With the UK being home to some 5.56 million private businesses as of 2023, firms of all shapes, sizes and sectors clearly play an integral role in making – and keeping – the UK an economic success story. But your own business will not be able to achieve survival and growth for itself, if its accounting practices are not at the standard they should be at.
So, whether you are a key decision-maker for a small business that is looking to better optimise its tracking of income and expenses, or a larger entity with multiple accounts across different departments, having the right procedures in place should be a critical priority of yours. It will be key to ensuring you remain compliant and in control of your organisation’s finances, so that you can plot further success for your company over the months and years to come.
To help, we have compiled a list of our top accounting tips for businesses here at ST Accountancy. Read on to learn more about how you can improve your organisation’s accounting practices and take a more proactive and informed approach to managing your accounts.
How do personal and business finances differ?
The first crucial thing to understand is the difference between personal and business finances, and the importance of keeping them separate from each other.
As the name suggests, personal finances are those related to your own personal expenses, while business finances relate to the money that goes in and out of your business accounts.
It is vital that you have a system in place that enables you to separate these two types of finances. If you are unable to differentiate between the two, it can be easy to get into financial difficulties and make mistakes when tracking your accounts.
Many banks offer accounts dedicated to businesses. Taking advantage of such services can be a great way to ensure any business transactions are kept separate from your personal finances, while also typically enabling you to access better deals and more features.
Another vital accounting tip for businesses is to ensure you stay on top of tax deadlines. Businesses, depending on their size and structure, may have different obligations when it comes to filing taxes, so you should make sure you understand what these are and plan accordingly.
HM Revenue & Customs (HMRC) requires businesses to submit their tax returns on time, and failure to do so can result in hefty fines. It is important to factor these into your budget, and to ensure you have enough funds saved up to cover any potential liabilities.
Of course, by engaging the services of suitably qualified Suffolk tax accountants like our own here at ST Accountancy, you can guard against the risk of ever breaching the UK Government’s tax rules in the first place.
Budgeting and forecasting
Budgeting and forecasting are essential for any business, as they can help you to keep track of your organisation’s finances and ensure you remain in control. Budgeting refers to setting a financial plan for your business that outlines how much money you plan to spend and earn, while forecasting is the prediction of future trends based on past data.
By understanding these two processes, you can take a more proactive approach to managing your business’s finances and avoid any nasty surprises down the line.
Both these practices should be revisited and updated regularly, so we would urge you to factor this into your monthly routine. By taking the time to do so, you can help ensure your business is on track financially, make sure any deadlines are met, and identify any potential issues well ahead of time.
Another key element to good accounting practices is auditing. Auditing is the practice of examining and verifying financial records to ensure they are accurate and up to date. Taking the time to go over these documents with a fine-toothed comb can help identify any potential issues, as well as any areas that could be improved or streamlined.
Auditing should be carried out on a regular basis, ideally at least once a year. You may want to consider hiring an external auditor to carry out this process, as they will be able to offer an unbiased view of your accounts and help you identify any potential problems.
Must-know accounting tips for businesses
Accounting is one of the most important aspects of running a successful business. So, how can you make sure you get it right every time?
- Follow the correct procedures
It is important to ensure that all financial transactions are carried out correctly and in the right order. Following procedures such as double entry bookkeeping and having accurate records will help to avoid any costly mistakes.
A good understanding of how accounting works can also be beneficial, so you should make sure you take the time to educate yourself (even if you won’t be directly acting as your company’s accountant yourself).
- Keep up to date with regulatory and legal changes
The world of accounting is constantly evolving. With this in mind, you will need to make sure you stay up to date with any changes in regulations or laws that may affect your business.
Examples of potential changes in this regard encompass the likes of new tax rules and changes to how your business is required to report its finances. When you stay abreast of these updates, you can be in an optimal position to adapt quickly, so that your business is kept compliant and avoids being hit with any penalties that could arise due to non-compliance.
- Take advantage of suitable accounting software
Using the right accounting software can help streamline your accounting processes and make them more efficient.
Many different types of software are available, ranging from simple spreadsheets to somewhat more advanced solutions. It is important to select the right one for your business, as this will depend on your size and industry.
- Draw upon automation
Automating certain accounting processes can help make them more efficient and reduce the amount of time spent on manual tasks.
You might achieve such more automated operations by using online invoicing software, or by taking steps to integrate your bank accounts with your financial software.
Such measures could be instrumental in the ongoing transformation of your organisation’s accounting processes, so that they are as good as they can be through the rest of the 2020s and beyond.
- Understand cash flow
Understanding your cash flow is essential for managing your company’s finances successfully. Keeping track of the money coming in and out of your business will help you to identify any potential problems, as well as opportunities for growth.
So, make sure you monitor your business’s cash flow on a regular basis, with the help of suitably qualified accounting professionals, and adjust your firm’s budget accordingly.
Reach out to our team for expert help with your business accounting
Here at ST Accountancy, our team of skilled and experienced accountants can help you manage your organisation’s finances more effectively, as well as ensure your business is compliant with all the latest regulations. With a wealth of knowledge and expertise, we are the perfect choice for all your accounting needs.
Our team has worked with businesses of all sizes, ranging from smaller start-ups to large-scale operations where we can provide a statutory reporting accountant in Suffolk, and many other services. We have the expertise to provide the best advice and assistance. To find out more about how we can help, please get in touch today, and let us take much of the stress out of the task of managing your business finances.