As a small business owner, you should be constantly looking out for ways to enhance financial intelligence. Regardless of what kind of business you do, staying on top of your accounting will keep your business plain sailing. Failing to do so will inflict unnecessary burdens looming down the road, which may clamp down your business growth.
This read breaks down 10 bits of tips for savvy accounting that leads to better cash flow and less paperwork.
Tip #1 – Detach your personal and business finances
Mingling your personal expenses with those of business is a common mistake in bookkeeping that will pull in a greater mess at the time of reconciliation. Getting a business credit card as soon as you sit on a decision to set a start-up is the business basics. Business bank accounts have several advantages over personal ones. An account dedicated only for business finance flow makes it easier to track and substantiate business expenses to take advantage of tax deductions. Moreover, a separate business account opens doors for the line of credit that your business can use to cover cash gaps.
Tip #2 – Track every expense
Keeping track of your expenses paves way for de-cluttered accounting. Label and categorize each expense and have an eye on the cash flow. Opting for cashless payments like online payments, card payments gives you a clear picture of your cash flow and expenses. Payment via these platforms might reward you cashbacks for your spending. Juggling with a tray full of paper receipts is a weary way of tracking your expenses. When cash is your only option, storing digital copies of your receipts is a smart choice to track your expenses effectively. This may expand your tax write-offs and credit.
Tip #3 – Keep tabs on income
Revenue from sales, loans and other cash infusions are pivotal in accounting. Also, they are at times easy to lose track of. Failing to record your cash influx will fluctuate your tax numbers, leading to penalties. Just like expenses, you must have clear and transparent records of your income for a mess-free accounting.
Tip #4 – Perform financial checkups
Whether you are a DIY bookkeeper or you supplement software for your bookkeeping, you must invest a considerable chunk of time in reviewing the numbers. Your books give you a clear-cut picture of what is happening in your business at any cross-section. You will have a clear understanding of the financial flow of your business and will formulate strategies accordingly. Even if you have a bookkeeper, it is a prime suggestion to go over your books in a regular time window to make sure everything is in good shape. By doing so, you can apprehend both the positive and negative trends of your business cash flow and take necessary strides. This will prevent the financial gaps looming at the month ends.
Tip #5 – Keep a close eye on payables
This is the most crucial step in harnessing your company’s accounting. Skipping this step will push you into a greater mess down the road. It is business at the end of the day and cash is its king. Your accounts payable and receivable determine the cash that you anticipate will flow in and out of your business in the near future. It is highly mandatory to stay in the know of your accounts payable and correct any trends before things run out of your hand.
By monitoring your payables, you will construct plans for upcoming obligations, due dates and payment accounts. Improper payables can halt your business credit rating. This will also limit your company’s access to bank loans and credits.
Tip #6 – Monitor your receivables
Monitoring your receivables will give you a clear insight into the influx of cash into your account in the future. You will have a clear picture of your financial health. You can check if you would have enough money to pay your obligations or if you need to seek an alternate funding source.
Tip #7 – Get to grip with tax obligations
Tax seasons come around every year. You should not be surprised by them. Tax-filing for self-employed business owners can be a little more complicated but shouldn’t pose too much difficulty, as long as you’re prepared. When you have clear and accurate records, you will have better ideas of your tax obligations. By doing it this way, you can plan ahead and set aside money for anticipated tax bills. As you have audit-proof records way prior, you will not get caught short. Everything goes smooth and mess-free.
Tip #8- Bid your paper documents
Paper documents are inconvenient, cluttered and so old school. The longer you are in business, the more storage you will need to accommodate your bills, invoices and other documents. When you digitize your records, you save a lot of space, time, labour and cost in your bookkeeping. Also, paper-based records are really messy to handle and irksome to maintain. You may unintentionally miss some bills that might trouble you at the time of reconciliation.
Tip #9 – Embrace automation wherever you can
In the present day scenario, manual practices are becoming obsolete in most businesses. You can deploy automation to your accounting and bookkeeping wherever possible for a faster and more accurate process. Instead of manually keying values into your systems, you can use an automation tool that can perform seamless data entry. Automation saves you hours, labour and cost to a great extent.
If you are opting for automation software, there are tons of them scattered on the web. But only a few are truly reliant and effective in usage. One such software is the Knuula, which handles bookkeeper contract engagement letters. Here are some other applications that are effective and credible for your bookkeeping.
PayTraQer – It is a predominant automation app to sync your online payments with QuickBooks, without any need for human support. You don’t have to worry about its compliance with QuickBooks as PayTraQer is Intuit authorized and is the #1 user rated application.
SaasAnt Transactions – This is an application that wipes off the manual keying part in your bookkeeping. With SaasAnt Transactions, you can bulk import transactions from Excel to QuickBooks with the click of a button. You can also perform mass export and deletes with SaasAnt Transactions.
Tip #10 – Create financial projection for future years
Even if your business is in plain sailing today, you have to make sure everything stays positive in the long run. You can estimate where your company will stand in the next few years with your financial projections and reports like general profit-loss statements and common size analysis. This will help you make decisions and cultivate strategies to scale your profit scores.
By taking strong strides in accounting processes, small businesses increase their likelihood of success to a great extent. Though a majority of small business owners do not have time and interest for bookkeeping, they must review these financial metrics in a constant frequency to leverage the opportunities to grow their business. If you are looking out for automation tools for bookkeeping, PayTraQer and SaasAnt Transactions are your must-haves. You shall try these applications with their 30-day free trial each.