If you are looking to launch a business empire any time soon, there is much to learn, and a major part of running a company is the accounting. Keeping accurate records is an essential requirement, which enables you to know exactly how the business is doing at any given time, and with that in mind, here are a few accounting principles you should understand before setting up your new company.
- Spreadsheets – A spreadsheet is a document that lists either expense or income, and while this would have been entered into a large ledger a few years ago, most business owners prefer to use software like Microsoft Excel, which is a spreadsheet software that employs many powerful tools that take the hassle out of bookkeeping. If you have yet to source an accountant, there are affordable accounting and bookkeeping services in Dubai that will set you on the right track. Your accountant will use your spreadsheets to prepare your reports and tax returns, and you must keep (and number) every receipt when you spend money that is connected with the company.
- Profit & Loss Statements – Once you have crunched all the numbers, you can create a profit & loss statement, which will tell you exactly how your business is performing. All your income is listed, along with all expenses, and the difference between the two will be your gross profit, or loss, depending on the figures. Without these statements, the business owner will have little idea as to how well the business is performing, and your accountant can help you to create these, or they can take on the responsibility of you are too busy.
- Tax Liability – Every business must pay tax and every year your accountant will prepare your annual tax returns. This can be quite complicated, which is why you need a qualified accountant who is experienced in compiling tax returns, and a good accountant will be worth the money, as they will save you from paying any more tax that is necessary.
- Cash Flow Statements – These will forecast the expected cash flow of the business, and can be made up to 5 years in advance. Cash flow statements help the business owner to plan for the future and the figures are based on past performance, while taking marketing factors into account.
- Employee Liability – When you employ people, you must make sure that you comply with the government guidelines, which include paying a national insurance contribution for each employee and making sure that income tax is deducted and forwarded to the taxation office. You must also take out employers’ liability insurance, which covers any injuries that your workers might suffer.
It is essential that you talk to an accountant prior to registering the business, as they can help you by setting up a bookkeeping system to follow and that will make the accountant’s job that much easier. Once you have a routine set up, take the time to keep your accounting up to date, otherwise things can quickly get out of hand.