Book-keeping and accounting are one of the key success drivers for your entrepreneurial venture. However, it is equally true that a majority of the entrepreneurs are technocrats and therefore might be novices in the financial field.
In case you want to know the basics of accounting for your business then these below terms and handy accounting tips can prove to be useful:
The accountant must be posting the payments to the vendors and also the sales receipts properly. However, it is important to have a summary of the Accounts Receivables and Payables handy.
You should not forget to compile an age-wise analysis of bills payable and receivables to monitor smooth funds flow. This would help in maintaining a good rapport with the vendors as well. Also from a compliance point of view, you can adhere to TDS and GST norms when this point is tackled well.
A decision on the method of accounting like the Cash basis or the Accrual basis is very crucial. It is a fact that there are advantages and disadvantages of both the methods but a majority of the business houses maintain the accounts on Accrual basis. This reflects the true picture of profit or loss.
Once you decide the method of accounting, you can choose the book-keeping system ideal for the venture. You can also opt for ready-made accounting packages with necessary customization, if necessary. Depending on the number of transactions and its complexity across the business, you can opt for outsourcing or hiring an in-house accountant.
Developing an MIS makes the monitoring simpler and the financial data also is no exception. In order to highlight the priority areas, the info should trigger an alarm for immediate attention.
It is always recommended to maintain a fool-proof tracking system of statutory payments and the tax remittances. Otherwise, in case of any default, there is a likelihood of penalty from the authorities concerned. With an MIS, the annual filing process to becomes simpler and convenient.
Depending upon the volume of business and financial transactions, it is not a bad idea to hire a professional. He will be able to suggest robust safety measures and balances for healthy financial controls. Any loopholes in the system also would come to light when a professional in the relevant field in place.
In the initial stages, multi-tasking the accounting function with other responsibilities seems judicious from a cost perspective. However, as the business and number of transactions grow, it might make total business sense to appoint a dedicated accountant. You can also plan to outsource the activities to capable experts.
To wrap up
You should remember that focusing on the financial discipline and the accounting principles is also as important as prioritizing business expansion. In fact, a strong foundation on the financial fundamentals would improve the overall health of the venture, thus ensuring better business traction.