The smallest of businesses can most easily be thought of as “man, van and boy”. This describes a tradesman, apprentice and his van. It can also describe a professional, colleague and their setting, two software developers and their computers or a one man entity with no employees. These are among the smallest business unit operating and expected to remain so for the short term.
Once the compliance requirements re the Revenue, any industry regulator or company law are addressed, the next step is the accounting records. Set out below are some practical measures you can adopt to make this easier.
- Is an accounting software package needed? This is not always the case and sometimes a manual system is fine or one using Excel is wholly adequate. Your accountant will advise and set up the Excel templates as needed.
- Use a software system, if required, that is mainstream. Make sure it's compatible with your accountant and other software you may have, such as that on your till. The top three such systems in Ireland are QuickBooks, Sage or The Big Red Book. All are value for money. Each is sufficiently mainstream that if you later hire a bookkeeper, they are likely to be familiar with it.
- Open a separate bank account and credit card for business matters. Most start-up businesses think of the bank account, but not the credit card account. This should of course be settled monthly. It should only contain business expenses, including motor, journals, subscriptions, small value purchases from one-off suppliers. By having a separate credit card, the credit card company keeps a record, saving you some work later on. So, if your personal credit card is a VISA card, open a MasterCard account for the business to quickly distinguish business from personal expenses.
- Open a lever arch folder for each year and divide it with 10 dividers so that you can tidily store that year’s key documents. The dividers would each identify the following:
- Bank statements for main current account
- Credit card statements
- VAT correspondence, computations and copy returns
- PAYE, PRSI correspondence, computations and copy returns
- Copy of business insurance policies
- Correspondence with bank
- Term loan bank statements
- Correspondence with your accountant
- Copy of loan and leasing agreements
- Sundry one-off documents worthy of retention
- In so far as possible, keep your dealings with Revenue and utility companies online. This will speed matters up. It will give rise to reduced rates for utility companies, particularly if you opt for e-billing.
- Do not allow your record keeping to build up. Do it regularly and this will ensure greater accuracy in your records and understanding of your business.
- Do your annual accounts quickly after the year end. This offers a number of advantages. It proves or otherwise the quality of your record keeping, always a good check. It allows you to identify developing trends and allows time to respond.
To be honest, keeping accounting records is not for everyone. Those that are naturally organised and disciplined have an advantage. If, however, you are one of those souls who have talents other than keeping records, then appoint someone from the start you trust who has.
It is vital none the less that you understand the principles of the record keeping . You will then know where to go and have a clear idea of what is available from your records. Records and accounts are very best insight allowing an objective view of your business.