In the second series of bookkeeping tips, entrepreneurs can look to adopt a lean startup approach through some of these techniques below.
Here are five easy things you can do to cut your year-end bookkeeping bill by 30 percent in your first year of business:
1. Don’t buy it
Examine every fixed asset you buy, and ask this question ‘Does this asset directly contribute to revenue?’ iPads are cool, but will it make my product better? Before buying large ticket items, think twice.
Call your accountant. Ask “I’m about to buy $3,000 in computer gear. What should I do?” He or she might tell you to try leasing instead of outright purchase. If you lease it, you can expense the computer monthly and maintain cashflow.
2. Avoid cheque payments
Cheques first appeared in 352 BC, and should have stayed there. They are really an outdated financial instrument.
- Cheques are blocked. Issuers make mistakes which cause the bank to reject the cheque.
- Cheques bounce. It is easy for the issuer to over draw the account.
- Cheques go missing. Cheques can be lost in the mail, or at the clearing house.
If you do need to write cheques, write them only once a month. Gather all the invoices you wish to pay by cheque, write all the cheques at once for each invoice like a production line, and then carefully eyeball cheque for mistakes.
Record on the cheque stubs and details like the supplier name, amount and description. This makes it easier to track the cheque in the future.
If you receive cheques, record the cheque number and issuer details. Better still, scan the front of the cheque with your camera phone and send the scan to the cloud.
3. Favour bank transfers and credit cards
A more elegant solution is to use bank transfers or credit cards. Payments can be automated, and it is impossible to over draw the account.
Having a personal or corporate credit card can help you manage monthly expenses. Credit card companies provide monthly statements, with each purchase broken down by date, item, description and amount.
4. Reconcile your bank statements
Reconciliation is one of the most expensive bookkeeping operations. The day you decide to pay the company expenses, have infront of you the company bank statement. Highlight deposits and annotate their source.
Tick off expenses one at a time, and check each expense has been captured in the cashbook. A monthly reconciliation will ensure you don’t over draw your account, and allows you to visually manage money.
5. Move to cloud computing
By using cloud computing to manage your accounts, you can reduce you bookkeeping fees by contributing some transaction directly into the application.
Generate invoices, company expenses, cheque payment directly from QuickBooks Online or Xero, two of the most popular small business accounting applications in the cloud.
Futurebooks is Singapore’s and Hong Kong’s most progressive bookkeeping company. Futurebooks offer affordable incorporation, bookkeeping, business planning and brokering, to entrepreneurs with big ambitions.
Whether your goal is to be acquired or to be more profitable this quarter, Futurebooks provide planning to keep your business on track and bookkeeping services that streamline the journey.
Using cloud computing solutions like Intuit’s QuickBooks Online, Xero, SaaSu, DropBox, Workflowmax, Vend, salesforce.com and Google Enterprise, Futurebooks are able to offer clients productivity improvements and reductions in the cost of accounting.
About the author
Anthony is the founder of an accounting and analytics firm Futurebooks Pte Ltd. Anthony is obsessed with helping start-up companies incorporate, conduct industry analysis and develop positioning. He has ten years experience in media and marketing, and was founder of Firestarter, a digital marketing agency.
Firestarter was acquired by Novus Media in 2010.
This post was originally published on Futurebooks as Bookkeeping for lean start-ups (Part 2).