Senior Corporate Accountant Pauline Ho has highlighted a number of must-dos to ensure the accounting of a small business doesn't become neglected. —
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In an interview this week, Pauline Ho, of Laus Consulting Services LLC, in Orlando, FL., said: "Accounting is sometimes not a priority for a business owner as they try to balance commercial pressures, but it is often the one area that could prevent the business from going under."
Ho cited accounting elements to pay close attention to, from keeping an eye on cash flow through to preparing accounts in good time. Here she outlines the most important:
Manage receivables: When an invoice is issued, it is logged as receivable, meaning the customer owes you money. When it is paid, it should be logged as such. But often, business owners put that off till a later date. Rather than constantly falling behind and wasting time on a paper chase, set time aside each week or month to stay up to date with receivables.
Cash flow statements: Setting up statements will allow an owner to carry out timely reviews and understand where cash flows occur. These help give an insight into cash flow cycles and financial pain points.
Save, save: That's not necessarily cash, but expense receipts are often mislaid or thrown away. Such poor record-keeping can come back to bite in future tax or financial matters. One tip is to use a dedicated credit card so you can stay abreast of receipts in one location or take an image of it from a phone so that it is logged somewhere.
What to claim: Business owners should consult an accountant, but generally travel, home office, entertainment and gifts can be considered for claims. But again, backing up claims with receipts is a must for tax reasons.
Don't mix personal with business: When it comes to accounts, small business owners need to stay focused when it comes to keeping personal finance accounts separate from business accounts. Using a personal account for business can often become confusing.
Bring in a professional: As much as business owners crave managing everything themselves, Ho recommends bringing in an accountant to oversee financial performance. "They can be on hand to understand the ins and outflows, advise on tax issues, help them avoid potential penalties and build firm foundations for the future," she said. Business owners should consider
staying in touch with their accountants for timely accounting management advice.
Review statements: Ho said: "It should be a priority to keep a constant eye on different elements of the financial picture. It will give a snapshot of a business's assets, liabilities, and equity. One of the best ways is to prepare statements on a monthly or quarterly basis so they can understand the business from different angles."
Accounting technology: The availability of accounting software should be actively considered, acknowledges Ho, as it will enable different accounts to be managed effectively, and keep track of every dollar circulating within the business.
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