The Best Accounting Tips For Businesses During COVID-19 Pandemic
If you're an entrepreneur, then you know that your business needs to stay floating no matter the circumstances. Running a business requires you to be always keen; otherwise, your business could be sinking even before it takes off.
Currently, the whole world is being affected by COVID-19 pandemic. Many businesses have been paralyzed. The virus has shaken even some large companies where owners are now forced to count more and more losses.
For you to keep sailing your company, you need to know how to balance your business accounts, whether you are using online or traditional bookkeeping. Business Accounting will help you balance between input and output of finances by allowing you to know if your business is gaining or losing - and that's why we created this brief guide for you for times of uncertainty like these.
The following accounting tips will help you during this Covid-19 Pandemic:
Employ the Use of Business Accounting Software
Today, business accounting software has gained popularity, and most business owners have prioritized it for bookkeeping over traditional methods. However, it is good to have double-entry bookkeeping just as a backup in cases of the worst scenario. Business owners consider online business bookkeeping because it's very efficient and easy to access your accounting information. The importance of auditing is that you can record the transaction of purchases and know the profit margin that you have made. Today there is a variety of business accounting software that you can comfortably choose from that suits your company. However, your first choice should be Zarmoney cloud business accounting software.
Why? In comparison to other online software providers, its final price is much lower than of its competitors, no matter how initial plans and free trials make you feel. Always look at all the features you are going to need and in which plan they are. You would be surprised how for even small companies you would be forced to pick quite an expensive plan to meet your accounting requirements.
To learn more, check out this brief guide comparing ZarMoney and its major rival Quickbooks, or check ZarMoney's feature list.
Make Sure You Separate Your Personal and Business Account
There is no offence using individual account funds to fuel your business for the first few months or years before it picks up. However, it is vital to create a separate account for your business to save yourself from confusing business and personal finances. Creating a business account that is separate from a personal statement will help you see how you spend business money. A different business account will also let you not to mix up business and related individual transactions.
Business owners should invest in credit card payment rather than cash payment. Credit card payment generates automatic statements, unlike cash payment, helping you with the cash-flow report, eliminating errors in forecasting.
Have a Way to Log Your Expense Receipts
This practice is among the best practises for any situation, not only for the worldwide pandemic. Saving expenses receipts every time you make a transaction can help significantly, especially when it comes to filing taxes. It is very likely for businesses that do not make copies of receipts to incur extra cost on their bank statements that they have no idea of where it came from, and these charges can go on if you have poor record keeping. To avoid these losses, make sure that you save the receipt of every transaction made by your business even if it looks like a lot of work.
The easiest it is to take a photo snap of each receipt with your phone and store it on the cloud using apps like ZarMoney's cloud accounting.
In this case, it will be easier to keep your accounting, taxes, and cash flow intact, backed up safely in the cloud, and reachable from anywhere.
Limit Customers From Borrowing
During this time of the Covid-19 pandemic, some of your consumers are struggling, and it might be tempting to give them credits, especially your loyal and frequent customers. However, you don't have to gamble with business money by lending, and then later finding your business in a money crisis.
Remember, you can only account for money already in your business bank account. Therefore, it will be difficult for you to forecast your business if you have credited a lot. The other option you can consider, if you must give credits, is to ensure clients clear off all their previous debts of the previous purchase.
Ensure You File Your Tax Returns
Even when your business is making big profits, always remember that not all of that is yours, and a portion of it belongs to the government. Therefore, you have to ensure that you don't miss on filing for your tax returns. Failing to do so might result in revoking your business license by the Authority. It is good to file your tax returns on time to prevents you from piling tax debts.
Always make sure you do proper research when it comes to matters concerning tax. Some of these laws are National Insurance, Income tax, VAT and business rates, etc. Just make sure you know what will apply for the business you are running and pay for it.
What else can happen if you fail to manage your taxes?
- You’ll face a failure-to-file penalty. The penalty is 5% of your unpaid taxes for each month your tax return is late, up to 25%. On top of that fee, if you file more than 60 days late, you’ll pay a minimum of $135 or 100% of the taxes you owe (whichever is less).
- If you file but don’t pay, the IRS will charge you a failure-to-pay penalty. The penalty is 0.5% of your unpaid taxes for each month you don’t pay, up to 25%. As a bonus, you are obliged to pay interest on the unpaid amount.
Hire a Bookkeeping Professional
Sometimes entrepreneurs opt to do their Business Accounting themselves to save money. This can cost your business a lot if you don't have the expertise in accounting. You can avoid this by hiring a tax manager with the knowledge of using accounting software like ZarMoney. Doing returns on your own may miss some key details that can lead you to incur penalties. Tax managers can do accounting correctly and accurately and also be able to keep on toes with up to date on the changing tax laws. A tax professional can also plan in case there is a tax rise in the future.
Use a Digital Accounting App
These days' technology has advanced, making it easy to execute the most of tasks using an app, these apps are easy to download on your phone. You can do almost everything related to Business Accounting using business accounting apps, like viewing your online bookkeeping from anywhere. The best thing is that most of these apps are user friendly, which means you'll have no difficulties working around it. This means that you don't have to be a guru in tech to use an accounting app that suits your business.
For example, using ZarMoney, you can calculate your tax accurately and on time.
In conclusion, ensure that you keep good communication with your accountant/bookkeeper; the reason for that is that you may find they are using jargon in some statements. In such cases, let them know that you're not a financial expert so they can explain Business Accounting in deep.