As a small business owner, it’s easy to lose track of your financial transactions. It may sound boring or a job that you don’t want to do but it will be worth it in the end.
Why bother? Well, for starters if you track what you are spending and bringing in, it’s much easier to make sure you are paying the right amount of tax. It’s also important to keep an eye on your business finances. Getting excited about a good month and splashing out, to find that the next month is not as productive, could land you in some sticky cashflow situations which, lets be honest, we don’t want or need the headache.
So with that in mind, this blog will hopefully set you on the straight and narrow, get you to pull your socks up with your finances and enlighten you about all the different types of transactions you need to be aware of. Grab a coffee and a notebook (if you still use pen and paper) and lets dive in!
Lets start with what types of transactions your business may have day to day:
These are just a few of the transactions that you need to track on a daily basis. Depending on the type of business you run, there may be other transactions that you need to track as well.
For example, if you sell products online, you will also need to track inventory and shipping costs.
It’s important to keep on top of these transactions, as they will give you a clear insight into your business’ finances. This way, you can make sure that you are keeping accurate records and that your business is running smoothly.
At the end of each month, you will also need to track some additional transactions. These include:
Tracking these transactions will give you a clear picture of your business’ financial health. This way, you can identify any areas where you may need to make changes or improvements. You should also compare these transactions against the previous month, as well as the same month last year, to get a clear picture of your business’ growth.
At the end of the year, you will need to track some additional financial transactions. These include your annual:
These documents are important for tax purposes. They will also give you a good indication of your business’ financial health for the year. This way, you can identify any areas where you may need to make changes or improvements before problems begin to pile up.
It may seem impossible to keep track of all these transactions, but thankfully there are some tools that can help. Enter: cloud accounting software.
Cloud accounting software makes it easy to track your business’ finances and see where your money is going. This way, you can make sure that your records are accurate and up-to-date.
With cloud accounting software, you can automate invoices, upload receipts via your phone, keep an eye on cash flow and generate detailed financial reports with the click of a button. This way, you can gain detailed financial insight into your business whilst also saving time.
There are many different cloud accounting software options available but Xero in our opinion is the best.
Each of these software options has different features and pricing plans. We can always help advise on what works best for you and your business. It’s also beneficial to use the same software as your accountants so all the information is easily accessible for everyone involved,
Other things to consider is how you take payments. We use Go Cardless and Iwoca, as the main benefits are receiving payments quicker, flexible payment terms and instant payment links, all which can be synced with Xero. Having your company transactions in one place will then make it easier to keep track of them.
Keeping on top of your small business’ financial transactions is essential for keeping accurate records and ensuring that your business is running smoothly. Trust us- in three months’ time, you’ll be extremely glad that you started tracking today.
If you need any help with tracking your transactions and getting your business in order then book a free call with us at hello@thenumbersquarter.co.uk