Important Files and Information
you should maintainMost businessmen avoid documentation and filing, conveniently forgetting that proper documentation is essential to good accounting.
Filing should be done on a routine basis as it will help you to keep a track over your cash flow, budgetary expenses and current financial position. Most small business owners are not organized in their approach to documentation and are often confused/ misinformed about their current financial status. Discussed here are some files you should maintain separately if you are considering entrepreneurship.
Unpaid invoices, paid invoices, open purchase order sheets, open customer order sheets, tax bills and receipts, Tax certificates and reports, bank statements, staff files and copy of salary slips and personnel records should be documented and maintained regularly. In addition, try to maintain records of insurance papers and copies of permits.
Maintain the following information in order to correctly credit your clients/customers account for payments on their account. Customer name, cheque numbers, mode of payment, total amount received and details of previous defaults should be saved and filed for future reference.
Keys to good Book Keeping
Maintain separate bank accounts for your personal and business use. Personal finances mixed with business finances make for a muddled accounts picture. If the strength of your staff is more than 5, maintain a separate account for salary disbursement. For any cash transfer between these separate accounts, write cheques. This way, you will save on a lot of hassle when you compile your tax returns at the financial year end. You will also have a fair idea of the profitability of your venture.
Review your bank statements once every month and maintain records that reflect your cash increase/decrease. Don’t put yourself (and your business) in a position where you have to call your bank to know how much money you have.
A petty cash fund is very important for the smooth functioning of every business. All minor and unanticipated expenses should be covered from this fund. Office stationary replenishment, impromptu boxes of Laddoos for festivals and postage/courier costs should be covered from your petty cash fund. Maintain vouchers for all expenses and conduct periodic surprise checks on the state of your petty cash fund to ensure that it is not being misused.
Balance your cash register daily. If it is too much of a trouble for you, hire somebody who will do the job. This will help you maintain a tight control over your finances and also prevent an unbalanced accounts book. Daily checks will also ensure that no employees are “borrowing” money from your cash register.