Home Accountant How to master business accounting and invoicing

How to master business accounting and invoicing


Bookkeeping is a legal obligation. But from a business perspective, being able to balance the books is also fundamental to controlling your cash flow and keeping your business afloat.

Fortunately, bean counting and basic financial forecasting isn’t difficult – you just need to know what’s coming in and what’s going out, and be ready to make financial decisions when the need arises. From managing your daily business accounts to budgeting and planning for the future, read on to find out how to keep your business on track.

Daily accounting

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While your accountant can handle the larger side of your finances, you need to have a good idea of ​​how much money is coming in and what is going out. Small businesses often find basic bookkeeping convenient to do in-house.

Whether you do it yourself or have someone else on the team take care of it depends on your patience with accounting. Either way, as a business owner, you need to check the accounts regularly. Bookkeeping is about keeping track of how much money is coming in and from whom, what needs to come in and when, and your outgoing expenses.

The latter includes things like rent, wages, software / hardware purchases, material costs, fancy herbal tea bags … Everything about the business needs to be recorded.

TO DO: Make bookkeeping a regular exercise. Monitor your turnover to see if you need to pay VAT or local tax, and keep documents in an organized system.

NOT TO DO : Mix personal and business expenses in your accounts. Also, don’t take money from a limited liability company unless it’s wages.

The numbers game

Basically, accounting can be done with an account book, but this is not ideal as mistakes can be made and it is not particularly flexible. A better bet is to use a spreadsheet in a program such as Excel, which has templates that you can edit as needed.

Once you have familiarized yourself with a spreadsheet, you can start using the more sophisticated financial planning features. Or you can invest in dedicated financial software. You can use a cheaper and less complex online service, paid monthly, or invest in a complete package, which tracks income, VAT, payroll, etc. The learning curve can be steep, but it’s time well spent.

Send invoices as soon as you finish a job and keep track of when that money is due. In the event of late payment, contact the customer as soon as possible. Invoices may be lost or blocked for reasons that may not have been communicated to you.

As a UK limited liability company, you are required by law to keep all documents, such as invoices, receipts and financial records, for the past six years (five years for a partnership). If the Inland Revenue finds that these records are not available, you could be subject to a hefty penalty. Back up and archive all documents and electronic documents.

How to find the right accountant

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Taxes are an integral part of your budget process, but they can be a legal minefield. Unless you have a firm grasp on what you’re responsible for, you’ll need a good accountant.

What is that ? : In short, independent traders and partnerships in the UK are subject to income tax on their profits; public limited companies are subject to corporation tax on profits, while employees are subject to income tax on their income. In the UK, if your business generates more than £ 82,000 in a financial year, you must also register for VAT. It’s complicated, but a good accountant will make sure you’re doing it right and advise you on what can be claimed.

Demand around: Like good builders and plumbers (there are a few), accountants take advantage of word of mouth to gain new business. Ask for recommendations from other similar businesses in your area. Usually people are only too happy to share positive experiences with financial professionals, just as they are more than likely to warn you about incompetent ones.

Look for official organizations: The Institute of Chartered Accountants of England and Wales, the Institute of Chartered Accountants of Scotland, the American Institute of Certified Public Accountants and the Association of International Accountants will advise you on any public accountancy request.

Do not choose on the price: Always find out how much – and when – an accountant will charge you. They normally charge by the hour, although some will opt for a year, but many will be flexible on payment terms. Keep in mind that while a business associate will cost more than a junior member, it’s all about service. You need someone who will tell you the truth without being patronizing or intimidating.

Get it in writing: Once you’ve appointed an accountant, make sure they send you their terms and conditions and spell out specifically what they’ll do for you. A good will be in touch regularly, not just at tax time. Likewise, you should contact them as soon as possible to inform them of any problem, question or change in circumstances. Don’t be afraid to ask seemingly silly financial questions.

Outsource or not? : As your business grows, you may prefer to entrust more of the day-to-day financial affairs to an accountant. Large companies will take care of everything from data entry and VAT to paying staff. Alternatively, services like Mazuma allow you to do your accounts online – including billing, expenses, payments, and taxes – through a web app for a fixed price.

Smart billing tips


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Graphic designer Adrian Shaughnessy says in his book How To Be A Graphic Designer Without Losing Your Soul, “It is good practice to ask for installment payments. If they refuse, you may rightly be suspicious of their ability and willingness to honor their debts.

Don’t leave anything to chance – make sure your invoices include all the relevant information. To help you, here are eight essential tips for improving your business billing.

To make easy: Each invoice should have a job reference, your mailing address, an email address and the amount, with a tax breakdown if applicable. If you are running a public limited company, you must indicate the registered office – often that of your accountant – your company number and, in the UK, your VAT number.

Check your customers: If you are concerned, find a client before accepting a job. Check with allied or similar businesses for late payment stories. In the UK, Companies House will provide their most recent accounts for a small fee and you can also check county court judgments against them online.

Conditions of agreement: Standard payment terms are 30 or 60 days from delivery; the same applies if the work is split into delivery stages. If you don’t get a contract, send an email stating your terms and explaining that late payments incur interest. If you don’t, legally speaking, you will have accepted their terms.

How will they pay? : Find out how each new customer will pay. In the UK, BACS direct electronic payment is popular; include your account name, sort code and account number on your invoice. For checks, your company name is sufficient. Small customers can offer PayPal, but you’ll lose about five percent of the fees.

Stay on top: Always keep track of who owes what and when money is due. At a minimum, you need a list of projects, amounts owed, invoice dates, dates you sent invoices, and who paid. It is important to be on top of your own finances, even if you employ an accountant.

Eliminate late payment: An extra month is cheeky, but not unusual. If the payment is a week late, call to find out why, then repeat this process every seven days. If the payment is one month late, send a new invoice and statement of account, along with a reminder that interest is due on any late payments.

Very late payment: In the UK, small businesses are legally entitled to charge eight percent interest on the base rate for late payments, as well as fixed compensation and debt collection costs. You can find calculators online that calculate this for you. Check the laws of your state in the United States if you are considering this option.

Take legal action: After three months, send the company a new statement or invoice, with interest included, and threaten to take legal action in the local small claims court. Call again immediately after. Plan a few weeks, call them and send them one last email, then take legal action.

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