7 Tips for Establishing Your Accounting Structure in the Caribbean

When it comes to starting and running a small business, there are a lot of moving pieces that need to be in place in order for things to run smoothly.

One important aspect of any business is its accounting structure – this is what dictates how your company records and tracks its financial transactions. If you're looking to establish or reevaluate your business's accounting structure, here this article will offer tips to get you started. 

With a proper framework established, anyone within your business - whether it’s you, an employee in your Accounting Department or an outsourced Accountant - would have a clear understanding of how your accounting structure works. But where can you start to build an accounting structure that works for your business? Here are 7 tips to make the entire process simpler for you:

1. Research and Select an Accounting Solution:
   For builders to create the foundation of a building, they must use tools. Think of your accounting framework as the foundation of your business and the accounting solution as the tool that you would use to create it.
   Although many small businesses use Microsoft Excel (spreadsheets) for their bookkeeping, an accounting tool is the better option for you to properly store your accounting records. As a new business owner, Microsoft Excel or Google Sheets may be most accessible and easy to use for your accounts, however, they should not be used for long-term accounting as you may run into a number of issues as time elapses.
   
   There are several accounting solutions available for use, however, you should do your due diligence to research which solution is best for your business and compatible with your local currency - especially if you are based in the Caribbean.
2. Time to Go On Record:
   After selecting your accounting solution, you should aim to log all of your accounting information into the software. This means that all of your sales and expenses must be entered into the system. You have to think about feeding your system the information it needs to properly illustrate how the business makes money (invoices/sales) and where does the money go? (expenses/bills etc.).
   
   This may seem simple for some, however, it can become very complicated. For example a solopreneur may easily create invoices periodically for the number of clients they have. However, for a retailer with a high volume of daily clients, their record-keeping system may have to account for different points-of-sales they may have - for example, in-store or online.
   
   
3. Triple Check Your Bank Statements:
   Use your bank statements and compare the information against what is logged into your accounting system. Your bank statements will clearly identify deposits, withdrawals and your bank balance so you will be able to see how, where, when and why monies entered and left your account. It will also help you identify if there were any transactions that you may not have recorded within your system.
   
   Bank statements are great for checks and balances…..pun intended!
4. Have Clear Terms & Conditions:
   Each invoice you submit to your clients or customers must have clear terms and conditions. If you operate on a credit basis, you should give your clients ample time to pay for your products or services and ensure that you have an effective plan in place to monitor and follow-up, in the event that a client is behind on payment.
   
   If you enforce tip 1, some solutions offer an automated feature that allows you to send reminders for clients to pay their invoices on time - which is another reason spreadsheets may not be the most efficient solution for your accounting structure.
   
   
5. Beware of Statutory Obligations:
   Your accounting structure should consider key dates such as tax payments and annual returns dates. This is to ensure that you are not liable to pay any fines due to missed or late payments.
   
   Also, keep an eye out for any requirements that are specific to your industry. If you work in the food industry, for example, you may need to renew your food badge (T&T) or have your establishment inspected by health officials.
   
   
6. Pay yourself a consistent salary:
   Paying yourself a constant wage provides financial stability and establishes a disciplined attitude to being compensated by your business.
   
   It also helps when you approach financial institutions for financing and they see a similar amount being reflected in your statements rather than random & inconsistent figures.
7. Hire an accountant:
   Please invest in the guidance of an accounting professional to ensure that the best practices of your accounting framework are adhered to. It saves your future time, money and a lot of migraines.
   
   Employ any of the tips shared above to establish an accounting structure that’s suitable for your business to thrive!

References:

Kriss, R. (2021, December 20). 8 best free accounting software for small business in 2022. 8 Best Free Accounting Software for Small Business in 2022. Retrieved March 21, 2022, from https://www.fundera.com/business-accounting/free-accounting-software 

Scott, C. (2019, December 12). Why Small Business Owners shouldn't use Excel as an accounting spreadsheet. Why small business owners shouldn't use Excel as an accounting spreadsheet - Article. Retrieved March 21, 2022, from https://quickbooks.intuit.com/r/taxes/shouldnt-use-excel-accounting/