It is essential to keep your accounts books upto date
, if you run a small business. You should update your books on regular basis as soon as the transaction has got completed. One simple data creates huge disaster, if you forget to record them. Hence, following the below rules would help you to avoid the last hours tension of filing the tax or preparing the financial documents.
Rule 1:
Keep track of your expenses:
Keep hold of all the receipts of the purchase you made. Create an effective system to sort receipts according to the date, function and details.You can use those receipts for future reference if needed. Keep them in to your accounts books and record the details in ledger. This will hep you to understand the expenses you made and you can justify the purpose of the expenses whether it is really required. Also this could help you to avoid the unnecessary expenses in the future also.
Rule 2:
Track the debt details:
Bill your customers promptly on a specific date and provide them deadlines to make the payment. Keep track of who owes you money and send a reminder on a particular date asking them to make payment. Many small business owner has stories about the mislaid bills or they may have lost the invoices. Finally, the customers will be surprised to understand that they forgot to pay. If the payment have been received from the customer, always remember to record them. Customer feels offended when they receive another invoice for the same payment even after they made payment. Hence, it is important to maintain a upto date records.
Rule 3:
Keep comparing the income and expenses:
The earnings should be more when it compared to the expenses.Then only we can say that the business is profitable. Hence, you should keep comparing the income and the expenses on a regular basis. It could be monthly or weekly or daily but it should be regular. This will help you to avoid the unwanted expenses.Also you can implement any changes that would brings more income.
Rule 4:
Observe cash flow:
Be aware of your income and the expenses so that you can balance the short falls with the tap into other resources and you can cover it. This will give you the idea of when the customer makes the payment. You can rearrange the policies or even charges so that they will be able to make payments on time.
By following these rules you will be able to keep a tidy accounting records which will also helps you to increase your income and reduce the unnecessary expenditure.