small business bookkeeping questionsTwice in this past week bookkeeping clients have asked me to clarify something about their accounts that they didn’t know.

Both were a little embarrassed that they didn’t know these things, but unless they ask me I don’t know that they don’t know, if you get my drift.

So What Don’t You Know?

  • Maybe it’s some accountancy jargon that your accountant uses at meetings that you are a bit too embarrassed to ask the meaning of.
  • Maybe its something you’ve read somewhere, maybe in your accounts, in a book, or online, and don’t know what it means.

Now’s your chance to find out …..

Ask me in the comments below or if you’d sooner not reveal your identity then you can email me in confidence, using the contact page.

I will use the questions asked to build a resource on this site.

You’ll be getting your question answered as well as helping lots of people too.

I’ll start the ball rolling with the two questions I had this week:

  1. What is net profit? The net profit for your business is the figure resulting from subtracting your business expenses from your business income over a set period of time, normally a year, but it can be calculated at any time. In your accounts, the schedule that documents your business income and expenditure is called a profit and loss account. Your net profit is the figure used to calculate your tax bill.  You can read an article here about expenses that are not included in your profit and loss account.
  2.  

  3. If I pay my credit card balance off does this reduce my net profit?  No.  It will only reduce your bank balance and your credit card balance. Anything paid for using your credit card, in the past, if it was a business expense, would have been in your profit and loss account at that time.

It may be a cliché but remember the only stupid question is the one you don’t ask.

Love Your BusinessThis Valentine’s Day isn’t it time you showed your business some love too?

heart You can’t send your business flowers
heart You can’t send your business chocolates
heart You can’t take your business out for a meal

 

 

BUT

You can give your business a gift to show that you love it

HOW?

For the month of February you can give your business the following gifts with love from More Than A Bookkeeper:

heartMore than a loving kiss:

  • A FREE 15 minute Skype consultation in which I will provide you with a basic process for organising your accounting records –  Book Now

heartA gift that lasts longer than one day:

  • A £27 discount on my Bespoke Bookkeeping Consultancy Services – premium services that show your business some love – SORRY THIS OFFER IS NOW FINISHED

Do you love your business enough?

woman shocked at finances

Are you reactive instead of proactive as far as your business finances are concerned?

There were lots of businesses being reactive this week – In the UK we had the tax return submission deadline of 31st January.

I was truly amazed by the number of people posting on Twitter and Facebook about how stressful it was for them getting their tax return submitted.  The poor lambs had not only left preparing their financial records until the last minute but they were also tangling with the HMRC tax return online submission programme, which according to some of the said posters was struggling to cope with the volume.

Now, excuse me, but on 31st January 2013 they would be reporting on their income for the tax year ended 5th April 2012, so at a minimum they have had 9 months to send in the information!

 

What that says to me is:
a) They have no idea of their business financials on an ongoing basis so therefore they cannot be serious about their business development
b) They are likely to have no idea what their tax bill will be, which by the way should be paid by 31st January 2013, and are therefore unlikely to have budgeted for it.
c) They clearly do not have a bookkeeper or accountant, preferring instead to have their annual stressfest each January.

If you are reactive instead of proactive do not underestimate the costs of not keeping your accounts up to date.

Had you failed to submit your tax return online, on time, then the immediate cost is £100, followed by £10 per day for each additional day that you fail to get it submitted – ouch!

It is an unfortunate fact that a lot of small business owners focus more on operating their business than they do on their books.

There are a number of reasons for this:

  • Lack of time
  • Lack of inclination
  • Inexperience
  • The perceived cost of having a bookkeeper

Lets look further into how inadequate bookkeeping, and thus a lack of up to date financial information, potentially harms your business:

  1. Do you know if you are still paying for things that are no longer of value to your business? How long is it since you really looked at your bank statements?
  2. Do you know what the costs are of providing individual products or services?
  3. Do you manage your cashflow and therefore know whether or not your business can afford that extra piece of advertising or extra member of staff?
  4. What happens if you suddenly need financial information to provide assurity for a tender or financial backing?  Suddenly you are on the back foot. Would you lend your own money to a business that had no real sense of where it stood financially? I definitely wouldn’t.

All these are the symptoms of a business that is reactive rather than proactive.

Can you really expect to grow your business if you do not understand your financial position, both in terms of how profitable it is and whether your cashflow allows for expansion?

How do you manage your books? Do you ensure that they are reasonably up to date and in-order? Do you insist on doing it yourself even though you find it stressful and have little or no idea whether you are doing it right? Have you paid a price when they were not?

Let me know in the comments below

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