If the mere thought of accounting is enough to make you want to send up a white flag, you’re not alone. Many entrepreneurs don’t find accounting to be a particularly inspiring subject. And yet it’s one of the foundations for setting up a sustainable business in the long run.
We’ve put together a shortlist of best practices for optimizing your business accounting that won’t sap your time - or your energy.
Keeping your bookkeeping well organized is the key to good business finance management - not to mention it frees up your bandwitdth for more important tasks.
Business accounting duties include recording and storing accounting documents; keeping track of transactions in chronological order; issuing invoices; doing annual inventories; and producing a financial statement at the end of the fiscal year (i.e. a balance sheet, income statement, and annexes).
Is maintaining accounting records mandatory for all businesses? Yes, for commercial companies like SA (Société Anynonyme or Limited Company), SAS (Société par Actions Simplifiée or Simplified Shareholder Company), SASU (Société par Actions Simplifiée Unipersonnelle or Simplified Single Shareholder Company), SARL (Société à Responsabilité Limité or Limited Liability Company) or EURL (Entreprise Unipersonnelle à Responsabilité Limitée or Limited Liability Sole Proprietor Enterprise), SNC (Société en Nom Collectif or Partnership) or SCS (Société en Commandite Simpleor Simple Limited Partnership). However, if you’re a freelancer or individual entrepreneur outside of the micro-enterprise regime, you’re exempt from maintaining a full accounting process: no need to do an annual inventory or produce a financial statement. All you need to do is keep a journal of your revenue and, if you’re a merchant, possibly a purchase register.
What are your company’s accounting obligations? The legal structure you choose when you create your company determines the accounting obligations you’ll need to follow. The key here is to get familiarized with your tax and accounting calendar to be prepared for its various deadlines.
Depending on your legal status, this includes:
Some of the above deadlines can come around several times a year. You can minimize the risk of missing those key dates by drawing up a schedule. You can eradicate the risk entirely by putting in place a digital calendar that sends you notifications when a deadline is approaching.
You can find all these deadlines on the Tax Authority's website, or even on their annual calendar, which indicates the deadlines for first year of business onwards.
By staying on top of your declaration and payment deadlines - and planning for them in your cash flow - you avoid financial and mental stress come payment time.
Is it mandatory to have an accountant for your business? Surprisingly, you’re not legally required to hire an accountant for your business. However, as we mentioned earlier, the law requires that you to keep accounting records (with some exceptions).
If you’re a member of an Authorized Management Center (Centre de Gestion Agréé or CGA), you may be required to hire an accountant. Most management centers require your accounts to be inspected and verified by a professional.
In reality, few companies do without the services of an accountant, for several (good) reasons.
Internal or external accounting? Most small businesses that delegate their accounting to a professional hire an external accounting firm. Once a business reaches a certain size, however, it’s often necessary to hire a dedicated person for the job.
The conclusion is clear: even if you can do your company's accounting yourself it’s better to hire a professional for these tasks. This saves you the stress of sorting it out yourself so you can devote your energy to growing your business.
Choosing an accountant: There are many accountants in the market to choose from. Some firms specialize in a particular sector or industry, while others offer additional services (e.g. part-time CFO services): it's up to you to identify the exact needs of your company to get the right support.
However, there is one quality to look out for when choosing an accountant: make sure they’re registered with the National Council of Certified Public Accountants (Conseil National de l’Ordre des Experts-Comptables). They’re the only CPAs authorized to keep accounts for companies.
Don't know how to choose your accountant? Find the one you need among our trusted partners.
Accounting software offers several advantages for businesses:
How to choose your accounting software: it seems as though there are as many accounting software as there are days in the year. Sometimes it can be hard to know which one to choose. Here are some tips to help you decide:
We’ve put together a list of best practices for choosing your accounting software for your reference (article in French) with a review of what we consider to be the best tools on the market. Good to know: Qonto offers many essential integrations with accounting SaaS apps.
