How to keep the accounts of a company: a handful of useful tips
How to keep the accounts of a company? This is a central question in business management. Indeed, the efficiency of a company is also based on the type of organisation chosen for its accounting records.
Let us see together in this article how to keep the accounts of a company to avoid wasting time unnecessarily or running into clumsy mistakes in a few simple steps.
Practical tips on how to keep a company's accounts
💸 Control expenses (accurately)
In order to manage a company's bookkeeping optimally, it is necessary to check the expenses incurred accurately.
☝ All expenses are important! Whatever money movements have taken place or whatever the nature and amount of the costs incurred, these must be recorded in the total expenditure budget of the business.
It is important that each financial movement is duly reported in the corresponding account and that the right percentage of VAT is applied to it.
💢 So, pay attention even to small cash transactions, even to small expenses incurred during business trips. In short, report any amount paid by the company to any counterparty.
✏️ Record bookkeeping transactions (properly)
In order to be able to properly keep the accounts of a company, it is essential that all transactions are properly recorded.
💢 Commit yourself, therefore, to make a timely and chronological accounting record of all transactions made since they are all relevant for accounting purposes.
In this way, keeping track of your company's accounts will be much easier: you will always have the certainty and security of having all transactions reported in the appropriate section. This will favour a certain speed of consultation and, therefore, agility in the management of company accounts.
Thanks to the new technologies developed and introduced in accounting, these administrative processes have been automated. By relying on specialised accounting software, one will be able to rely on its expertise in entering and storing accounting data.
💸 Pay attention to (non-deductible) VAT
The main errors in business accounting are related to VAT deductions from specific costs. Indeed, it is not so obvious to understand when VAT can be deducted. For example, it may happen that a theoretically deductible cost is not deductible if there is no receipt or if the receipt is incorrect.
💢 For this reason, pay particular attention to the deductibility of VAT on various costs. Always ask yourself the question: are all the prerequisites fulfilled for VAT to be deducted on this amount?
🗃 Manage the archive (with care)
Good business accounting also relies on a well-managed archive. In fact, one of the secrets of good business accounting is precisely to manage your archive carefully.
Especially when dealing with paper documents, it is easy for documents to be lost, for them to be assigned the wrong location, or for them not to be constantly reorganised and updated.
Thus, when a consultation is needed, it is easy that, in a badly managed archive, documents cannot be found. Consequences of this inconvenience are a considerable loss of time and, in unfortunate cases, even financial penalties .
Accounting documents must in fact, by law, be retained for tax purposes for a number of years. A concrete example is receipts of costs on which a VAT deduction has been made must be kept and made available to possible audits by the tax authorities for four years beyond the financial year of reference.
💢 For this reason, it is advisable to systematically organise all business documents, i.e. all invoices, all receipts and all other documentation, within a well-structured archive.
With the introduction of the electronic invoicing system, the management of accounting documentation has been greatly simplified . In fact, online archiving has not only made it possible to save data on tax documents more quickly, but has also enabled them to be stored more securely and reliably.
🕑 Organise (appropriately) your timing
Keep in mind that bookkeeping for a company involves a certain amount of time. Indeed, however duly organised it may be, bookkeeping is not an overnight practice.
💢 This is why we advise you to set fixed periodic deadlines dedicated to the pure and simple management of your company's bookkeeping. In other words, it is a good idea for you to organise your business plan by including times dedicated to monitoring and supervising your accounts.
Italian law does not impose periodicities for the implementation of business management, so the organisation of a management plan is the responsibility of each individual company.
The bookkeeping and taxation of a company, for example, can be organised on a
- Frequent;
- Monthly;
- Quarterly;
- Half-yearly.
Bookkeeping → on a frequent basis
Supervision of company bookkeeping on a frequent basis is a very effective method of monitoring.
This method of supervision is facilitated by new invoicing technologies, but is not necessarily dependent on them. In fact, thanks to modern software, it is possible to monitor expenses and record them instantly with a few simple clicks. In contrast, managing documentation manually is a bit more time-consuming and energy-intensive, but still possible.
😊 Checking on a frequent basis is highly advisable if you want to increase the effectiveness of your accounting operations: any oversights or errors can be identified and corrected immediately, without causing too many delays or knock-on problems.
Accounting management → on a monthly basis
The periodic accounting control on a monthly basis is a relatively scrupulous periodicity of supervision of bookkeeping. In fact, this periodicity corresponds to the minimum time span to ensure that one's bookkeeping is properly managed.
Possibly, one could take the opportunity to perform the canonical monitoring of the company's bookkeeping at the time when employees hand in their expense reports. At this time, in fact, you could take the opportunity to identify any discrepancies or errors, to check the conformity of the expenses incurred, the policy according to which they were made (e.g. in relation to established budgets, etc.).
Accounting management → on a quarterly basis
A quarterly basis for monitoring the accounts will therefore involve a systematic check carried out four times a year.
In this case, it is advisable to organise the calendar in such a way that the control phases do not coincide with the busiest periods for the company.
Accounting management → on a half-yearly basis
According to this approach of business management on a half-yearly basis, the control of bookkeeping and taxation takes place only twice a year.
😟 If this method of monitoring is adopted, be aware that the amount of information to be reviewed will be considerable. It is therefore advisable to develop an organisational plan accordingly: the time required for monitoring may become longer and the time required to resolve any problems that arise may also be not insignificant.
👀 Operate control actions (on an ongoing basis)
The advice offered is valid for any type of business: if tax and accounting obligations are a must that no business can escape, practical advice on how to keep a company's accounts properly can only be helpful.
The important thing, however, is that the checks are carried out consistently. In fact, if one wanted to reveal the secret of how to keep a company's books correctly, it would suffice to say that it would be enough to carry out checks on a regular basis. In this case, it is worth saying: better to check once more than once less!
👦 Seek advice from a (competent) consultant
💢 In the event that you do not feel confident and constantly fear running into some management error, you can always decide to seek the advice of a competent bookkeeping consultant.
In this way, you can concentrate on other business tasks with the security of having entrusted your business management to a competent specialist. He will support and assist you in all accounting procedures and provide you with the right tips to organise your bookkeeping in the best possible way.
And you, what do you think about this? Tell us your opinion in the comments section below, let us know your personal techniques and how you prefer to manage your bookkeeping!
Article translated from Italian