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Can Better Accounting & Bookkeeping Make You Wealthier?

When your business books are in order, there’s the potential to make yourself wealthier. Whether you use a Toronto tax accountant or accounting software by yourself, knowing exactly where you stand financially can benefit your business. You can see areas where there’s unnecessary expense, identify your most profitable activities and direct your energy where it’s most needed. It all adds up to financial health and greater wealth. Here are some tips on where to start:

Claim all your Deductibles

You pay tax on every pound you earn over your tax threshold. So it makes sense to claim every penny you’re legally entitled to in order to reduce your tax bill.

  • You can claim for heating, cleaning, rent, business insurance, maintenance, rates and lighting if you have dedicated business premises. You can claim a percentage if you use part of your home for business purposes.
  • You can claim a mileage allowance if you use your car on business. Company cars have more extensive expense deductibles than privately owned cars used for business. Keep a check on your mileage and save your fuel receipts.
  • Claim for travel and hotel costs when they’re purely for business purposes.

Expenses are different to equipment purchases or premises rentals, which are classed as capital allowances, which you can offset against tax. Everything must be accurately reported in your bookkeeping, with all relevant paperwork and documents to back up your claim.

Keep Track of Your Invoices

Keeping better track of invoices can help make sure you’re getting paid on time. Many accounting products – like Sage 200 cloud – also include the facility to create and send invoices, and it’s equally simple to check payment and send a reminder if the invoice is still unpaid a couple of weeks later.

By keeping on top of invoices and gently reminding clients or customers of outstanding balances, you keep a healthier cash flow. This in turn means you have more cash available when it’s needed and can focus on generating more business instead of losing money through chasing unpaid invoices or allowing them to remain unpaid.

Keep Your Receipts Safe and Organised

Develop a better system of storing and categorising receipts than throwing them haphazardly into a file or shoe box. You’ll save money on the time it takes to sort them out at the end of the year, and make submitting the tax return much easier and faster.

The best way is to keep electronic records. When you buy something for business from a physical shop, take a quick photo of the receipt on your phone. Following purchases made online, forward the receipt email to your cloud storage. Some apps for receipt storage sync with online accounting packages. Taking a photo or forwarding an email takes just seconds, but can save you hours of manual hunting and sorting in the future. Once you have your digital receipt copy, you can throw the paper version away.

Automate to Save Time

Bookkeeping can be time consuming, and the bigger or busier the business, the more time it can take. By automating as many processes as possible in your accounts, you’re free to direct your attention to more profitable tasks.

When choosing bookkeeping software, investigate how much you can automate. Invaluable things include a bank feed, so every transaction from your bank account is automatically synced to your books. All you have to do is go through the transactions and create correct explanations regarding the type of payment or expense.

If you send your invoices from within your accounting software, check if you can set up automatic reminders for those that remain unpaid. Individually these tasks may only take moments, but if you’re repeating the same action several times each day the time commitment is considerable.

Use Professional Services

Professional bookkeeping services can more than pay for themselves in terms of time saving, financial efficiency and peace of mind.

Hire a bookkeeper to organise and update the books on a daily basis, and an accountant to prepare your end of year taxes and you’ll know everything is correct and legal. Your accountant can also give business advice to make your business more profitable, which in turn will generate more wealth for you.

With better accounting and bookkeeping, you’re in better control of your business finances. And that means you can keep more of your hard-earned money in your own pocket.