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Bookkeeping, Accounting and Tax Preparation for SMEs: Don’t let these become a Nightmare

Bookkeeping, Accounting and Tax Preparation for SMEs: Don’t let these become a Nightmare

Unless you are a pro, the word ‘accounts’ probably strikes fear in your heart – or a little bit of restlessness and anxiety, at least.

For young entrepreneurs, the feeling is even more amplified. After all, poor and inefficient bookkeeping can not only set a project back in the short term, it can come back and haunt you over the long haul.

If the growing pile of receipts on your desks giving you chills and the thought of sorting your accounts fill you with dread, do not worry. These simple tips will ensure your bookkeeping success. Let’s have a look.

  1. Maintaining Records and Keeping Receipts

A number of new businesses are not used to maintaining a detailed record of their everyday transactions and may therefore forget to record them. By ignoring this single most important thing, they miss out on valuable tax deductions on expenses, or worse still, underestimate their income, leading to potential penalties and fines.

Nevertheless, there are a number of accounting tools and software that allow you to track or submit your expenses you incur while on the go. If you want to avoid the last minute panic, these solutions offer significant help.

Another reason for ensuring that your business keeps detailed records of each and every transaction is to help guarantee you get paid by your customer, which is of course a top priority for small businesses with limited cash reserves.

Small businesses often fail to see this as a priority; nevertheless, it is important to have a well organized system in place to help you get to your clients once you have provided the services. Needless to say, your business would not be able to run effectively without cash. More businesses fail due to a shortage of cash than lack of profits.

  1. Paperwork, Tax Returns, Tax Preparation and Deadlines

Small businesses usually have at least two very important deadlines to comply with; one for paying associated tax bills and the other, tax preparation and filing of tax returns.

Additionally, if their turnover exceeds a certain amount, most businesses will have quarterly value added tax returns to their file as well. On the plus side, the payment of liability can be set up as a direct debt right from your bank account.

Should you miss any of these deadlines, penalties can build up real fast. In extreme cases, a company can be stuck off. A professional tax preparer can help you make sure you meet those deadlines and perhaps help the business to save tax and grow its profits and turnover.

  1. Tax Preparation

Have you ever heard of the old adage, “Just because you can, does not mean you should.” In this day and age of information technology, the internal accounting and tax department is very quickly becoming the quintessence of this very old phrase.

In the competitive landscape of today where businesses are struggling hard to balance costs versus benefits in every key decision, business leaders are increasingly beginning to realize that keeping all operations in-house may not be the most effective business practice in terms of profitability.

Perhaps the biggest advantage of outsourcing is that it has provided many enterprises the scope and skill set to become more competitive and global in addition to putting other advancements within reach including more advanced technology, greater transparency, and improved collaboration. One thing is clear- the benefits of outsourcing your accounting needs fit well with the needs of a twenty first century business.

While outsourcing is a very crucial component of the strategic management of most businesses, if you are not applying the tools of outsourcing properly, you’re not taking advantage of effectively managing your business, thus restricting to its full potential. Effective outsourcing facilitates you to focus on the core competencies possessed by your business and can employ to build your business.

Tax preparation and accounting are among the areas organizations should consider outsourcing, since the benefits of doing so are tremendous. Transferring these activities to an independent professional provider of these services, organizations can increase focus on the core aspects of the business instead.

The concept of outsourcing cannot be fully understood without having a complete understanding of the core identity of your business. If you understand your unique competitive advantage, you would find yourself in a better position to understand what work you’re doing that could be done better by others.

The areas of expertise of an organization are called its core competencies. The core competencies of Microsoft for example are innovation, product design, and new product development. To fortify and further enhance its strengths, the company avoids spending its resources on areas that are not part of its core competencies.

  1. Dealing with Company Administration

In order to avoid the year-end rush, it is a good idea to gather all of the necessary accounting documents and data throughout the year.

Assuming the business is self managed, there are a number of legal and financial issues that company directors need to be aware of. They need to know how the profits can be extracted from the business efficiently from the point of view of taxes.

Doing away with the time sucking tedium of tax preparation is often the biggest reason small businesses hire an accountant in the first place. You would want to ask your accountant the tax claims and deductions you should claim.

Bottom Line

In the competitive business landscape of today, where businesses are striving hard to balance costs versus benefits in their key decisions, business leaders are increasingly realizing that keeping their business operations in-house may not be the most effective business practice in terms of profitability.

Outsourcing your accounts, bookkeeping, and tax preparation can be more beneficial for your business than you might think. Needless to say, the combined effect of skilled experience and reduced costs can lead your business towards sustained growth.

 

In the end, it is not as scary as you may think. If you got off the right foot, it can actually be fun. After all, that’s where you are going to see your profits grow.

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