Money is volatile, and if care is not taken, you can lose or spend all the money you worked sleepless nights for. Yes, this can happen, and you wouldn’t be able to point to a tangible investment you’ve had over your years of hard work.
What then can you do to control the situation? It is important to keep an accounting record so you can hold yourself accountable for every dollar spent.
Accounting Books defined
In simple terms, an accounting book is where all records of your account go. Whenever a transaction is being made, and you got paid, the account book is where you do the writing. The importance of keeping an account book for your business cannot be overemphasized. It gives you a clear view of everything going on with your service. When coupled with other books you need to keep, it helps you stay on top of your freelance game, making an organized career, as much as possible. With account books and other books you keep, you can carry out frequent appraisals and make necessary decisions.
Why you need to care about having an account book
It is easy to dismiss the idea of having an account book, or you rely on your IQ that you can have it all stored up without mixing things up. Well, before you decide on whether you need an account book or not, here are some things you need to know:
Account books help with tax matters
In a world where famous footballers can be jailed due to tax defaults and all, you don’t want to mess around with the tax enforcement agents. In the bid to avoid tax issues and all, if you have enough money, you may be tempted to have a tax accountant do all your accounts for you. This is only going to cost you more. You can keep things in check and order just by entering records as and when due. You don’t need to pay extra hundreds of dollars to have your files clean and in order. With a properly managed account book, paying your tax will be more comfortable.
Audit becomes easier
You are a business owner; you work for no one, so no external auditor is going to check your records. However, you need to audit yourself from time to time. When you have a proper record, it is easy to determine how well you are faring, and how to maximize your time and resources for better performance. When your book is managed correctly, you do away with financial mistakes. If you don’t know how to handle a proper account book, read on..
You can monitor your assets and protect them
As a freelancer, there is a need for you to invest in having assets. Though this is a topic for another day, with the account book, including all your assets and liabilities, you can quickly know when things are going wrong. The account book helps you stay on top of this.
Tips to keep your account book perfect and organized
Keeping an accounting book is more than just entering text when you get a credit alert, or when you are debited for payment. There are some tips that we have curated to help you make the most of the account book.
Make sure your personal and business bank accounts are separate
You don’t want your money to be up for tax, do you? It is best to run different accounts for your business and personal finances. With this done, tax deductions can be levied on the business account. Don’t mix up financial details relating to business with your personal finance. This is necessary, and it will make things easier for you and also save you from tax enforcement.
Don’t use cash for bills
Whenever you can, do not use some money to sort bills. It may be tough to track this. In cases where you do, it is best to reimburse where the cash came from. Whenever you can pay via bank. Rather than having to keep receipts of transactions, bank statements will come in handy.
Separate the records for payable and receivables of the account
When you have a separate record for receivables, you can keep track of how much you should be expecting from a client, and when. You keep a record of the name, what he is going to pay you for, and when he promised to. This way, you can chase payment when due. One thing you should note is that your clients should always pay on time.
Also, you should keep a payable account, where you keep track of all the expenses you need to incur and when. This way, you don’t get things mixed up or duplicated.
You don’t have to record all these in books and papers. They can get lost and worn out easily. Your very best bet is tech-related products. There are several accounting software out there, and you can pick any that suits your needs. One thing about leveraging on tech is that you don’t ever have to worry about losing those details. There are backup utilities you can tap into.