When you're first starting your business, it’s necessary to multi-task. Resources are limited and there’s so much to do. It’s the story of every small business. However, accounting is one aspect which should never be ignored. It will lay the foundation for your business’s future.
So, here are 10 useful accounting tips for you to save time and money for your small businesses.
1. Start Recording Every Expense
One of the earliest mistakes any entrepreneur makes is that he/she starts devoting time to building the business but ignores recording the financials. Bookkeeping is very significant when you’re a small businesses.
It helps to keep a real-time track of the business and allows you to make informed decisions. For every expense that you incur, no matter how small or how big, start recording them immediately and create a respective bill for that account.
2. Separate Personal and Business Expenses
Another early mistake entrepreneurs, proprietors, and small business owners make are that they fail to distinguish between personal and business expenses. Sometimes, both are meted out of the same account.
This hampers the cash position, messes the financials and creates a bad habit. As a founder, many make personal withdrawals from the business since its not capable enough to offer a salary yet. However, keep a track of it and make periodic withdrawals. Do not make direct personal expenses from the company account.
3. Take Out Time Every Week To Tally Accounts
You might not get time every day to tally the day’s accounts. So, it’s best to create a weekly schedule. Take time out every week, so that the accounts are tallied by the weekends. This will reduce the workload when you create your monthly financials and help you make better decisions.
4. Track Accounts Online and Offline
If you have an online accounting application to keep track of your books, do not forgo an offline account completely. Online accounting is easy for small businesses since its one less thing to worry about.
However, accounting in small businesses requires continuous adjustments since the nature and value of each transaction is small. Keep an offline account to reconcile your online books.
5. Create Future Projections
Do not under-estimate the ability of being able to visualize your future. Take historical data as a basis and create future projections. This will serve as a guide line for your business and keep you hungry.
6. Start Provisioning For Expenditures
Most small business owners are so stuck in grinding it day-in-day-out that they forget to provide for the future. Maintenance of machinery, insurance for the stock, phasing out of outdated machinery are just some of the expenses that are recurring for a business.
Start listing a budget for these costs and provisioning a monthly amount to a separate account.
7. Hire Professional Help
You might not think you need it but you do. Small businesses are experts in mishandling accounts. It’s fine to do it yourself, but do not underestimate professional help.
Hire a temporary or part-time accountant who can look at your accounts at least once a week. This will keep your accounts true and allow you to save cost on hiring a full-time accountant.
8. Follow Up On Receivables
We often get caught up in build a sales machinery but fail to realise the importance of a smooth functioning collections team. Your sales are only as good as your collections.
So, do not forget to regularly follow-up on your receivables. Start keeping an account for debtors and A/R cycles. Try to work with your clients to reduce your A/R cycle.
9. Create Repayment Plans for Debt
Our accounting tip 9 is to do that exact same thing as in #8 but for debt. A debt-free business is a healthy business, but a business with control over their debt is a better business. An organisation cannot grow without taking on liability. However, how you meet those liabilities help decide the future of the business. Before you take on debt, start with a repayment plan. Ensure that you are always on time with your payments. This will save money on interest payments and help build credibility for the business.
10. Make Place for Automation
The final accounting tip is to start integrating automation into your business early on. When a business is growing, it has the agility to be able to adapt. As a result, make a few changes keeping the future in mind.
Try to ensure automation is built into your business so that you can start to build your business up to scale. Once a business starts gaining in size, it can be extremely difficult to adapt to new technologies. However, for a small business, it’s relatively easy.
In fact, it’s less costly as well. For example, accounting applications save a lot of time and money. Some do not cost anything if you have a small team size. But later on, these tips can help you create the business of your dreams.
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