Starting a business can be an overwhelming process. From opening the right type of bank account to determining how much you’ll bring in per product, these tasks will all contribute to your business’ success.
It is therefore essential for you to have a startup’s finances are in order from the beginning.
Event expenses areincurred when meals, light refreshments and/or related goods and services are purchased using funds in connection with a social or recreational activity, business meeting or another event.
Here are a few points that you need to keep in mind, in order to effectively account for event expenses.
Planning for the Event:
Before you go into accounting for an event, you have to be able to plan for it. It is essential that you prepare your cash flow statements and analyze if you, in fact, need an event in the first place.
As a startup, you cannot afford to incur any unnecessary expenditure for every penny you save; you can invest in expanding your business.
Track your event expenses:
Tracking your event expenses allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and support what you report on your tax return.
Right from the beginning, you should establish a system for organizing receipts and other important records.
Always remember that the foundation of a solid business is learning to track your expenses effectively. In the case of an event, ensure that you keep track of the receipts for all payments that you make while organizing it.
Develop a book-keeping system:
Before we look into establishing a system of book-keeping, it is essential that we understand what book-keeping actually is and how it differs from accounting.
Book-keeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements.
Accounting is a high-level process that looks at business progress and makes sense of the data compiled by the bookkeeper by building financial statements.
In the case of an event, book-keeping becomes more important because a number of cash transactions take place and you cannot keep track of the same with the help of your account statements.
Determine How You’ll Get Paid:
When you invest in an event it is obvious that you need to get something out of it. Even while your event is in its planning phase, you need to be able to determine, how your investment in the event brings in returns for you.
Unless you are absolutely sure that you will get some form of dividend out of investing in the event, you should not go ahead with it. These are just a few points to help you understand how to account for events that you might organize.
Last but not least, it is important to conduct events to build a public image but you must be totally convinced that there will be assured ROI.