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Accountancy and book keeping for new businesses
Start the way you mean to go on. In very straightforward terms :
BUSINESS ACCOUNTS MUST BE ACCURATE AND UP TO DATE
Sorry to shout, but this is important.
- You don't keep accounts up to date for the tax man.
- You don't keep accounts up to date for the vat man.
- You don't keep accounts up to date for your accountant.
- You keep your accounts up to date for you.
Why is it important? Businesses survive and die based on their
financial position. If you don't know where you are financially,
you cannot plan. At any moment you need to have an idea of : how much
money you owe your suppliers, how much money your customers owe you
and how much money (or overdraft) you have in the bank. Without
these bits of information, the operation of a business can only be
charitably described as 'guesswork'.
Quite apart from that, keeping accounts is a legal requirement for
all Limited companies.
FINDING AN ACCOUNTANT
Accountants traditionally have a bad name, but this is almost always
unjustified. You should regard your accountant as your friend rather than
your enemy. Accountants save you tax and keep you legal. Their job revolves
around reducing tax liabilities by whatever legitimate means they can.
Their work is often quite time consuming and therefore can be costly, but
if you ask your accountant for an estimate of what your annual costs will be when
you first meet. Meeting your accountant is essential. Not everything
can be done by phone, fax and email.
KEEPING ACCOUNTS ON A COMPUTER
Keeping accounts on a computer package is now accepted and expected by
accountants and government departments alike. There are many choices
over how you do this, from a straightforward spreadsheet like Excel (a
very DIY approach) to a full accountancy package such as OmniAccounts
or Sage. The advantages of keeping computerised accounts are many, but
one common mistake computer-literate people mistake is assuming that
because they know how to use most software, that they will not have
any problems using accountancy software. This is a bad assumption!
The best thing to do is to read up on the principles of business
accounts ; almost all business accounts software works on the
Double Entry Bookkeeping method. Without going into exactly what
this means, it's advisable to read about and understand this before
embarking on computerising your accounts.
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