Accounting and Book Keeping

Although most people's most dreaded part of running the business, keeping the books is an important part of the business. It provides key information on your business and represents a score sheet as to how the business is progressing and can identify any areas of concern and warning signs within the business, not to mention being a necessary tool for supplying records and information for many outside the business, in particular decisions made by banks, potential investors, Landlords, trade creditors including Government bodies and taxing authorities. One of the greatest mistakes made by owners is not keeping good financial records and making improper decisions based upon inadequate information.

The key to successful book keeping is not to over complicate it. It needs to be good enough to provide you with the information you need and simple enough for you to use.

Chart of Accounts

This is the basic road map into any accounting system. This chart will establish the information captured by your accounting system.

There are a number of questions to consider to establish a good working chart of accounts:

  • Does the business have stock to be accounted for?
  • Are fixed assets significant proportion of your business?
  • Will there more than one product or service being sold, or will there be several?
  • Are the products you sell subject to VAT?
  • Do you need to monitor costs by department?

Cash or Accrual Accounting

One of the decisions to be made when you start a new business is if you wish to keep your records on a cash or accrual basis. If you work on a cash basis you record your sales when your received the money and account for the expenses when you pay the bills. The difference in the money in the cash box at the end of the month is how much you have made.

Unfortunately, as we all are well aware in the business world, that is not always so easy. Sales are made to customers with credit. Your business will incur liabilities which are due even though you may not have received the invoice or have the cash available to pay them.

Most users of financial statement such as bankers and investors are used to accrual basis accounting. They also provide a much better measuring device for your business than cash basis.

Accounting Records and Record Keeping

An important question to consider is - who will keep the books of the business? Will you do it yourself or employ a book keeper or secretary?

Very often the owners of a business decide to keep the books themselves and underestimate the commitment they have made to other phases of the operation, and the time required to maintain a good set of financial records. As a consequence the books are often left and caught up with later. This approach, though rarely planned, can require a substantial expenditure of time and money. While it is important for the owners of a business to maintain control and stay involved in the financial operations of the enterprise, this can be achieved by maintaining close control over the cheque signing function and scrutinising certain records.

Mitchells can provide the appropriate support to ensure that your records are maintained in an efficient and cost effective manner, allowing you to obtain all the financial information essential to your business without distracting you from other core operations. In this way you can work on your business and its development rather than simply working in it.

Computers

A must in today's day and age, in particularly if you have many repetitious tasks, lots of paperwork and general correspondence and need to create written reports, contracts, newsletters, catalogues or brochures.

Mitchells MTech can take the stress out of finding the right computer and software for you by assisting in the purchase and installation of the computer and showing you how to use it.

Our digital marketing company, cloudspotting, can also help you with all aspects of initiating and developing your vital online presence, from websites and e-commerce to Search Engine Marketing and Email/Viral marketing.

Internal Control

Internal control is the systems, checks and balances that are put into place to ensure that the company's assets are safeguarded and that financial information is reliable and accurate.

In any business of any size it is imperative that 'Yes' is answered to the following questions in order to maintain adequate internal controls.

  1. Is the sale recorded when the business provides goods or services to a customer and is the debt recorded in the accounts receivable or is the cash collected?
  2. When cash is expended, have the goods or services been received?

In order to maintain these controls there are many different ways in which to monitor these controls, one being reviewing all invoices and payments due before signing the cheques and numbering all invoices to ensure all is accounted for.

For more information, call us on 0113 274 3496 or email Clare Bruce at info@mitchellsgroup.com.

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