7 Rules for Keeping Control of Your Business Accounting

There are many difficulties in starting and keeping afloat with a business, but one of the most important ones that many entrepreneurs make sure to lock down is utilising effective accounting practices. It doesn't matter if you're hoping to run a new startup or if you are going to be in control of a well-established empire, having a well-controlled business accounting situation is integral for success over the long term. This article will cover just that, we will go over what we think the seven most important rules for keeping a tight handle on your business accounts are and hopefully help you to navigate the complexities and vagueries of business accounting.

1. Prioritize invoicing

Some might think that invoicing is just a procedural task that needs to happen in the background and not think much more of it, they would be wrong. Timely and accurate invoicing should be the strategic cornerstone of all of your cash flow management. By ensuring that your invoicing is happening in a timely fashion, you will ensure that you have good and stable client relationships while also making sure that you have a steady revenue stream. A great way to make sure that the invoicing is all going according to plan is to implement automated free invoicing software that streamlines the process and minimizes the chance of human errors. Having clear payment terms and promptly following up on anything that might be overdue will maintain that healthy cash flow cycle that you need. It might seem basic, but the most complex systems are built on the backs of basic things, in the same way, having a solid invoicing practice will ensure your business has financial vitality.

2. Maintain detailed records

The transactions that take place over the life of a business can be many and varied, and it's not uncommon for them to be somewhat disparate from each other. Because of this, keeping a meticulous and clear record of all your transactions can act as a beacon of clarity should you ever need to review past transactions, which you certainly will. Documenting every interaction with precision is a must. Digital accounting solutions can be used to organize these records and that will help them remain accessible and transparent across the entire business. By having a comprehensive record-keeping system in place it will be easy to prove that you are compliant with regulatory needs but it will make it easy for you to collate and analyse data about your own business's financial history and then make well-informed decisions driven by that data.

3. Separate personal and business finances

This might seem like a no-brainer, but it needs to be said. Do not mix business and personal finances unless you don't care about your future or the future of your business. By having a firebreak of well-established and distinct bank accounts and credit lines for your specific business costs you will ensure that your personal assets are shielded from any troubles your business might find itself in. Practising financial compartmentalisation is a smart move that will ensure that your personal and professional realms both remain fiscally separate and, hopefully, healthy.

4. Regular reconciliation

This is another rule that might seem somewhat basic but is oh-so-important. Most of you probably know what financial reconciliation means, but in case someone doesn't, financial reconciliation is the process of comparing two sets of information to verify that one or both of them are accurate. The reason this is important for businesses is that it will prove to you that all of your accounting and invoicing is being done correctly and that no money is going missing. By doing this regularly you will protect yourself from potential fraud or simple errors. As the steward of your business's finances, it falls to you to make sure that nothing is going wrong and no one is taking advantage of you, financial reconciliation will ensure this.

5. Budgeting and forecasting

While no one can know what might be around the corner and global or local events can upset the balance and capsize a business of any size, it's still important to look ahead and have some sort of plan. When budgeting try and encompass all of the different revenue streams available and marry them to expenditure categories that make sense, by making sure the expenses and revenue come in line, you are setting yourself up well. Budgeting ahead will also help you to not spend more than you can afford, and keep you grounded in the reality of what your business is able to accomplish on a short and long-term basis in terms of expenditure. Budgets can be regularly revised and updated as new clients come in and old clients leave, as well as in response to shifts in whatever market your business happens to be tied to. Even a poor attempt at forecasting and anticipating the future outlook of your business is better than none at all.

6. Stay updated on tax laws

We can't overstate the importance of this enough, tax law can change and it is not a good idea to let your business slip into noncompliance with tax law. If you are handling your business tax yourself, you must keep abreast of any changes in any tax laws that might affect you. The best way to do this is to keep in contact with tax professionals, consult with them and help build a strategy together. Being proactive about your tax compliance is the only sane way to approach it.

7. Invest in accounting software and professional support

In this day and age, many many tools can be used to aid you in financial management. You should invest in robust and up-to-date accounting software that is relevant for your business, if possible find software that will save you work and automate a number of the mundane tasks that otherwise can eat time. Another great idea is to hire experts in accounting for your field, or even to outsource some of your accounting to a firm of seasoned professionals. Using technology or paying experts is a very wise move for such a complex and critical task to your business's success, and it will free you up to focus on other things.

To conclude, a business is only as strong as the accounting cornerstones on which it is built. These seven rules are by no means an exhaustive list, but we think they are the most important. Prioritise invoicing, maintain records, keep personal and business finance separate, conduct regular financial reconciliation, budget and forecast for the future, stay abreast of tax laws and utilise experts and technology to aid you. If you do these seven things you will ensure that the financial foundation of your business is strong. The path to financial mastery begins with the disciplined application of basic but sound accounting principles.