Manage your business accounts well

Accounting is one of the most important parts of any business, regardless of its size or industry. It allows you to follow the company finances, to manage the inflows and outflows of money, produce financial statements and make informed decisions about the future of the company. Well-managed accounting can provide solid foundation for growth and success long term of a business.

However, accounting can also be confusing and frustrating for many entrepreneurs. If you don't have an accounting background, it may seem overwhelming and difficult to manage. Fortunately, by following a few simple steps, you can set up strong and efficient accounting for your business.

In this article, we'll go over the steps you need to take to properly manage your business's accounting, as well as the benefits of well-managed accounting.

Whether you are a beginner or an experienced entrepreneur, this guide will help you learn the steps to keep good business accounts. But before that, what is accounting? What are the advantages ?

Let's go !!

🌿 What is accounting?

Accounting in a company consists of recording all the financial transactions carried out by it. This includes maintaining accounting books, managing invoices, verifying bank statements, preparing tax returns and other tasks related to the financial management of the business.

For example, When a business purchases office supplies, it must record this transaction in its books of account by debiting the office supplies account and crediting the cash or vendor account, depending on the method of payment used.

Similarly, when a business sells a product or service, it must record that sale by debiting the cash account or customer account and crediting the corresponding sales account.

Accounting is therefore a essential function of any business, because it helps you track business expenses, revenues, and profits, meet tax and regulatory obligations, and make informed financial decisions.

🌿The different forms of accounting

There are several forms of accounting that businesses can use to manage their financial activity. Here are the main forms of accounting:

Single-entry bookkeeping: This method is the simplest and consists of recording expenses and receipts in a cash book or a register of purchases and sales.

Double-entry bookkeeping: This method is more advanced and allows better management of the company's cash flow. It involves recording each transaction in two different accounts – a debit account and a credit account.

For example, if the business purchases office supplies, it credits its bank account and debits its office supplies purchase account.

Analytical accounting: This method makes it possible to analyze the production costs of the company and to identify the sources of income. It is useful for companies that want to optimize their profitability by identifying costs to reduce and revenues to increase.

Cash accounting : This method consists of recording financial transactions only when the money is actually exchanged. This means that expenses and revenues are recorded only when they are actually paid or received.

Single entry accounting with bank reconciliation: This method is similar to single-entry accounting, but it also requires periodic bank reconciliation to ensure that company records match bank statements.

Each business must choose the method of accounting that best suits its needs and size. Larger, more complex businesses often require more advanced accounting to effectively manage their finances.

🌿The benefits of bookkeeping

Keeping accounts in a company offers many advantages. Here are some of them:

✔️Better financial management

By maintaining accurate and up-to-date accounts, you can follow the evolution of your business financially. You can easily see your income and expenses, as well as your bank account balance.

This allows you to better understand the state of your business and make informed decisions.

✔️Better tax planning

By keeping accurate accounts, you can plan your taxes accordingly. You can easily identify tax deductible expenses and tax credits your business may be eligible for.

This allows you to reduce your taxes and maximize your profits.

✔️More effective cash management

Accounting allows you to closely monitor the cash flow of your business. You can easily see money coming in and going out, as well as bills awaiting payment. This allows you to better manage your cash flow and avoid overdrafts.

✔️A better understanding of profitability

By keeping accurate accounts, you can easily see how much you are spending on each project or service. So you can also know how much you earn.

This allows you to determine which projects are most profitable for your business and adjust your strategies accordingly.

✔️Better transparency for investors

Potential investors are more likely to invest in a company that keeps accurate and up-to-date accounts. This gives them a better idea of ​​the financial health of the business and its ability to generate long-term profits.

🌿How to keep accounts properly

Accounting management can be complicated and tedious, especially if you are new to it. Here are the key steps to follow to properly manage your business accounting.

⚡️Identify accounting obligations

The first step to properly manage your business accounting is to identify the legal obligations in terms of accounting.

This may vary between countries and jurisdictions, but in general there are standards and rules to follow regarding the accounting documents to be produced, submission deadlines, retention methods, etc. It is important to stay informed of the rules in force to avoid errors and possible penalties.

⚡️ Choose a suitable accounting system

The choice of accounting system will depend on several factors, such as the size of the company, the complexity of operations, the number of transactions, etc. There are several types of accounting systems, from the simplest (single entry bookkeeping) to the most complex (double-entry bookkeeping).

It is recommended that you choose a system that suits your needs and that allows efficient accounting management.

⚡️ Maintain rigorous accounting

Once you have chosen your accounting system, it is important to maintain rigorous accounts by recording all the financial transactions of the company.

This includes invoices, receipts, payments, bank statements, etc. It is recommended to update the accounts at least once a month to avoid delays and errors.

⚡️ Hire a professional

If you are not comfortable with the management of accounting, it is advisable to call on a professional (chartered accountant, accountant, etc.).

They can help you keep your accounts up to date, prepare financial statements, complete tax returns, and advise you on accounting and tax matters. Hiring a professional can help you save time and minimize the risk of mistakes.

⚡️Use accounting management tools

There are many accounting management tools available today that can help you automate certain tasks, simplify accounting management and reduce the risk of errors.

Accounting software, invoice management applications and online financial management platforms are examples of tools that can be used to facilitate accounting management.

🌿FAQs 

✔️ Why is it important to manage your business accounting well?

Accounting is a key part of running a business, as it helps track the finances of the business and ensure its stability.

Good accounting management allows you to make informed decisions, control costs and revenues, predict future expenses and ensure that the business is profitable.

✔️ What are the essential steps to properly manage your business accounting?

The essential steps to properly manage your business accounts are:

• Maintain regular and up-to-date accounts
• Follow the banking operations of the company
• Perform regular analysis of the company's financial results
• Comply with legal obligations in terms of accounting (tax declarations, etc.)
• Use financial management and accounting tools adapted to their needs

✔️What financial management and accounting tools are available for businesses?

There are several financial management and accounting tools available for businesses such as accounting software, online accounting services, online invoicing services, expense management services, etc.

✔️How to choose the right financial management and accounting tool for your business?

To choose the right financial management and accounting tool for your company, it is important to take into account the specific needs of the company, the available budget, the complexity of the accounting and the functionalities offered by the tool.

✔️What are the most common mistakes to avoid when it comes to managing a company's accounts?

The most common mistakes to avoid when managing a company's accounts are:

• Not keeping regular and up-to-date accounts
• Failure to comply with legal accounting obligations
• Mix personal and professional finances
• Not tracking company banking
• Not doing regular analysis of the company's financial results

✔️ Is it possible to delegate accounting management to a third party?

Yes, it is possible to delegate the management of accounting to a third party, such as an accountant or an accounting services company. This can be a good option for companies that don't have the expertise or the time to handle their own accounting.

🌿 Conclusion

In short, accounting management is an unavoidable task for any company wishing to ensure its sustainability and growth. The different steps that we have listed in this article are practical guides to help you manage your accounting well.

It is important to keep in mind that keeping well-organized and accurate accounts will allow you not only to meet your tax obligations, but also to better understand the financial health of your business and make informed decisions for its future.

Ultimately, managing your accounting is an essential investment for your business. By following the key steps we've outlined, you can be sure to put in place a strong and efficient bookkeeping that will allow you to thrive for years to come.