Your dream of starting a business is now a reality, and the prospect of channelling your entrepreneurial spirit into a self-made venture is certainly a glamorous one. Balancing your books, on the other hand? Not so much.
Many early-stage business owners find bookkeeping intimidating, which can weigh heavy on the task at hand. Truth is, the thought of balancing the books is often much worse than the act itself. Yes, it’s an important factor in running your business. No, it doesn’t have to be so terrible and tedious.
Allow us to bust some myths and help you turn bookkeeping into a breeze for your growing business…
Balancing the myth
One thing that isn’t a myth is how crucial bookkeeping is for your business. Putting it off may seem convenient at the time, but a failure to balance always comes back around to bite – if not in a legally compliant sense, then in a developmental sense for your company.
But the good news is that handling your accounts isn’t as complex as you might think. Many things in business appear complicated, until they’re not. And understanding that bookkeeping isn’t the work of wizardry is the first step. Get to grips with the basics, and the rest will follow naturally.
In a nutshell, bookkeeping involves keeping a record of all your receipts and invoices to be reflected and reviewed for your financial statement, VAT claiming and Corporation Tax. Here’s where the balancing act comes in – aka basic maths. You add up your debits and credits, and work out the difference to find your remaining balance. Simple.
It’s often what you do – or don’t do – leading up to this stage that can make things a little more challenging. Here’s a few tips to keep the process a smooth one:
Know your balance sheet
Get to grips with what goes on a balance sheet and understand its formula: Assets = Liabilities + Shareholder’s Equity.
Track the transactions
Failure to record transactions is a common mistake in startups, often only realised when you’re forced to remember the date and purpose of every receipt, invoice and cheque.
Don’t mix business with pleasure
Using your personal account for business expenses will overcomplicate your financial statement and is not a friend of the bookkeeping process.
Master your books with Nabarro Poole
Balancing your books not only helps confirm the stability of your business, but it’s an important tool for forecasting as you look to expand. Done well, it can play a huge role in grounding your organisation to prepare it for all-important growth.
Although it’s a simple concept, you still need to create a balance sheet and find an approach that fits your business the best. Choosing between cash accounting and accrual accounting is one, determining which software to use (if any) is another. And then there’s the small matter of finding the time to do it amongst the rest of your responsibilities…
Nabarro Poole can help you refocus your energy into the fun parts of your business by taking care of all the financial logistics – like bookkeeping – and supporting your day-to-day decisions. We do it by combining a genuine passion for helping startups thrive with our dedicated accounting expertise.
Ready to hear how we can spark growth in your business? Get in touch with us today.