You may not enjoy number crunching, and maybe you've never even been good with numbers, but as a small business owner, the role of "accountant'"is one of the many hats you'll have to wear — at least in the beginning.
This is because your business' survival depends on a solid financial strategy involving efficient record-keeping, financial analysis and ensuring there's always more money coming in than there is going out.
Failing to anticipate this can be a major stumbling block, points out Viresh Harduth, the vice-president for new customer acquisition: start up and small business at Sage Africa and Middle East.
His top piece of advice: educate yourself on at least the basics of accounting practices. There are plenty of such short courses, even online.
Harduth has also highlighted five tasks that can make your accounting faster, more accurate and more efficient:
1. Move away from manual spreadsheets
As a manual solution, there's a good chance that errors can slip into your spreadsheet – and finding that error when you realise there is one, could force you to start the paperwork all over again. Automating data-capturing drastically reduces errors and makes those that are there as easy to fix as a click of a mouse.
2. Do your accounting regularly, and not just at the end of the month
It's tempting to put off financial admin until month-end or tax season, but this means a rushed job and a chance that you'll exclude important transactions. Set aside 15 minutes a day or an hour a week to properly record income and expenses and follow up on unpaid invoices. This is a surefire way to improve your cash flow and to spot problems.
3. Outsourcing too much can be costly
Outsourcing your entire financial management function when you're just starting out could end up costing a lot more than if you'd done it yourself. Accounting and payroll software solutions, available online, could do your business some good. They are easy to use and automatically comply with tax laws, as and when they're announced, helping you stay compliant.
4. Not outsourcing specialist functions could also be costly
While modern solutions simplify much of the accounting process, some tasks, like tax, are best left to the experts.
5. Have proper systems and processes in place
A shoebox filing system is effortless, but it's not exactly efficient, especially if you're audited.
- Scan receipts and save them to the cloud, or link them to your online accounting solution;
- Rename each receipt with the date, vendor and expense category e.g. fuel, entertainment, rent;
- Create a folder for each month in the financial year and organise your receipts;
- Save these inside a master tax folder. This makes searching for and discovering transactions fast and easy.