As an entrepreneur, you’ll often find yourself having to carry out tasks that aren’t your field of expertise.
As you embark on the entrepreneurial journey filled with hurdles, you’re going to need all the advice and help you can get.
Unless you are a bookkeeper, or a maths and regulations enthusiast – then ruinous bookkeeping hurdles can creep up on you. You need to learn how to manage your accounts and finances, and preferably flawlessly.
To give you a little nudge in the right direction, here are some of the most common sins that SME’s commit. Hopefully, you’ll be able to manoeuvre around them.
Mixing business with pleasure
When you’re running a business, it’s easy to mix business and personal finances. You pass the shop on the way home from work where you pay with the company card. You fill your personal amazon trolley with things for work.
Faffing about and not being careful comes with a price. We’d recommend you keep your personal accounts and cards carefully separated from the ones of your business.
A complete separation of accounts, cards, and purposes doesn’t only reduce the temptation to use the company card for personal purchases, it also drastically reduces the accidental crossover.
Don’t be an ostrich
In startup life especially, there’s no running from your problems. Digging your head into the sand, humming loudly and ignoring all numbers that aren’t promising is a bad, bad idea.
As a business owner, you should be tracking and tracing every penny, deepening your understanding day by day.
We’re not all good with numbers, just as we can’t all fix a broken tap or play a champions league match. But you cannot dodge the the numbers, you have to learn!
Get involved in startup circles, ask your friends, your accountant or your bookkeeper for a crash course in bookkeeping.
Dishonest bookkeeping is a big nono.
Whilst it can seem a good idea to jot down a white lie in return for short term gains (whatever they may be), we can almost assure you that it will come back to haunt you.
The rules are very clear: don’t go on holiday for company money, don’t underreport earnings and keep the difference, and don’t take money from the petty cash. Easy as that.
Today you can automate your backups and never have to worry again for a few quid a month.
Loads of businesses still live in oblivion, completely ignoring the need to backup their data. As a result of this, when things go wrong, when the old hard drive dies, or when buildings burn to the ground, businesses lose everything.
We strongly recommend keeping multiple records and storing them in different locations, on- and offline. I.e. a hard drive on site, and a cloud backup service. So should one be destroyed or corrupted, you will have a replacement
Receipts are a hassle, there’s no denying it. That said, keeping receipts for your accounts simply isn’t optional.
If audited, the auditors will need to see receipts. If you’ve been too lazy to file proof of all your expenditures, you’re going to be in trouble.
Keeping on top of receipts doesn’t take much. Give someone the responsibility of acquiring and storing the receipts in a box, then designate half an hour at the end of every month to scan these and file them onto your computer for safekeeping.
Bookkeeping is based on accuracy and consistency. Take one of these away and the information will be utterly useless.
To run a long term successful business, you need your bookkeeping to be clear and transparent so you can make well informed decisions.
Whilst financial forecasts are based around informed estimations and guesswork, bookkeeping is not. If you start estimating figures, your books are basically worthless.
Whether you’re buying the weekly milk for the office, getting new hardware or investing in new business you need to update your records regularly to make sure you’re numbers are on point.
Guesstimating facts and figures is a slippery slope. Make sure you keep your books precise and transparent so you don’t end the financial year with a few thousand pounds unaccounted for.