- Accounting is the process of identifying, measuring, recording, and communicating financial transactions related to a business.
- Small scale businesses should focus on accounting as this can boost the growth of their business and, if not taken care of, can even be the reason for their losses.
- Book-keeping is needed to be done on a daily or periodic basis as it maintains and expands the financial wellness of a business, be it small or big.
- Bookkeeping helps a business owner know where and how he is investing his money and how he can benefit by cutting down unnecessary costs.
- This is an article that would enhance your bookkeeping skills.
Daily accounting tasks
We are all aware of the accounting needs in today's day-to-day life. Small business owners are worst hit by not being able to keep the records of their expenses; since they are small business operators, they need to be available to provide service to their customers, which decreases their accounting efficiency. They tend to spend a lot of time resolving their accounting inconsistency in the audit season.
Here comes the need to create and follow a daily accounting routine. Daily bookkeeping is a small step that eventually helps you win the race; as we all know, slow and steady wins the race. The below mentioned some of the daily tasks can help you improve your effectiveness and the precision of your business.
Recording and depositing payments
Stop procrastination and maintain a record of the payments as soon as you receive them, be it cash, invoice, or cheque. Get things done accordingly, and you can save a lot of time and consider it investing. Try not to keep any backlogs and deposit the cash as soon as you receive them.
Log your payments as soon as you receive them as it would help you be safe from the confusion that can happen due to the payments about which you don't have any idea. If possible, try to mention the project name next to the payment to make it easier to identify the incoming and outgoing amounts data. Try to do it on a daily basis as small business owners and even big businesses sometimes have lots of transactions to be performed every day, which would tend to create confusion when the reconciliation is not done regularly.
Updating financial data
There are a lot of software and applications present on the internet that helps you keep your financial data updated. Even if it is done manually, it would also take down the risk of inaccuracies in the payments as one can spot the differences very soon if it is kept updated every day. If this task isn't performed daily, this can even turn out to be a financial shock for you as you would not be able to maintain the balance between your expenditure and income.
This can help business owners build strong roots in the market as good inventory management is what makes you manage your money. For example, if businesses run out of stock they would lose a huge amount of sales. If reordering of stocks has to be done then an ample amount of funds has to be available. Ordering more stocks would result in financial tension as it would not fetch you the amount you estimated to get. So if this task is done properly, this could help save a lot of money and reduce the financial risks associated with it.
Paying the invoices
Checking the invoices regularly allows you to keep an eye on the due payments. It can avoid discrepancies regarding the bill and the payment, as you'll have a perfect record of all the transactions that one cannot refuse to accept.
Monthly accounting tasks
Certain important tasks need to be performed on a monthly basis in order to avoid any unwanted dispute and defamation. Here are some checkpoints that you need to take care of.
Maintaining monthly payrolls of the employees.
This is one of the most hectic tasks that can burden you if it isn't done on time. Many small business owners have a weekly or monthly payroll system. However, maintaining payrolls can turn out to be a tedious task if not done regularly. This task can help you cut down the risk of payment disputes.
Backing up your data
Try to back up all the data you have entered as you would not lose any data if any hardware failure occurs. You can use cloud-based accounting software for this, or this can be done manually as well. Taking the backup manually allows you to restore the document that gets deleted and reduces the risk of losing data. It is easier to fix, change or re-enter the data if backing up manually.
Keeping an eye on legal matters
It is suggested to keep a check on legal matters since legal matters, if left unattended, can turn out to be a blunder that a business owner can make. Try to resolve all the legal matters as soon as it comes under your supervision.
Checking and paying the taxes applicable
There are various kinds of taxes one needs to pay. Not paying taxes on time can give rise to unnecessary legal matters and a loss to the reputation and fame of the company as well as the owner.
Maintaining a sales report.
Maintaining a sales report monthly helps you understand whether a product is in demand on not. It can help you cut down the risk of loss in the future and can even help you gain profits. Using a sales report, one can closely look up the money he is investing and the amount he is getting in return, which eventually helps the business grow stronger.
Annual accounting tasks
Certain tasks that do not seem to be important on a weekly or monthly basis and are avoided can lead to greater risks to the company's financial situation. Here is a list of tasks that need to be taken care of on an annual basis.
Preparing and analyzing year-end financial statements.
It is important to assess the yearly financial performance of the company and its present financial condition. It would help you plan and build strategies to further increase the financial returns of your company. This data needs to be accurate and can turn the lucks of the company as several points don't seem to be important but are important and get covered in this year-end financial statement.
Preparing a profit and loss statement
This is one of the most important things to be done as without analyzing the profit and loss data, you can not determine where you are losing and gaining money. This is the turning factor for every successful business. This can help you visualize the further plans that need to be implemented in order to improve the company's financial growth.
Completing audit and year-end tax returns
After completing the above-mentioned statements, one can prepare an audit. The law requires the financial statements to be audited by an independent auditor to check their accuracy and integrity. This needs to be done before presenting a neutral audit report that banks, shareholders, and the government use. This must be done by an expert or a certified professional as it adds more value to the business than only the bureaucratic requirements. It helps to determine the tax liabilities applicable and suggest the changes that can improve the company's efficiency. These audits are to be filed in March or April each year, and you need to pay the quarterly taxes and the pending amounts.
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