With some knowledge and a lot of order, you will be able to have clarity about your business accounts. In this way, you will be able to reduce your tax payments and avoid late payments.
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Accounting is used in a company to keep accounts and control over all daily operations such as buying, selling, expenses and investments. The person in charge of this work must organize the documents and both register and report the activities carried out with the money, whether tangible or intangible movements.
This is the financial plan that every entrepreneur must manage
The operations are to analyze, classify, summarize and finally put them in a financial statement or balance that must contain all the truthful information and financial reality of the company.
On many occasions, as it is a small business, a micro-company, a store, or an enterprise, you do not have enough resources to have a payroll that includes an accounting department, or at least one professional person in the area to take charge of economic affairs .
What often becomes a problem, because surely the person who created the company or the work team is not an accountant, economist or administrator and worse still does not have a good management of their finances , because they only worried about potentializing their capabilities and perhaps the product or service that was dedicated to sell.
During the first year, everything may turn out well. But the moment when several invoices begin to arrive to pay taxes for the constitution of your company and then it is your turn to run to collect invoices that you have never saved and report the assets and obligations that you never register. Not only that, you can lose tax benefits for not having a clue about it.
So the best thing is that you build the habit of reading so that you are updated on the changes that the country is going through and that can benefit you and also, that you learn some basic accounting things so that at least you keep an order in your operations and given case you can make correct decisions for the financial situation of your company.
Let’s start with some basic concepts
According to vivoemprendiendo.com, keeping financial control of your business allows you to know the needs you must face and the resources you have for it. In fact, it ensures that if you are not careful with accounting, you are risking to exhaust your income in the middle of the month or to ignore the loans granted to a third party.
Look at these two concepts:
1. Balance Sheet: is a summary that reflects the current panorama of your company. This will guide you in making financial decisions. Basically it is a summary of everything the company has, what it owes and what really belongs to the owner. The report is classified as follows:
1.1 Assets: are all the assets and rights that are owned by the company and that contribute to the generation of profits. Example: real estate, bank accounts etc.
1.2 Liabilities: are the debts and obligations that the company is in charge of and that in some way generate costs for the company. Example: accounts payable, loans etc.
1.3 Equity: is the result of subtracting liabilities from assets. This way you will know exactly what the business owner has in tangible or intangible form, or rather if any loss is reported.
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2. The Income Statement: in this document the data of a specific moment of the company is recorded so that it shows us the profit or loss status. Its components are:
2.1 Income: those that were obtained during the accounting period that is being reported. Example: sales income, financial income or other income.
2.2 Costs: it is the economic expense that represents the manufacture of a product or the provision of a service. By determining the cost of production, the retail price can be established which is the sum of the cost plus profit.
2.3 Expenses: always implies an outflow of money. They can be fixed expenses such as the payment of the rent, the payroll or the services or variable expenses for an emergency.
¿ How bookkeeping?
In four steps we tell you how you should organize yourself to carry out a good management of your company’s movements and financial operations. The key to doing this is being disciplined and creating a habit of filing as many documents as necessary. These are the steps proposed by emprendedores.es
Get a billing program: Control of income and expenses is the main thing. Use the technology for this, a software that has templates for invoices and files them so that you can analyze the information and project your business.
Keep track of your expenses and income: in both cases organize them by category. Write or make a copy of the receipts that you give to your clients and in the case of expenses divide them into fixed (credits, services, payroll etc) and variables (emergencies, or sporadic expenses)
Keep a record of taxes: the first task is to find out what taxes you have to pay according to the constitution of your company and if you are a natural or legal person. Make a calendar to record the important dates of the year when you must have documents ready and you must fulfill this obligation.
Save time and money: Choose once a month or every fifteen days a day to organize documents and file accounting operations for the time you need to make the balance sheet or pay the tax. Remember that if you have everything in order you can find tax benefits.