of this article, we have added the following points:
- Simple ways to make a start – Keeping Accounts
- How to manage accounts?
- The Bottom Line
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Simple ways to make a Start:
The need for accounts may vary from business to business and it depends on what scale are you carrying out your business. If the need is basic and straight accounts then a spreadsheet is a good catch to start keeping your accounts maintained and channelise the financial reports.
This will easily fulfil the cause of putting accounting data straight and this will help you to learn the pace of your business as well as it will balance the bank accounts. Cost and income will appear in a clear picture.
This easy process will easily cover the following details:
- Business receipts about payment
- Payment details paid through bank
- Paypal account payments
- Paypal receipts related to the business payments
To double-check that the process you followed was right, you can always reconcile the Paypal accounts and the business accounts as well. This could include the following:
- Year-end equal losing balance
- Total cost must be less
- Check total income
- Brought forward the opening balance, this case will not be necessary if it is a new account.
Sometimes, the closing balance and the statement do not match or agree with the records. Even if it does not match with Paypal account details, then there is a possibility of mistakes in the bookkeeping. Paypal statements or bank transactions can be rechecked to figure out the mistakes.
How to Manage Bank Accounts?
It will be easy to manage the bank details of transactions and money or it will be harder, it all depends on how you might want to keep it.
1- Manual Way to use Highlighter:
Since, we all want ease when it comes to keeping accounts, so a basic way is to keep different coloured highlighters and go through your details line by line. Saving expenses, fixed expenses and variable costs can be highlighted by one colour code.
2- Use Need-Based Separate Accounts:
Once you are done with categorising, it is the right time to see ways to keep it even more manageable in an effective manner. Another technique is to keep one account for the fixed expenses, another saving account for saving purposes and a third cheque account for the variable costs.
This will give you a better idea of how fixed expenses do you require and what amount of money is needed for this purpose. This will help to pay all the fixed expenses like the bill payments every month. Saving accounts will help you to know that how much amount should be kept aside for business urgency and growth plans.
The same way variable cost needs a clear picture, this cause will be fulfilled by the third mentioned account and you would know what are the irregular expenses in your business expenses.
3- Online Folder Structure:
Since HMRC accepts the soft copy of accounting records. So, google drive and dropbox are extremely user-friendly options to keep a record. Keep your accounts saved online and evidence can easily be given to HMRC. The process is less time-consuming and there are fewer chances of errors as well.
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The Bottom Line:
To sum up the discussion of how to keep your accounts, we can say that account keeping makes it a lot easier for people to streamline their business basic requirements. With a better picture of your business needs, it will be helpful to channelise your thoughts and energies to better put in the growth process of business in the future. We hope this article developed a better understanding.
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Disclaimer: This article intends to provide general information based on how to keep accounts.