The life of a business owner is pretty full-on. With so many tasks to take care of to support the day-to-day running of your business, it is only natural to expect that your finances and abilities will be stretched.
One such area you shouldn’t neglect is your accounting. With 60% of small business owners admitting it not feeling as confident with their accounting skills as they think they need to be, getting expert financial help with your accounts from an accountancy firm such as Perks can help take the weight of your mind.
But in the meantime, you need to assist your account by keeping thorough and up-to-date records to enable your finances to be put in order ready to be submitted for tax purposes.
Keep Separate Accounts
The fact that you own a business implies that some of your business-related finances will be combined with your personal funds, rather than all of your income and other cash being deposited into an individual account.
There’s nothing worse than sitting down and going through every single shopping list or personal transaction to locate that one specific item of business. To further simplify things, start by opening a new bank account for all of your business-related expenses.
Set A Budget
In developing a company plan, one of the initial phases is to build revenue predictions and a list of anticipated expenditures, after which the budget is compared to actual expenses and income. A survey conducted by the Federal Reserve Banks of Chicago and San Francisco found more than 60% of enterprises in outstanding financial health usually develop a budget and, as a result, establish a separate bank account for payroll. According to a recent study, these two financial planning and management methods were used by less than 5% of organizations in poor financial health.
Keep Clear and Organized Records
Some people enjoy a little mess, while others cannot work if their documents are not neat, tidy, and well-organized. That may be fine in your personal life, but when it comes to your books, try to keep them in good order so that you don’t have to waste time hunting for them when they’re all over the place.
A well-organized filing system allows you to save time looking and spend that time doing whatever else you desire. When those sneaky tax deadlines are approaching, you’ll be grateful that you invested a little more time in making sure that your records were neat, tidy, and a whole lot better organized.
Keep An Eye On Costs
In most small firms, labor expenditures are the most significant expense, with inventory being a close second. Many small firms outsource work to contractors who bill hourly to decrease labor costs and maximize profits. Using this method can be less expensive because the contractors may not require as many as 40 hours per week to accomplish their work, and they will not be entitled to perks as employees.
With the use of time-tracking software, business executives may better understand how much various jobs are costing the company, allowing the company to better budget and identify strategies to minimize these expenses. Inventory carrying costs, inventory turnover ratio, amount lost to obsolete inventory, and other crucial variables may all be tracked to help companies reduce inventory expenditures.
