Business

The questions you should be asking when it comes to business accounting

October 20, 2021 by Mark Davis

Just imagine being an accountant.

Think of all the numbers they need in order to do their job: employees' salaries, bonuses and expenses, direct debits coming in and out on a daily, weekly, monthly, yearly basis. Then there's the labyrinth of social charges and taxes, not to mention those extraordinary expenses that really aren't that extraordinary at all.

All those categories, rows and columns. It was what made Microsoft Excel such a game changer. Back in the 1980s.

Today, accounting is a far more complex beast. Taming it requires more than just a spreadsheet. It requires a strategy. There are questions you need to be asking yourself as a business owner so that you can get the right bookkeeping solution at the right price.

This article seeks to provide you with those questions, so that you can find the right answers.

Business accounting: to outsource or stay in-house?

While every business' accounting is unique, the first choice is a simple one that boils down to two options:

  • Manage your accounting internally. In this case, the company employs its own accountant, or several accountants if the size and activity of the business demands it. The challenge is knowing at what point this option becomes worth it, and there's no one-fits-all answer.
  • Outsource your accounting. Here, you delegate the responsibility to an expert, external accountant. Most companies with fewer than 20 full-time staff choose to go this route. The accountant might do some occasional gigs when needed, or take on board all a company's bookkeeping.

Each option has its pros and its cons, and here they are for each one:

In-house accounting

What are the pros? The company's directors maintain control over all operations and all the confidential information never leaves the building, as it were. Independent accountants can always be called in, if and when the need arises, but these external costs will be lower or non-existant.

What are the cons? Accounting demands advanced skills and time. If the in-house accountant gets sick or leaves, that can have a significant negative impact on the company. In such a fast-evolving field, ongoing training will also represent an added cost in the long-term.

Outsourced accounting

What are the pros? Outsourcing brings a guarantee of safe, stable accounting. Professional accountants are bound by law to respect tax obligations. They can also provide directors with precious advice and act as that useful 'outside pair of eyes'. You can be confident your books will be solid, now and in the long term.

What are the cons? Calling in an expert accountant brings with it a cost that each business will need to calculate accurately. It can be very tricky to predict the volume and frequency of future bookkeeping missions and it goes without saying that the more an external accountant works, the more they'll need to be paid.

💡 Turning to technology can lower these external costs by doing some of the accountant's work for them: new digital finance solutions can hook your operations up directly to your accounting platform. This way, you don't need to set aside time to carry out these menial tasks or even have somebody dedicated to doing them.

How to choose between accounting software

Bookkeeping software can be used both within your company and by outsourced accountants who are granted access to it. This makes communication smoother if you decide on taking the external path. Daily book management is simplified; the software saves time and reduces the risk of human error.

There's an abundance of accounting software adapted to all manner of businesses. It's well worthwhile comparing what's out there and identifying the most suitable solution for you. Take the time to examine several products and give yourself a good idea of the features and settings that each one offers.

Below is a list of the various tasks covered by bookkeeping software:

  • Drafting documents (general ledgers, balance sheets, income statements);
  • Fixed asset management (calculating depreciations and write-offs);
  • Payment management (salaries and direct debits);
  • Data entry (calculating VAT, tax archives);
  • Managing reminders and follow-ups;
  • Banking operations (bank statements, payment orders);
  • Office automation (recovering and integrating data from other software).

💡 New digital solutions have revolutionized business finance management over the last decade. Here are a few examples that illustrate their capacity to make things simpler:

  • Some software solutions can banish manual data entry by automating a great number of features, thus saving a significant amount of productivity hours. If you frequently repeat the same operation over and over again when you do your bookkeeping, save yourself the time by having the operation do itself automatically. Over the course of a month, you might save yourself a few days' worth of menial, manual work.
  • Finance integration tools allow you to transfer your data and operations to your accountant in real time. This means communication and things like following up expenses becomes faster, more reliable and more secure.
  • The user-friendliness of a software is also important; it's more than just pretty, it's practical. Some software is more intuitive than others and will be adopted much faster by your employees. Some apps have done to accounting what they did for ordering pizza or a taxi, making life that little bit easier.

What good habits should you stick to?

Categorize all your bookkeeping records for a better vision of your spend

Accounting lies at the heart of a managing a company. It translates all the operations that make up your daily business into something countable. The data goes into the system thanks to accounting entries that are kept in a ledger. You need all of this information for your balance sheets and income statements, hence the importance of keeping everything as organized and efficient as possible.

The number of accounting entries you generate can grow extremely quickly, making it essential that they're filtered and categorized according to their purpose or date.

The standard categories are as follows, along with examples of the relevant accounting entries:

  • Costs and revenues (invoices and receipts);
  • Banking (bank statements, supporting documents);
  • Payroll (payslips);
  • VAT and other tax declarations.

You'll need to create files - whether paper or digital - for each category, and then feed them with accounting entries sorted into numerical order (for example, by client codes) or chronological order. The earlier you put a methodical system in place, the better.

Streamlining the 'pre-accounting' step makes bookkeeping so much less painful, and this is where digital banking solutions prove their worth. 'Pre-accounting' refers to getting all the documents and operations you'll need ready to go into your books. It used to mean collecting all the little bits of paper that prove your numbers. Now, thanks to automation, that doesn't have to be the case.

Receipts and proof-of-purchase slips can now be digitalized, which makes processing them both quicker and more reliable. Follow-ups and reminders and data entry can also be automated, as can bank reconciliation (matching the transactions in your accounting records to those on your bank statements).

If you're curious to know more about all the processes and tasks that can be automated and simplified by Qonto's solutions, you'll find them right here.

Create a schedule of accounting deadlines

Knowing what payments are going out and when is key to successfully managing your company's treasury; if you miss a deadline, you risk paying a penalty. Again, these deadlines can be categorized:

  • Tax: VAT, corporate tax, payroll tax;
  • Social charges: In France these include the DSN (Déclaration Sociale Nominative), DADS-U (Déclaration Annuelle des Données Sociales), and DSI (Déclaration Sociale des Indépendants);
  • Accounting: End-of-year reporting (inventory, balance sheet, income statement).

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.

Are you eligible for "Super Simplified Accounting"?

In France there exists a program that removes some legal accounting obligations for businesses, and, appropriately, it carries the name 'Super Simplified Accounting' (la Comptabilité Super Simplifiée). This allows companies to implement simpler and less expensive bookkeeping management.

The program is open to shop-owners and tradespeople with an annual turnover of between:

  • €32,900 and €236,000 for service providers;
  • €82,200 and €783,000 for purchase/resale activities, sales of products to be consumed on site and those who provide accommodation.

Tradespeople and shop-owners turning over less than the above amounts can also qualify as long as they obtain a special 'simplified system' status.

Specifically, this 'Super Simplified Accounting' program can bring you the following advantages:

  • You can centralize your records into your accounting journal once every quarter, as opposed to once every month.
  • Record petrol expenses as one lump sum.
  • You are no longer legally obliged to provide proof of purchase for general equipment paid for in cash (within a limit of 0.1% of pre-tax turnover).
  • When it comes to end-of-year reports, your balance sheet, income statement, inventory and outstanding payments are made less complicated.

If you can stay on top of your accounting, you'll have a clearer overall, real-time vision of of the health of your company's finances. This, in turn, makes it easier to plan ahead.

By working out the answers to the questions discussed above, you can find the accounting system that suits your business. You can take care of all those rows, columns and categories in the simplest way possible. And all that, perhaps, without the need for a spreadsheet.

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