Manage your business accounting well

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

However, accounting can also be a source of confusion and frustration for many entrepreneurs. If you don't have a background in accounting, 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 will review the steps to follow to properly manage your business accounting, as well as the benefits of well-managed accounting. Whether you are a beginner or an experienced entrepreneur, this guide will help you know the steps to properly keep business accounting. But before that, what is accounting? What are the advantages ? Let's go !!

What is accounting?

Accountability in a business is to record all the financial transactions carried out by the business. This includes keeping accounting records, managing invoices, checking 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 accounting records by debiting the office supplies account and crediting the cash account or the accounts payable account, depending on the payment method used.

Similarly, when a company sells a product or service, it must record this sale by debiting the cash account or the customer account and crediting the corresponding sales account. Accounting is therefore a essential function of any business, because it helps 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:

1. General Accounting

General accounting is the fundamental basis of a company's accounting system. It methodically records all financial transactions according to the double-entry principle, where each transaction affects at least two different accounts. This discipline follows a strict regulatory framework, in particular the General Accounting Plan in France or IFRS standards at the international level. It produces three essential documents: the balance sheet, which presents the company's assets at a given time; the income statement, which summarizes the income and expenses of the financial year; and the appendix, which provides additional information to understand the financial statements.

General accounting obeys fundamental principles such as prudence, consistency of methods, continuity of operations, and sincerity of accounts. It serves as a basis for the preparation of tax returns and allows stakeholders (investors, bankers, suppliers) to assess the financial health of the company. The entries are recorded chronologically in the journal, then reported in the general ledger, before being summarized in the balance sheet. This form of accounting requires great rigor and precise documentation of each transaction.

2. Analytical Accounting

Cost accounting is distinguished by its orientation towards the internal analysis of costs and performance. Unlike general accounting, it is not subject to strict normative rules and can be adapted to the specific needs of each organization. It breaks down costs by nature to reallocate them according to different axes of analysis: by product, by service, by project, or by responsibility center. This approach makes it possible to calculate precise cost prices, to evaluate the profitability of different activities and to make informed strategic decisions.

It uses various costing methods such as full costing, variable costing, or ABC (Activity Based Costing). Cost accounting also helps in preparing quotes, setting sales prices, optimizing production processes, and measuring the efficiency of different departments. It provides crucial performance indicators for managing the company and helps identify sources of profit or loss. This form of accounting requires detailed data collection and a thorough understanding of the company's operational processes.

3. Budgetary Accounting

Budgetary accounting represents the forecasting aspect of financial management. It begins with the establishment of detailed budgets for each function of the company: sales, production, supplies, investments, cash flow, etc. These budgets are developed according to a structured approach, generally starting from sales forecasts to deduce other needs. Once the budgets are established, this accounting ensures regular monitoring by comparing achievements to forecasts and analyzing deviations. It thus makes it possible to exercise control over activities and take corrective measures if necessary.

Budget accounting plays a crucial role in strategic and operational planning, facilitating coordination between different departments and the optimal allocation of resources. It uses tools such as dashboards, variance analysis reports and rolling forecasts. This form of accounting requires strong involvement of operational managers and effective communication between departments to adjust objectives and means according to the changes observed.

4. Cash Accounting

Cash accounting focuses exclusively on the cash flows of the company. It ensures the daily monitoring of cash receipts and disbursements, establishes short- and medium-term cash flow forecasts, and manages banking relationships. This form of accounting is crucial to ensure the solvency of the company and optimize liquidity management. It involves the constant monitoring of the bank balance, the negotiation of banking conditions, and the management of cash investments or short-term financing.

Cash accounting uses specific tools such as the cash flow plan, which details the forecast inflows and outflows of funds, and the cash budget, which plans financing needs. It plays a key role in managing working capital requirements and optimizing cash flow. This accounting requires great responsiveness and excellent mastery of financial instruments and banking relationships.

5. Social Accounting

Social accounting manages all financial aspects related to personnel. It processes salaries, social security contributions, paid leave, allowances, expense reports, and all elements of remuneration. This form of accounting produces pay slips, establishes mandatory social declarations (DSN, URSSAF, pension funds), and manages relations with social organizations. It must constantly adapt to changes in social legislation and collective agreements.

Social accounting plays a crucial role in controlling personnel costs and in complying with legal obligations in social matters. It provides essential information for the social balance sheet and negotiations with social partners. This accounting requires constant regulatory monitoring and great precision in data processing, because errors can have significant consequences for both the company and employees.

The advantages of bookkeeping

Bookkeeping may seem like a hassle, but it actually offers many benefits. First, bookkeeping gives you a clear view of your finances. It’s like having a road map of your money. You see where it comes from, where it goes, and how much you have left. This helps you make better financial decisions, whether it’s for your business or your personal budget.

A big advantage is that it gives you helps to respect the law. If you have a business, keeping accounts is not a choice, it is a legal obligation. It saves you problems with taxes and other authorities. Even for individuals, good accounting makes tax returns easier.

Accounting also helps you spot problems before they become big ones. If you’re spending too much in one area, or if a part of your business isn’t making enough money, you’ll see it quickly in your accounts. It’s like an early warning system for your finances. For businesses, good accounting is crucial for getting loans or attracting investors. Banks and investors want to see clear, accurate numbers before they’ll trust you with their money. It’s like showing your report card to prove you’re a good student.

Accounting also helps you plan for the future. By looking at your past figures, you can make more accurate predictions for the future. It is useful for setting realistic goals and making long-term plans. Another benefit is that it helps you to save money. By clearly seeing where your money is going, you can spot unnecessary expenses and save money. It's like sorting out your closet: you realize that you have things you don't really need.

Finally, good accounting gives you peace of mind. You know exactly where you stand financially, without having to guess or worry. It's reassuring to know that you're in control of your finances.

How to keep accounts properly

Managing accounting can be complicated and time-consuming, especially if you're new to it. Here are the key steps to take to successfully manage your business accounting.

⚡️Identify accounting obligations

The first step to properly managing your business accounting is to identify the legal obligations regarding accounting. This may vary depending on the country and jurisdiction, 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 about 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 to choose a system that suits your needs and allows for efficient accounting management.

⚡️ Maintain rigorous accounting

Once you have chosen your accounting system, it is important to keep a rigorous bookkeeping record of all financial transactions of the business. This includes invoices, receipts, payments, bank statements, etc. It is recommended to keep the accounts up to date at least once a month to avoid delays and errors.

⚡️ Hire a professional

If you are not comfortable with bookkeeping, it is advisable to hire a professional (accountant, accountant, etc.). They can help you keep your books 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 errors.

⚡️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.

FAQ

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

Accounting is a key part of running a business because it helps keep track of the company's finances and ensures its stability. Proper accounting management helps you 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
Track company banking transactions
Conduct a 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 business, it is important to consider the specific needs of the business, the available budget, the complexity of the accounting and the features offered by the tool.

✔️What are the most common mistakes to avoid when managing a company's accounting? The most common mistakes to avoid when managing a company's accounting 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 transactions
Failure to regularly analyze 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 firm. This can be a good option for businesses that do not have the expertise or time to manage their own accounting.

Conclusion

In short, accounting management is an unavoidable task for any business looking to ensure its sustainability and growth. The different steps 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 accounting will not only allow you 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.