How Small Businesses Should Manage Accounts

How Small Businesses Should Manage Accounts

Thankfully the number of Small Businesses in Ireland is on the rise again.

Over the past five years this number has grown – especially since the recession, where more people have been made redundant or have found themselves struggling professionally – a situation which has lead many to become entrepreneurs.

But even though setting up a business is a very exciting new chapter in life, the first and most important step is to get the basics right.  And even to know what the basics are is a struggle.

You don’t really need to be a maths wiz to successfully run a small business, all you need is a basic understanding of bookkeeping and finance.  And now you don’t even have to know that.  I always tell people that Sage is built for people who AREN’T accountants.  So you can concentrate on growing your business.

My top tips for a running your accounts as a small business are:

  • I recommend keeping your personal and business accounts separate.  It’s easy for your personal finances to get tangled up with your business finances. But no matter what type of business you’re running, it’s a good idea to keep your personal finances separate from those of your business. If you have separate bank accounts , all you have to do is review your bank statements for a clear picture of your cash flow, which is for me, a clear picture of how the business is doing on day to day.

accounting software package and payroll system offer

  • Invest in Small Business Accounting Software
  • Know your costs- When you start a small business, you will have two types of expenses: fixed costs and variable costs. Fixed costs do not change with sales volume, but variable costs do. Fixed costs are the costs associated with your business’ product that must be paid regardless of the volume of that product or service you sell.As sales go down, variable costs go down. Variable costs are costs of staffing or materials that change with sales. Small Businesses need to keep a very close eye on both costs.
  • Make payments easy for customers.  Accepting Credit cards and setting up Direct Debits is so much easier these days.  More on this in future blogs. But I like to use Paypal and SumUp.

Small Businesses

  • I always try to Agree Clear Payment Terms. The best way to ensure you get paid on time is to have proper credit management practices in place that increase cash flow into your business and minimise the risk of not getting paid. This includes putting contracts in writing at the outset that contain fair and realistic payment terms that both sides can live with.
  • Use your stock control
  • Get organised- Be OCD about it,  There’s no point in wasting valuable time lokoing for that invoice.  That’s why the latest innovations in Sage One appeal to me.  They have an #AI named Pegg.  I can upload my lunch/ diesel/ miscellaneous receipts to Pegg via messenger.  No more worrying about emptying my wallet every week. Perfect for Small Businesses.

 

 

and my top tip;

  • Invoice Quickly- follow up- get your money