Five Accounting Habits Small Business Owners Should Pick Up
Small business owners think they are on top of their finances if they can promptly pay their bills every month, cover all the expenses, and pay themselves and their employees promptly. These positive benchmarks will give your business a solid foundation but there is a list of accounting habits you must pick up to ensure the financial health of your company. Being one of the top accounting firms in Dubai, we have curated a list of five accounting habits small business owners must practice to improve their business processes. Read ahead to know:
1. Send Accurate Invoices
Inaccuracies or errors on invoices can make you confused over how much is owed when payments are due. It can cause serious issues when filing your VAT/Tax returns. You need to ensure that all the invoices sent from your company must contain accurate information. You can use invoicing software to make sure all the necessary information such as issue date, invoice number etc. are properly filled in.
However, you must also double-check key information such as customer details, product descriptions, due dates, and prices. Inculcate the habit of spending some time to verify your invoices so that you can spot errors which will enable you to prevent issues further down the line. You can also seek assistance from accounting firms in Dubai to further strengthen your processes.
2. Record Expenses As You Go
Entrepreneurs struggling to juggle multiple tasks may be tempted to postpone certain tasks, especially those responsibilities that they find unexciting. Don’t wait till the end of the month to record your business expenses in bulk. Ditch such inefficient accounting practices and start the habit of recording each expense as it’s incurred.
Recording costs as you make purchases helps you to eliminate the risk of forgetting about an expense or losing a receipt. Recording expenses as you go will also save you from the burden of clearing a backlog of expenses from the previous weeks. Outsourcing accounting and bookkeeping services in Dubai can prevent dealing with such backlogs.
3. Regularly Reconcile Your Bank Accounts
The bank reconciliation process compares the cash balance on your company’s balance sheet to the corresponding amount on the bank statement. Reconciling two accounts helps you to identify whether you need accounting changes. Bank reconciliations need to be performed at regular intervals to make sure the company’s cash records are accurate. The process also helps you to detect any act of fraud or cash manipulation.
All small business owners may not find this process not much enjoyable but it is essential for accurate accounts. You need to pick up the habit of regularly reconciling bank accounts to keep on top of your finances. Business owners need not compare the payments every day but reconciling accounts once a month will help you to have a clear view of your most recent transactions, with an amount of data that’s easy to manage.
4. Keep Digital Records
Relying on paper records is a habit of the bygone era. Switching to digital record-keeping can save you time, space and the environment as well. Digital record keeping will make it easier for you to quickly retrieve a specific document when auditors ask for it during an external audit. It will also save you from the menace of losing important documents and financial records. Moreover, the Federal Decree-Law No. 8 of 2017 on VAT also recognises tax invoices in both forms: written and/or electronic.
You can use robust cloud-based accounting software or invoicing software to keep the records securely online. It will enable easier access to every invoice you’ve sent and every expense you’ve recorded, as well as your tax returns and financial reports. Cloud-based software will help you to quickly search for a specific invoice, expense, quote, or credit note and find what you need in a matter of seconds. It will also save your accountants from the burden of sending over bulky files, giving them easy and secure access to the data they need.
5. Seek Professional Help
Advice from experienced professionals can improve your accounting processes. Outsourcing to accounting firms in Dubai doesn’t mean you should leave it entirely to someone. Business owners will still need to review reports, understand what’s happening with their business, and ask the right questions to the providers of accounting services in Dubai.
Irrespective of the level of your accounting expertise, you can benefit from understanding the basic business numbers, including profit, the trend in expenses, accounts receivable, profit per customer, and how your client funnel works. Working with accounting and bookkeeping companies can enhance your financial knowledge as well.
Hire the Top Accounting Firms in Dubai, UAE
In conclusion, practising some of these five accounting habits will help small business owners improve their finances. Don’t think you are alone in this process. The best accounting firms in Dubai such as Jitendra Chartered Accountants (JCA) can support you in your entrepreneurial journey. JCA is one of the leading accounting & bookkeeping firms in Dubai with over 20 years of experience. We have a team of highly qualified accounting and tax professionals who can help you develop robust business strategies. JCA has helped thousands of startups and small businesses to create effective accounting strategies. JCA’s accounting services in Dubai also cover allied services such as audit, VAT compliance, ICV certification assistance, corporate finance, ESR, UBO & AML-CFT compliance etc.