The 4 Laws To Get Your Small Business Accounting Right From The Start
There is no doubt that getting your business accounting right is very important especially for small businesses in Malaysia. There are consequences for not paying attention to this critical aspect of operating an SME if you are audited by the taxation department. Tax evasion carries hefty fines and a charge may damage the reputation of the company.
Therefore, it is important to imbibe the practice of good accounting from the beginning. Unfortunately, there are still a lot of small business owners in Malaysia who do not think they need any kind of accounting or even basic bookkeeping; however, this is short-sighted. No matter the size of the business, getting your business accounting right from the start is critical. Note that just keeping receipts and invoices is not really enough as even a small business should have a thorough system that records all business transactions and makes financial reporting available when needed. The reality is that getting it right will surely set you up for long term success.
Separation of personal and business accounts
One of the most important tips to note is separating your personal account from your business account. It is advisable and good practice to always open a separate business account when you launch your small business. However, it is very common these days to see small business owners using their personal account for their business transactions and in the end, it becomes difficult or impossible to reconcile figures involved in your business transaction.
Regularly reconcile your accounts
Another important tip that should help you get your business accounting right is to regularly reconcile your books and accounts. Reconciling your accounts regularly could mean a weekly or monthly reconciliation. This is a good way to catch any errors early. Errors normally arise when you do not do a thorough check or when you are not in control of your finances.
Good business accounting such as monthly financial reporting will benefit you when it comes to submitting your tax returns since you have figures and documentation well prepared. Further, you can see if you are overspending in a particular area and know whether you will make a profit or a loss. In fact, it also helps you see the trend of profit or losses which may have gone unnoticed.
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Check for tax relief
It is important for small businesses to check if you are eligible for tax relief. Unfortunately, there are small businesses that do not take this seriously or do not know it is possible. For example, there are things that could be untaxed like home office costs, travel expenses among others. It is important for business owners to do the necessary research to ensure that you are not actually overpaying.
If you own are small businesses in Malaysia and would like to adopt a good business accounting system but may not have the expertise involved to do your own accounting. In this case, there are some options available. You can buy accounting software that will help generate financial reporting for your business. These applications are inexpensive and easy to use, but it is important to note that they are only compiling your inputs. This means that if you make a mistake, it is likely going to go unnoticed.
Hire your accounting firm early
Another important tip is to find the right accounting firm early for your business. This will ensure that your small business accounts will be prepared by a knowledgeable person who can give you the right advice and guidance on how to file your business expenses from the start.
You can find an accounting firm in your local area to keep costs lower. It is always advisable for small business owners to hire the accounting firm early in order for the accounting firm to get familiarised with your business before the end of the tax year. Many small business owners find their accounting firm when it’s too late.
There is a broad tendency for small businesses to wait until a few weeks or even a few days before the due date. Handing over your accumulated receipts and expect the accounting firm to allocate resources to get the job done, is both costly for you and many accounting firms don’t even want to bother accepting you as their client. Keeping bookkeeping as an ongoing process and hiring an accounting professional early will keep a professional relationship between you and the accounting firm so they can keep the compliance in order for you.
When hiring an accounting firm, it is advisable to hire one that specialises in the area of small business accounting. Ideally, the firm to hire will be one that has worked with small businesses and has experience in your industry. If you cannot find a local accounting firm that fits these criteria in your area, it is possible to find one online or use the above form to find one fast and easy. We match your needs with the right accounting firm for free and give you not only 1 but 3 accounting firms to choose from. It’s an easy way to find the right accounting professional to fit your small business needs at the right price.
There is no doubt that small business accounting plays an important role in deciding how successful a business can be. Getting it right will help to ensure you can track your cash-flow accurately, avoid falling foul of the taxation department, and provide you with ease-of-mind so you can concentrate on your business.