If you own a business or you are holding an important portfolio in a business organisation, you ought to know the importance of bookkeeping. Bookkeeping is an essential aspect of every business that can make or break the business. A badly maintained ledger of expenditures, receivables etc. can create chaos while accounting. Read on to know the book keeping tips that will make you a better business owner.
How Bookkeeping Tips Will Help Your Business In Dubai?
Dubai is a flourishing city and is home to countless dreamers who want to conquer success in the field of business. Your small business in Dubai can turn into a conglomerate in less time than expected, provided you understand even minor changes in the world of business and follow the right path that includes perfect bookkeeping services in Dubai. A good business owner is expected to keep close track of all the debts, income, and expenses.
Of course, there are software and reputed accounting firms to support business organizations. A credible accounting agency will be of great help in monitoring cash flows and guiding the management accordingly. A detailed plan and successful execution of the same will reward you with success in business.
The bookkeeping tips that will make you a better business owner are appended below.
Keep Separate Business and Personal Finances
A person will have financial requirements in both personal and business field. Some of the money outflows such as given as credit, personal tax, property tax will be of personal in nature. Those must be recorded separately and monitored. Not keeping a separate ledger/ account system may cause confusion regarding payments due towards the government.
Keeping a separate business account, credit card and keeping all the receipts of expenses and incomes accounted separately can aid in reviewing financial status at the end of the year. Being the bank account, credit/ debit card in respect of the business is different. The calculation of expenses could be undertaken with a snap of the finger.
It will be a better thing if you start paying yourself as an employee. The payment should never exceed the top sealing. Once you practice paying self, it will control your personal expenses too. Or else you will end up spending uncontrollably, even from the business profit/ principal amount.
Don’t forget that the moment you start spending beyond the stipulated limit, the downturn of your business begins. It is essential to keep personal expenses at a check always. The personal expenses include that of the family.
Keep Records of Business Expenses
A business expense can include both expenditure and debts. Each penny spent on the business has to be entered into the ledger/ computer system and monitored. An employee in the organisation has to be designated for the task. He or she must undertake a weekly review of the expenses and intimate the management if it crosses the expected limit.
Separate books/ registers are required to keep a close watch on expenses and debts. Whereas debts are to be returned in the specified timeframe and expenses are to be controlled if the budget overheads are high. Nowadays most of the business entities are assigning reliable bookkeeping agencies for the bookkeeping services. They are experienced in the field. And an agency can be of great help to the organisation.
The expenses could be entered and maintained in a computer system. However, it must be ensured that the backup of the data is maintained. Any unforeseen defect on the system can result in loss of entire information.
Keep Track of Accounts Receivable
The money pending to be received from clients and debtors has to be tracked closely. Both the parties are to be reminded from time to time if in case, there is an undue delay from anyone. The on-time receipt of the receivables only enables the organisation to run smoothly and climb to success.
You will find a lot of examples with respect to business firms turned pauper due to poor management of funds. A company can grow only when it balances the expenses and receivables in the correct manner.
It is also important to remind clients of the pending payment without irritating them. Since they are required for the growth of your business. Any kind of disparity between the business and customer can affect the business negatively.
Conduct Quarterly Review
Periodic review of all kind of expenses, budget overheads, receivable and the status of development of business is vital. In addition to fortnightly/ monthly review by the assigned team in the organisation, a comprehensive budgetary review by an audit team will be of greater help for the growth of the organisation.
Any kind of errors, the unexpected expenditures, future fund requirements, money required for business expansion etc also could be deliberated during the quarterly review. Since the quarterly review can help in the decision regarding the future of the business, an authoritative person from the management should lead the review team.
Do regular financial check-ups
Regular financial inspections are also required in an organisation. This can include periodic check-up viz. quarterly, half-yearly or annual and inspections without notice. Inspections will enforce the employees assigned for bookkeeping to do the task with alertness. And can prevent any kind of financial frauds in the organisations.
Financial irregularities observed during financial inspections should be investigated to find the guilty. Any financial discrepancy let off without proper examination can sink the business. The inspection must be led by the team independent of the financial division of the organisation. So that unbiased financial inspection could be ensured.
Automate the Systems
Business firms have turned to automatic software for maintaining bookkeeping. The software can be of great help in maintaining the data regarding expenditures, receivables etc. Further, reminders for payment of taxes, receipt of invoice payment, and repayment of debt also would be provided by the software.
With software, the business owner can have data regarding financial condition any time they want. The accounting software is easy to use and has multi-tasking capabilities. Most of the candidates aspiring to be accountants are experienced in the usage of accounting software nowadays.