Are you afraid of numbers? Do you freak out with accounts? Don’t worry we are here to help you with numbers and accounts. Here are some start-up accounting guides which all business owners should consider.
Business Bank Account
As you start-up business, as a thumb rule, open a separate business bank account. Avoid any personal expenses from your business account and vice-versa. As a start-up accounting guides, accounting gets simplified and accurate if there is a dedicated bank account for business, from where no personal expenses are made.
Book of Accounts can be maintained in Excel, but reporting gets tricky. There are many softwares available in the market for SME’s to maintain their book of accounts. Wave is a free accounting software and ideal for small business organizations. There are other softwares like tally, QuickBooks, Zoho, Zero. Depending on your needs choose the correct software. Need help in choosing the right software? You can email us at firstname.lastname@example.org. We will help you choose the correct accounting system.
Another important thing is to keep track of your expenses. Each file count! As far as possible avoid any cash expenses, try paying it through bank. If you are making a cash payment, make sure you pass proper entries in your books of account. Maintain separate excel sheet to record your petty cash expenses. You can follow a monthly cycle of cash vs expense reconciliation before you replenish further funds.
Keep a full record of all your initial investments. As a start-up your company may not be in the position to pay back the whole initial investments in first few years. Keeping a record of it is absolutely important, to understand the owner’s equity.
- Your business bank account should be reconciled on a weekly or monthly basis, depending on the volume of your business.
- Try and avoid ledgers such as general expense, miscellaneous expense, suspense account, office expense. Try and be as far as possible accurate in defining your ledgers.
- Reconcile your petty cash on a regularly.
File for all your documents. As per FTA law you need to maintain books for at least 8 years with evidences
- Segregate your documents as Sales, Purchase and Petty Cash.
- Stamp your documents as entered and paid, it will ensure that you have accounted each document and avoided duplicate payments.
It is very important to analyze your monthly financials. This would include Profit and Loss account, Balance Sheet and Cash Flow. If you find it difficult to in understanding these reports, take guidance from an expert, at least for the initial few months.
Be mindful about the VAT threshold. Once your sales reaches a turnover of 375,000 dirhams over last one year, you need to register for VAT. Need help in registering for VAT? We at Beyond Numbers, help you to register your company with Federal Tax Authority.
Books to be reviewed by a Professional
You can certainly maintain your own books of accounts specially with user friendly accounting software’s. Ensure it is reviewed periodically by an accountant for meaningful reports and comments on overall business health.
Beyond Numbers is always there to support you. Visit beyondnumbers.ae.