I meet many business owners that find a real struggle doing their books. Consequently they really don’t know their numbers. These are what tell you what is happening in your business. There is no need to be embarrassed or worried about this – figures are not everyone’s cup of tea. There are three elements to think about:
Accounting
Use a good accountant to do the necessary things like VAT returns, annual accounts submissions, tax returns. They are also often able to provide many other useful services;
Book-keeping
You might use your accountant for this or someone who does it for a living. This involves feeding your purchase and sales invoices into the system. It might also include actually raising sales invoices (as soon as you can – don’t wait until the end of the month) and generally keeping it all neat and tidy. Very importantly make sure someone is chasing up payments. This is probably the most important aspect of this activity;
Management Accounts
Your accountant might offer a management accounts service. Whoever does it, you simply must have up-to-date information about how your business is performing. This applies to costs and sales as well as cash flow. Above all in this day and age it is simply not good enough to only look at this on an annual basis.
You don’t need to be able to do all the financial mumbo jumbo yourself – hire someone who can. They will more than pay for themselves in all sorts of ways.
What is absolutely essential is that:
- You keep your books up to date. This is not only so that you have an accurate picture of what is going on in your business but also for legal and HMRC reasons, and
- Your business simply cannot run effectively if your figures are not up to date. You really do need to know what is going on. YOU need to know what the numbers are telling you, only then can you make informed decisions.