It is possible to be clear about your business accounts with a little knowledge and order. The result will be a reduction in your tax payments and an avoidance of late payments.
In an organization, accounting is responsible for keeping track of daily transactions, including sales, purchases, expenses and investments. This person has to organize the documents, keep track of the expenditures of money, and report both tangible and intangible movements of the funds, you can also take help from billing software with GST.
Operational activities consist of analyzing, classifying, summarizing and finally presenting them in a financial statement or balance that must reflect the true financial position and reality of the company.
It is common for small businesses, micro-businesses, stores and enterprises to have no accounting department on their payroll or a worker capable of managing economic affairs, because they lack the resources to do so.
Often, this creates a problem, since he may not be an accountant, economist, or administrator, and in addition, have a poor understanding of the management of finances, because he is only concerned with enhancing his capabilities and perhaps the product or service you are seeking to sell.
It is possible that everything turns out fine in the first year. The moment when you will receive several invoices for paying taxes for the incorporation of your company, and you will have to scramble to collect the invoices you did not save and to report assets and obligations you never reported. Not only that, but you might also lose out on tax benefits simply because you’re uninformed.
To win, you should develop a reading habit that keeps you updated on the changes in the country and that are going to affect your current situation. You should also learn the basics of accounting so that at least you are in complete control of your company’s finances and in case you make the right decisions.
Let’s Start with the Basics
You are better prepared to handle your business needs when you have control over your financial situation. In reality, if you are not cautious with the accounting, you run the risk of running out of income in the middle of the month or ignoring the loans granted to third parties.
Here are Two Concepts to Consider:
- This is an overview of the current state of your business that reflects your current situation. Using it will help you make informed decisions about your finances. An ownership statement summarizes everything a company has, what it owes, as well as what really belongs to the owner. Reports are categorized in the following manner:
The company’s assets are all of the company’s property and rights that it owns and that generate profits. An example of real estate is a house and a bank account is a bank.
Liabilities: Are the obligations and debts that are owed by the company and that are somehow related to its costs. Accounting, loans, etc. are examples.
- Liabilities are subtracted from assets to arrive at equity. Business owners can use this to understand exactly what they own, whether it’s tangible or intangible, or whether they have reported a loss.
In the Income Statement, the data of a particular moment of the company is recorded, which gives us an idea of the profit or loss for that moment. Among its components are:
Income: Earnings during the reporting period. Sales income, finance income, and other income are examples.
Costs: Comprises the economic expense likely to be incurred in the manufacture or provision of a product. In determining the cost of production, the selling price to the public can be determined, which is the sum of the cost and the profit.
Expenses always result in money flowing out. Expenses such as rent, payroll or services can be fixed or variable, depending on the situation.
How to Keep the Accounting?
We will discuss how you can set yourself up to manage your financial operations and company’s movements in four steps. Being disciplined and making it a habit of arranging all of the necessary documents is the key to effective organization.
- Billing software must be used to control revenue and expenditures, a good example is GST invoice bill format. Take advantage of technology and software that allows you to archive your invoices and analyze the information to determine how good your business is.
- Organize your income and expenses by category to maintain a sense of control. Be sure to retain copies of receipts you give to clients, and when it comes to expenses, separate them into fixed (credits, services, payroll, etc.) and variable expenditures (emergencies, or irregular expenditures).
- Tax records: the first step is to determine what taxes you have to pay according to the constitution of your company and if you are a natural person or a legal one. Organize a calendar so you can keep track of the dates when you must have your documents ready and when you must meet your obligations.
- If you are required to do a balance sheet or pay taxes, choose to organize documents and files every fifteen days or once a month. Having everything in order can lead to tax benefits.