Accounting and Bookkeeping Tips for Small Businesses

Posted by Elaine Viljoen on 26 January 2018.

Elaine Viljoen

CA(SA), CTA, Hons BCompt, Adv Diploma Banking, BCom (Cum laude), IALMBA Graduate Student, Business School Netherlands

The Tax Shop Head Office

More about Elaine Viljoen

Elaine obtained qualifications from various academic institutions and currently studies towards the International MBA at the Business School Netherlands. She qualified as a Chartered Accountant (SA) in 1988 and is a member of the South African Institute of Chartered Accountants. After completion of her articles with KPMG, she lectured in the fields of accounting and auditing at various universities. Thereafter, she occupied high profile positions in the banking sector, including appointments as Group Chief Accountant at Standard Bank, General manager in the enterprise risk management, treasury and finance divisions at ABSA and Chief Financial Officer at ABN Amro Bank South Africa. She served on various executive committees, including audit and risk committees and as representative of the Middle-East and Africa region on the Steering Committee Information and Operations for ABN Amro Bank. Since 2008 she has provided business consulting services to various financial institutions in South Africa and acted as a specialist advisor in the nuclear energy sector.
Separate Your Income and Expenses from Business Income and Expenses
If you are an individual freelance contract worker and pay provisional tax, it becomes essential to keep your personal expenses separate from the business. For this, meticulous accounting is needed. It is easy to fall into the habit of throwing all receipts and invoices into one box. When it comes to doing tax returns, you realise that you can no longer remember which costs should be allocated to personal expenses. Using our accounting services and bookkeeping expertise will help you to keep adequate record of personal and business expenses, making it easier to calculate taxes payable.
Do Monthly Bookkeeping
As small business owner, time is a valuable resource. Do not procrastinate on doing the books. Unless your books are kept up to date it will be difficult to make projections and you will miss out on business growth opportunities because you lack insight regarding the financial state of the business.
In order to do monthly bookkeeping, you must have a system in place that enables daily input of accounting information. We strongly recommend investing in appropriate software for this purpose. Make life easier and use our accounting and bookkeeping services, which include cloud-based software accounting solutions.
Keep Debt under Control
Whether it is debt owed by your business or debt owed to your business, you need accurate record keeping. Do not let debt spiral out of control. Clients who do not pay their accounts should not be able to order more products. Set a policy on payment of invoices and stipulate such in your quotes. Keep to this policy in order to minimise the risk of cash-flow problems because of non-paying clients.
At the same time, you need to ensure that you pay your accounts on time. If you don’t, you will end up with interest to pay, judgments, risk of forced liquidation, inability to order products and inability to deliver products or services to paying clients.
Distinguish Between Accounts Receivable and Payments for Repayment of Loans
As start-up or small business, you may need to borrow money at beginning for setting up the business and to pay for initial marketing expenses. You need to separate the accounts receivable payments from the loan accounts that must be repaid. The borrowed funds should not form part of income. If you do not make the separation you will not be able to clearly identify what income belongs to your business and what amount must be paid back to the lender.
Move from Weekly Expense Calculation to Daily Expense Calculation
If you only calculate the expenses on a weekly or monthly basis, you will not be able to budget appropriately. By keeping record daily regarding expenses, you gain better insight regarding the cash-flow available and can thus make better forecasts and budget for expenses accordingly.
Determine the Minimum Profit for Survival
Review all the monthly expenses to get an overview of the most important financial obligations. Now set a monthly target for income to ensure that you can meet all the financial obligations every month. Rent, employee salaries and utilities are expenses you will have every month.
When to Outsource Accounting and Bookkeeping
Decide whether to manage the payroll in-house or have an outsourced company handle it. If you do not have experience in small business accounting, then outsourcing the function will help to ensure accurate recordkeeping, on-time payment of employees and compliance with tax regulations.
Apart from payroll management you will benefit from using outsourced accounting services and bookkeeping solutions to streamline the monthly recordkeeping, preparation of financial statements, setting budgets and making the relevant payments. With such services, you also have the option of outsourcing the tax function which will help you to focus on business rather than struggling with complex calculations and compliance requirements.
Our Professional Accountants and Tax consultants can help you determine whether to register for provisional tax or turnover tax. The turnover tax is a relief system for micro-businesses.  In addition, the Tax Shop Professional Accountants will help to streamline bookkeeping with appropriate software and assist in other aspects of running a business in South Africa such as business plans.