All business owners must be aware that Accounting is by far one of the most important aspects of starting and operating a successful business. Without a solid understanding of the numbers, you will not survive as every activities centered on accountability.
Below are the tips needed to have a solid and profitable setup:
1. Know the Basics of Accounting and Bookkeeping-: Unless you have the money to hire a professional accountant, you should learn the basics of bookkeeping and how to keep accounting books. This will save you a lot of money which you will spend on hiring the services of a professional accountant. There are any free online courses on basic accounting and bookkeeping that will help you get started.
Go back to the roots of accounting and get acquainted with the procedures of bookkeeping, even though you don’t intend being a bookkeeper. Maybe you have delegated the task of bookkeeping to an employee or to your business partner, but that shouldn’t mean that the bases will always be covered. It is your duty as an entrepreneur to know everything about your business.
2. Keep It Separate: One big mistake most small business owners make is that, they don’t separate their business transactions from personal transaction. Imagine having a single bank account for both business and personal related expenses, you will start making personal spending from money meant for business. Have a separate bank account for your business and another one for personal use. Also, you need to separate your personal expenses from business expenditures.
3. Keep It Simple-: If you cannot understand details of each of your accounting books at glance, then it means that you are not keeping it simple. Have a separate book for your expenses, your income, your debts and many more; So that you don’t end up confusing yourself.
You should try and make your record keeping as simple as you can. The early years of your business should serve as a learning process to you and you should build up your accounting methods slowly. Rushing into things that are complicated can at times be an avenue for disaster, and you diving into something you really do not fully understand is simply overwhelming.
4. Consider Every Little Detail-: There are some tiny expenses that we tend to overlook, which add up to become problematic for us in the future. Expenses you made or hiring the services of a laborer, little incentives you give your employee should all be recorded in your accounting books, because whether you consider it or not, they are part of your credit entry or expenses.
5. Get It Online-: I mentioned above that there are accounting software that will help you make your accounting task easier and less boring. Examples of online bookkeeping software you can use for your business include: Kashoo, Invocera, Xero and Quickbooks online. You can also opt for cloud storage of your data to help you have access to them whenever you wish, and avoid loss of data because paperless accounting is the main thing now.
6. Periodical Review-: Always set out time constantly to balance and reconcile your accounting books both online and offline. It can be weekly, or monthly; whichever works for you. This way, you will keep ahead of your finances and know when your business starts defaulting. You should always take note of your monthly and even daily account balances. If someone is doing it for you which is the necessary thing, always take time to occasionally check and ensure that they are being done.
7. Review Your Tax Reports-: As a business owner, there are certain taxes you are expected to pay, and it is expected that you pay them as at when due. Always involve your tax payment as part of your expenses to avoid payment of penalties from piling up. This is a form of evitable debt that you can avoid.
8. Monitor Your Expenses to Check for Unwanted Expenditures-: There are some expenses you make from time to time that do not contribute to the positive growth of business. These are expenditures that your business and do without. Review your books, find those expenses and find a way to cut it out.
Making and sticking to budget will always assist to keep expense in line, and permits you to see the actual outcomes reflecting planned ones. This will surely assist you to guide your expenses and keep your profits up.
9. Keep Track of Your Debtors-: Credit sale in business is inevitable, always keep track of your debtors. If possible, open a debtor account book to keep track of them, and send them reminders once in a while to remind them to pay up as you need the money to run your business.
10. Employ the Services of a Pro-: In as much as I mentioned that it is cheaper to keep your accounting records, but if at any time you start getting confused, don’t hesitate to seek the advice or services of a professional accountant. Also, as your business begins to grow and expand; the services of a professional accountant may become inevitable. Look for an accountant that will work with you. When in doubt, it is very essential to invite or call up an accountant that will work with you and as well assist you to meet all your financial goals or objectives.
In conclusion, proper accounting and financial documentation is essential to run a successful business. Therefore, follow the above tips for the betterment of you and your business.