Accounting transactions are of the utmost importance when it comes to small businesses. Unfortunately, small companies often juggle around complicated accounting transactions and maintain daily business operations without complete knowledge.
As a result, the majority of the small businesses make the mistake of treating their accounting transactions as a mere afterthought. The accounting transactions of your business serve as the backbone for your business.
You reap what you sow, in fact, fits when it comes to your accounting transactions. After all, they represent the financial management of your business. Here are some of the essential accounting transactions small businesses can record easily:
Cash flow is the integral aspect of your monthly or quarterly financial review. In hindsight, the cash flow allows you to understand the movement of your business cash. You can use that direction to visualize total expenses and payment cycles.
Moreover, you can record cash flow transactions to predict future expenses and assign specific income. The idea is to create a financial trajectory for your business account. You can, of course, use a holistic cash flow statement to understand the monetary aspect of your cash movement.
The management of your accounts receivables can be a headache. Small businesses consistently have to log receivables and list payable balance without mistakes. Naturally, you want to maintain a multitude of orders. However, it’s trickier than you think. Ideally, you should monitor different rotational points of your transactions in real-time.
A business ultimately learns to save all expense receipts of each purchase. It might come across as a lot of hard work, but it often creates unexpected problems. However, it can make the life of a small business owner so much easier.
You can, for instance, monitor credit card receipts. Furthermore, you can even assign a location to your expense receipts. And if you want to make things simpler, take images of your expense receipts on your smartphone.
Receipts and Invoices
Small businesses tend to combine receipts and invoices mistakenly. Consequently, it creates extraneous complications in your financial books.
An invoice practically serves as a reminder for the customers to pay money. It entails the products or services customers get from your company. The separation of invoices and receipts is vital because it allows you to improve the efficiency of your cash flow and maintain better financial records.
What about Double-Entry Transactions?
Although the age of physical bookkeeping doesn’t exist anymore, you still need to have a basic understanding of double-entry transactions for your accounting software. So, Instead of mentioning negative value on your balance sheet, you will also need to note positive value as an inventory gain for double-entry transactions.
Today, you can even digitalize your VAT via HMRC’s new policy of MTD (Making Tax Digital). You can register your business under the current limit of £85,000 and maintain a digital record of your VAT returns via a suitable MTD program.
We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.
Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our financial advisor if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.