Small Businesses – Are You On Top Of Your Finances & Accounts?

We understand that, for small businesses, spending your money wisely is always top of the priority list – and sometimes it can seem more cost-effective to carry out business-related tasks yourself rather than pay for an external expert. And in the case of looking after the business finances – well, it’s pretty simple to keep a track on what’s owing and what’s due in, right? Wrong.

If that sounds typical of your business, then it’s time to think again – spending a little of your business income on a book-keeper or accountant will actually save your business money - and far more than you think. Here’s why every small business should make the smart choice and look to the experts when it comes to managing money matters and accounting software.

When it comes to the taxman, there’ll be no nasty surprises

Do you know how much tax you’ll More...

There seems to be something in the air – a definite and growing recognition amongst accountants and small businesses that investment in accounting software and IT in general is one of the best ways to increase efficiency, reduce costs and maximise productivity.

For accountancy firms, software and IT solutions are a fundamental component of their day-to-day activities. For them it’s easier to know when to upgrade or to invest in entirely new systems. But for a small business, how do you know when it’s the right time to invest in accounting software and what things should you consider before taking the plunge?

I’m doing fine with my Excel spreadsheets. Do I need accounting software?More...

The Business Inspector was a four part series broadcasted on Channel 5.  The show was broadcasted to capture the attention of small and medium sized businesses to try and change their behaviour towards running a business.

Presenter of the show Hilary Devey & Mick Allcock from the HM Revenue & Customs were interviewed after one of the shows.  Use the link below to view this short video.

Mick highlights how 30% of businesses aren’t taking reasonable care in their record keeping.  Many businesses have the ‘I will do it next week’ syndrome. More...

Tune into Five tomorrow night to watch the first of a new TV series “The Business Inspector”.

The series has been sponsored by HM Revenue & Customs (HMRC) and will raise awareness among small businesses that they need to keep good records.

This four-part series will be broadcast weekly on Five at 8pm from 17 March 2010.

Stephen Banyard, Business Customer Unit Director at HMRC said:

“We know that most small businesses want to get their tax right.  But we also know too that failure to take reasonable care costs the Exchequer over £6bn a year, with a major cause being poor record keeping.  We hope this series will raise awareness of the need for good record keeping.

“We also want small businesses to realise the benefits to them – such as improved cash flow – of taking better care of their records and paperwork.”

Each week presenter and award winning entrepreneur Hilary Devey, visit two small businesses and advises them how to improve their processes, systems, strategy and direction.

Hopefully this series will highlight to businesses the importance of having a good bookkeeping system in place and the value of having an online bookkeeping system which can be accessed real-time and from any location.

www.fusionaccounts.com

Although many business owners do not wish to understand the intricacies of double entry bookkeeping, they are interested in invoices.  By understanding how an  invoice is processed through the books you will gain understanding of the bookkeeping process but also how your accounts can be used to assess how your business is doing.

A businesses books are made up of a set of accounts or (nominal accounts) with transactions debiting and crediting these accounts such that the sum of the balances of these accounts is always zero.  There are also accounts for customers and suppliers – although these do not form part of the businesses financial position.

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Many businesses financial year coincides with the calendar year so during January is accountants and bookkeepers are often busy preparing year end accounts for both the business owners and statutory bodies – companies house, HMRC etc.

To lessen the burden here are some simple periodic checks that can be carried out to ensure your books are in good order.

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Many businesses are just beginning their new financial year.  Fusion accounts has a very simple year end routine which we believe allows the business to continue transacting whilst allowing the accountant and bookkeeper to prepare the reports and carry out adjustments for depreciation etc..

In order to support this Fusion accounts marks each account transaction with a year identifier.  Transactions that do not have a year identifier are deemed to be in the current year.

All new transactions have no year identifier and so are deemed to be in the current year with the exception of nominal adjustments which may be made in previous year.

A year end session marks all transactions up to the entered date as being in that year end.  When the year end is committed the adjustments are made to clear down the sales accounts etc.

The upshot of this model is that the year end can be run at any time and that once it has been run the transactions, and so the financials, for that year are fixed.  So even if a transaction is dated in the previous year it will not alter its figures.  Similarly, previous years transactions can be edited as the reversal and new transaction both appear in the current year and the original transaction remains in the original year.

We recommend the following process for year ends.

• Carry out all bank reconciliation up to the year end date.
• Create a year end session for the year end date.
• Carry out any adjustments on the year end as Journal Entries in that year.
• Commit the year end session

This process can be carried out any time subsequent to the end of the year.

Cash accounting for VAT in Ireland is different from the UK. In the UK cash accounting applies to both sales tax (the VAT you charge) and Purchase tax (the vat you are charged).

However, in Ireland it only applies to sales tax.

Some accountancy software - including some older versions of Sage - always apply cash accounting to both sales and purchase tax. This means that you are waiting until you pay your suppliers before you claim the VAT back rather than when the supplier invoices you.

For details on Irish cash accounting see the Irish Revenue Site - Moneys Received Basis Of Accounting.

Fusion accounts allows businesses to specify weather they wish to use Supplier and/or Customer cash accounting. It also supports multiple VAT registrations for international traders.