Is bookkeeping for a small business an art or a science? The answer is neither. The precise answer is it is mandatory. Bookkeeping is something that a person loves to hate. It is a necessary evil that no business can do away with.
Following are five tips that can that can help you out in this regard.
Segregation of Accounts
Don't ever operate your business from your personal account. Both these entities have your hard earned money, but mixing both into one is a recipe for disaster. If you use the same account for both the purpose, your accountant would be saddled with grocery and clothing bills as well as number of unknown cash withdrawals and he will scratch his head thinking how to manage these accounts. Don't mix your personal finances with your business'.In-House Accountant or External Accounting Agencies
This is a dilemma that every small business encounters. Keeping an accountant on a monthly salary is not a viable proposition. Most businesses have an in-house accountant thinking that an external agency is cost prohibitive. In this commercial age, this is not so. You can hire an external agency at one-tenth the cost that you pay your accountant. With cut-throat competition in this sector, the external agencies offer you a free trial and a customer friendly rate. They are up to date with all the laws and by-laws and even the newest rules. They are specialists in their jobs and warn you as to where you are going wrong and give clear and concise advice on what needs to be done. Your in-house accountant tells you what you want to hear, and the external agency informs you of what you need to hear. Mind you, your job is to run a successful business and your accounting firm takes care of the non-core end of your business. Don't be penny wise and pound foolish.Records
Not a rupee spent or received should be unaccounted for. If you spend Rs. 200 daily on providing tea to your staff, get a bill for the same on a printed paper. Otherwise, at the end of the year you would have spent Rs. 70,000 on tea expenses and if you don't provide a bill, the tax authorities are not going to take your word for the same. Proper bills are the only thing that the authorities are going to understand. Spending 10 minutes daily to write your day's receipts and expenses will help you avoid working 10 hours after a month. Cheques and cash are one and the same. A person might make an entry when paying cash but fail to document a cheque issued. This will prove catastrophic at the time of accounting.