Qonto is much more than a business account. You also get access to tools that help you prepare and simplify your bookkeeping: invoicing, digitized receipts, transaction reconciliation, etc.
Planning for accounting and tax deadlines; getting expert accounting support; using accounting software: these are already 3 best practices to ensure proper business management. But proper managing also involves proper planning. Which is why you need to establish both a budget plan and an expense policy.
What are the company's goals for the coming year? What’s your strategy for getting there? Take the time to ask yourself these questions every year - the answers will help guide the growth of your business. Once you’ll have defined the steps you’ll need to translate them into a balance sheet forecast. Need help? This is where having an accountant can prove useful.
By planning the investments you’ll need to make to reach your goals and establishing spending priorities you limit the risk of unforeseen expenses (which could potentially derail your long-term plans).
A budget forecast is more than a simple accounting document: it’s a guide for making your daily business decisions. And contrary to what one might think, budgets aren’t set in stone. They’re meant to be revised over and over again to adjust your forecasts to better reflect the current economic climate and actual performance of your company. It’s important to analyze the discrepancies between the projected budget and the actual performance of the company at the end of each accounting period to identify exactly where you need to course-correct.
Establishing a precise budget plan also helps you identify potential financing needs (bank loans, fundraising, etc.) and plan for them in advance.
Typically when you make a projected budget for a company, you ought to create multiple variations: one based on an optimistic scenario and another on a more pessimistic one; or one for short-term objectives and another for longer-term objectives, etc.
Once you establish your company’s overall budget plan, it needs to be broken down by department. What should the budget be for Marketing, Tech, etc.? Remember that each team has unique budget requirements. Each team manager is responsible for managing their department’s finances while respecting the guidelines you’ll have set out beforehand.
To make managing business expenses even more effective and structured, it’s helpful to define an expense policy. Which expenses should be allowed for employees? How much are they allowed to spend? Travel expenses, team-building activities, office supplies purchases, etc.: create an internal document the clearly outlines the rules for business expenses. This will help you avoid any unpleasant surprises when closing the books at the end of the year.
With Qonto, enforcing your expense policy is simple. Thanks to our customizable payment methods (including cards), you can define the rules for your employees' expenses in advance. Stay in control all while giving your team autonomy.
The primary role of accounting is to ensure that a company complies with its legal obligations. But, beyond that, making accounting a real management tool for your company ensures the good financial health of your company.
Setting up a budget plan outlines the the goals you’ve set out to achieve. But you also need to define key performance indicators, or KPIs for short, to control the trajectory of your business.
These markers are mainly financial indicators derived from accounting data. There may also be commercial indicators or other relevant data from your business activity in the mix.
As far as bookkeeping management is concerned, there are three key indicators that are relevant for most companies: working capital, working capital requirement, and the breakeven point. However, your cash flow, supplier receivables, or average payment period (Délai Moyen de Paiement or DSO in French) can also serve as good indicators depending on your business activity and objectives.
The important thing is to define your goals and the key indicators to track your progression and formalize them by putting them in a tracking dashboard. You’ll easily be able to track their real-time evolution to make informed decisions.
Keeping your bookkeeping files neatly organized in an accounting software makes monitoring your KPIs easy. With Qonto, you can link supporting documents directly to the relevant transaction and add custom labels for easy organization and analysis.
While accounting can provide you with good data to better manage your company, you probably want to spend as little time as possible on it. Automating your accounting can save you several precious hours every month.
What tasks should you automate? Here are some ways we help our customers save time with Qonto:
Depending on the SaaS you chose for your accounting you can also automatically calculate your charges and VAT or create financial projections. Make accounting a management tool for your business activity while spending as little time as possible on it.
We hope that these few accounting tips will help keep your paperwork under control. Remember: while the subject may seem a little tedious at first, it’s essential to stay on top of it for long-term viability of your business. By adopting these good practices, you can have an efficient accounting and finance management system without little fuss.
