As a business owner, accounting is essential to running your organisation, no matter what your goals for the future are. However, accounting can also be challenging, especially for small business owners with limited resources.
But knowing the most pressing challenges that most businesses face and how to overcome them will help you with your financial duties.
Bookkeeping and record-keeping
Bookkeeping and record-keeping are the foundation of accounting and are crucial for any business. However, keeping accurate and up-to-date financial records can be time-consuming and overwhelming, especially for small businesses and owners needing attention elsewhere. It’s no surprise that so many business owners, unfortunately, fall behind.
The solution to this challenge is to implement an organised bookkeeping system from day one; a little bit of work each day is far more manageable than hours of catch-up at the end of the month.
Bookkeeping software is especially useful — by connecting it to your bank account, you can automate the books entirely, only requiring you to check that everything is correct.
Tax planning and compliance
As a business owner, you must understand the tax laws and regulations that apply to you to avoid penalties and fines. This includes filing accurate tax returns ahead of deadlines. Depending on your activities, there are taxes on self-employed and corporate income, profits from selling assets, property taxes and more.
But the challenge around tax that businesses face isn’t just about the admin work required to pay them — it’s the tax burden itself. However, you can ensure that you pay only the taxes you need to by claiming Government-backed tax credits and relief.
From allowable expenses and capital allowances to special tax relief schemes for companies, there are a lot of opportunities for businesses to ease their tax burden.
Claiming all this on top of submitting your annual tax return isn’t easy, though, so always begin work on your taxes early so you have time to adjust any mistakes and budget for your tax bill. Alternatively, talk to an accountant to find out how they can help you.
Keeping up with changing regulations and standards
Accounting regulations are constantly changing, and it can be challenging for businesses to keep up with them. Failing to comply with them can result in fines and penalties, and damage your reputation, however.
To overcome this, it’s a smart idea to keep abreast with the latest business news. You’ll find plenty of specialist media sites dedicated to business and accounting regulation, while business groups and bodies endeavour to keep members in the know.
You can also trust your accountant to stay on top of the latest regulation and legislation changes — it’s our job, after all, to know this stuff.
As they say, cash is king – especially for SMEs. A lack of cashflow can lead to significant problems with paying bills, employees and vendors. If it becomes bad enough, you might not even be able to repay loans, which would spell disaster for your business.
We wrote an entire blog post on managing cashflow better, but the most important thing is to create cashflow forecasts, which help you predict your future inflows and outflows.
Make sure to read our top cashflow management tips for precise advice on how to control your expenses and bring more money into your business.
Financial reporting and analysis
Without proper reporting and analysis, you’ll never be able to make informed business decisions. However, it can be challenging to understand financial statements and analyse financial data, especially if you’re unfamiliar with accounting principles.
To overcome this challenge, it really is advisable to hire an accountant or financial professional who can help you understand your statements to provide insights into your business’s financial health. Otherwise, you risk misinterpreting or missing something, which would hurt your financial planning.
It’s especially beneficial to find an accountant who uses online software such as Xero, which helps you and your accountant see your figures in real time. This allows you to see how your business is doing and your accountant can help you plan strategies for the future.
We’re willing and able to be that accountant for you. From managing cashflow to filing your tax returns and annual accounts, we’ve got you covered.
Get in touch with us to discuss how we can help your business.