8 golden rules for good accounting management
Accountancy doesn't always get a good press among entrepreneurs. It's sometimes seen as a tedious, time-consuming task that doesn't add much to the business. But think again! Taking an interest in accounting is essential for any entrepreneur.
When it comes to managing their accounts, entrepreneurs have several options: they can do it themselves, they can outsource the entire process to a physical or online accountancy firm, they can do some of the bookkeeping in-house and outsource some to a chartered accountant, or they can hire an in-house accountant.
Whatever choice entrepreneurs make, they need to ask themselves the right questions. How can they maximise the usefulness of their accounts? How should they organise themselves? What tools should they use? Here are 8 golden rules of good practice for managing your accounts.
1. Learn about accounting
Accounting gives you a complete picture of your finances, enabling you to anticipate cash requirements, make budget forecasts and, above all, comply with your accounting, tax, social security and legal obligations.
What accounting obligations do you have?
Your accounting obligations depend on your tax regime:
- normal real tax regime,
- real simplified taxation system,
- controlled declaration system.
The tax regime depends on your turnover and your business. The higher your turnover, the greater your accounting obligations. For example, if you are subject to the normal real tax regime, you must keep accrual accounts, based on your receivables and payables, whereas cash accounts are based on your receipts and expenses.
Why is training essential?
Training in accounting will enable you to understand and comply with all your accounting obligations. This saves you time in managing your business and gives you a better understanding of your cash flow.
By taking an accounting course, you gain greater visibility. There are a number of resources available for training, including online MOOCs and websites such as compta-facile, and face-to-face courses offered by public and private organisations.
2. choose the accounting software that's right for you
Choosing the right software to manage your accounting is crucial. It's not a question of choosing the "best" accounting software, but of choosing the one that suits your business. Make your choice based on 2 criteria:
Your business sector
There are accounting software packages that specialise in certain areas of business (catering, retail, etc.). These software packages offer additional modules. For example, for a restaurant, the accounting software will offer a module for managing stocks and purchases.
The size of your business
The type of software and the cost will depend on the size of your business. If you're a very small business, you should opt for simple software with the basic functions: producing estimates/invoices and VAT declarations. If you're an SME, you'll need more comprehensive software that integrates the entire accounting process. Finally, if you're a large company, your accounting software will become an ERP (Enterprise Resource Planning ), enabling you to manage your entire business, not just the accounting side.
Take your time when making this choice, and don't hesitate to compare, test and get information from your network.
3. be organised
You have to deal with your accounts on a daily basis. Don't wait until the last moment to file your monthly, quarterly and annual returns. And don't wait until the last moment to send the documents to your accountant if you're outsourcing your bookkeeping. To do this, draw up a schedule of all the accounting tasks to be carried out during the year so that you are not caught unprepared a few days before an important deadline.
You should also carefully file all your accounting documents (estimates, invoices, expense claims, proof of transfers, payslips, etc.) so that you can find them quickly if you need to and so that you have a clear overview of your accounting information.
4. Monitor accounting developments
Accounting is subject to legal changes. It is important for all entrepreneurs to keep abreast of these changes so that they can manage their accounts properly. First of all, this will enable you to comply with the law and the new accounting obligations, but it will also enable you to be on the lookout for opportunities for accounting and tax optimisation, such as new grants for entrepreneurs or tax exemptions.
There are a number of ways of doing this. Start by following the news: major legal developments are covered by the media. You can also follow the specialist media in your business sector, which will bring together all the information you need. Finally, you can also follow specialist accounting media or accountant blogs.
If you have a chartered accountant, you should know that they have a duty to inform and advise (source: Code of ethics for chartered accountants), i.e. if there are any legal changes affecting your business, they must inform you.
5. Opt for sincere and honest accounting
This rule may sound funny, but don't be tempted. Don't pass on personal expenses to your business account. Nor should you try to evade VAT or resort to moonlighting.
On the one hand, you expose yourself to penalties from the tax authorities that can go as far as imprisonment and a fine in the most serious cases. These penalties will jeopardise your business and its survival. On the other hand, honest accounting will facilitate the work of your chartered accountant , who will not have to look for a justification for a suspicious expense. Your accountant will therefore spend less time on your file, which will have an impact on your fees, and will also be more available for advisory services.
6. Automate your accounting
Take advantage of technological developments to save time on your bookkeeping. Gone are the days of pencil and paper to manage your accounts. You can manage many aspects of your business online by connecting them with your accounting software:
- Online expense reports
- Online banking
- Online payroll management
- Online health insurance
Automating your bookkeeping gives you greater reliability and eliminates time-consuming tasks where you add little value. By dematerialising all these elements, you can easily store all your documents and supporting evidence online. Don't wait any longer, save time now.
7. Turn your accounts into a management tool
The advantage of clean, rigorous accounting is that it gives you lots of interesting figures on your company's financial health. Go one step further and stop thinking of your accounts as an accounting obligation, and think of them as an opportunity for your business. Your accounts can help you to obtain crucial information:
Your company's KPIs
Turnover, profit, margin, EBITDA (gross operating profit), personnel costs and marketing expenditure: this non-exhaustive list shows you just how much information your accounts can give you. Your accounts should help you take a "scientific approach to your business".
Financial forecasts
Your accounts bring together all the information you need to produce a financial forecast. This is useful not only for your business, but also for your investors, if you have any, and your bank.
Cash requirements
Which expenditure items need to be reduced? Do you need cash in the short or long term? All this information can be found in your accounts. Use the information in your possession to get to grips with the lifeblood of any entrepreneur: their finances.
8. Call in a chartered accountant
It's not compulsory to have a chartered accountant. There is no legal requirement for companies of any size to have one. You can do your accounting in-house. However, the role of a chartered accountant goes further than simply keeping your accounts. He or she is a privileged partner who can be very useful in helping your business grow smoothly. A chartered accountant can help you in a number of ways:
They save you time
The chartered accountant and the accountants in his firm are specialists in their field. Outsourcing your bookkeeping saves you precious time. As specialists, they will be more efficient in handling your accounts and give you peace of mind in managing your business.
Supporting you at key moments in your business
A chartered accountant has multi-disciplinary skills and can provide important support during key periods in your business: company start-up, takeover, liquidation or buyout. Whether it's accounting, legal, employment or tax issues, a chartered accountant can advise you or refer you to a specialist.
He enhances your credibility with your contacts
The chartered accountant is the "guarantor" of your accounts. As such, they give you credibility when you apply for finance from your bank or investors. They draw up the necessary legal documents: balance sheets and financial forecasts.
In conclusion, be rigorous, keep abreast of legal developments and take advantage of innovations to automate your accounting. Change the way you look at your accounting and use it to gain greater visibility and peace of mind in managing your company.
Article translated from French