How to keep on top of your accounts as a small business | As a small business, your accounts are one of the important things to look after. However, often this can be easier said than done. There’s always a lot to consider, from how best to manage your money to the easiest way to invoice your customers. That’s why this article tells you exactly how to keep on top of your accounts as a small business. Keep reading for easy and effective methods that will get your business operating more efficiently in no time.
Open a business account
If you’re just starting up or looking to expand your business, it’s worth opening a bank account for your business. This enables you to track all your financial activity under one roof and helps you operate more efficiently. If you haven’t considered having an official bank account for your business before, it might be time to consider it now.
Get everything in writing
You may think that only big companies need contracts, but if you run a small business, it can be even more important to have things in writing. It ensures that everyone knows what they are doing and when they will do it, not to mention ensuring that costs are kept down because there are no misunderstandings or assumptions being made.
Contracts should be signed if possible, so document all your business transactions to avoid any problems later on.
Budget for expenses
As a small business, you’re probably constantly having to pay out for different expenses that arise in the course of running your business. You can help keep on top of these costs by budgeting beforehand how much money you think will be needed and sticking to this figure no matter what arises. This is key to saving yourself some cash and getting more time back in your life!
Many businesses make the mistake of thinking they have enough money at the beginning, but suddenly find themselves strapped for cash when something happens that wasn’t planned or estimated correctly. For example, say you need an extra print cartridge at the last minute for an important meeting. The cost of this may be considered as a one-off expense, rather than factoring it into your monthly expenses, and having some money left over for those ‘just in case’ moments.
Streamline your invoicing processes
As a small business, you probably invoice your customers at some point. But if you’re not invoicing efficiently it can be easy to miss invoices or lose track of which ones have been sent out and when. The best thing to do is keep the process simple, so that it doesn’t become complicated.
If you send out monthly bills with all your charges for the month on them, then this makes it far easier for your customer to pay up quickly and gives you one less thing to think about. You should also keep track of these invoices by saving all emails regarding customer payments in one place (such as an ‘invoices’ folder), so everything is together in one area.
This will help you to keep on top of your invoicing process and make it easier to stay organized in the long run.
Be prepared for company audits
Audits are essential in ensuring that your business is complying with all relevant laws and regulations, but they can also be difficult to prepare for if you aren’t expecting them. Make sure that if you are audited, you have everything together so that discussions are simple and straightforward. This means being able to access information quickly regarding any transactions, contracts, or processes needed during an audit without having to scramble around looking for important documents.
Invest in the right accounting software
Investing in the right accounting software is a good way to make sure that you can keep on top of your accounts for years to come. There are lots out there that make it easy to manage different aspects of your business and streamline the entire process, so that you don’t have to worry about staying organized or forgetting anything important.
For example, Mike Savage from New Canaan developed a virtual accounting business that helps to eliminate bookkeeping and tax preparation issues for small business owners. This kind of technology is worth investing in as it helps to streamline your accounting practices and optimize your performance.
Monitor your turnover
Being able to see how well your products or services are selling is key so that you know whether you need to expand, cut down on costs, or improve the ways that you market your business. Keeping a record of all transactions related to your business will help you get an idea of how it’s doing at any one time and enable you to plan for future activities. You should also keep track of the number of clients that visit your website within a month, their average amount spent on each transaction, and what types of products they buy.
Avoiding common accounting errors
There are some mistakes that businesses tend to make repeatedly when it comes to accounts. If you’re making any of these errors, then it can be difficult to keep on top of your accounts and run your business effectively.
One common mistake is failing to update records regularly, leading to mistakes in the long term. For example, if you don’t record information about who owes you money or where your invoices are at any given point (which may happen if you keep old invoices around for longer than they should), then this could lead to lost income further down the line.
Another error that many businesses make is failing to claim all their expenses as allowable costs within a tax return. You should always aim to pay as little tax as necessary (there are ways to lower your tax liability when planning for the future), but to do this you must be able to claim all expenses that are necessary in making a profit. This means being able to add up exact costs, finding receipts and invoices where possible, and having a good understanding of the ins and outs of running a business.
Outsource your accounting department
If you don’t feel like you have the time or skills to keep on top of your business’s accounts, then why not outsource this function? This will free up your time so you can concentrate on the day-to-day running of your company and enable you to make more informed decisions about future plans.
There are lots of accountants who make it their business to help small businesses grow by offering them affordable accounting services. They’ll be able to give you hands-on support when needed, which is especially useful during tax season, while also giving you access to all kinds of online software that will help improve your management systems. All in all, outsourcing means that you get an expert team behind you to handle all of the details for you, so that you can focus on what matters most.
Finding an accountant might seem like a good idea, but only once the numbers are getting bigger and your company’s tax obligations become too much for you to deal with alone. However, if up until now you haven’t needed any help with bookkeeping or tax processing, there are certain signs that it might be time to find someone who can lend their expertise. For instance, your books aren’t adding up at the end of every month, you don’t understand how your finances work, or you feel like you should create budgets but don’t know where to start. These are all signs to look out for when deciding whether to outsource accounting.