How to keep your small business’s finances in order
Believe it or not, many small business owners do not prioritise staying on top of their finances, leading to overly complicated situations, high stress levels as well as unnecessary confusion. To many, accounting is just a headache. However, the reality is that a business’s finances are its lifeblood – if they’re in a mess, you can almost certainly bet on the business failing eventually.
Even though it may be time consuming and frustrating, organising the finances are a must if a business is going to succeed in the long-run. As an accountant, you’re blessed with the knowledge of numbers, so do all your budding entrepreneur friends a favour and tell them these helpful tips for getting those finances in tip-top shape.
Like oil and water, personal and business finances don’t mix
A good place to start is by stressing the importance of keeping personal and business expenditures separate – they’ll save hours of work by maintaining a clear division between the two. Mixing the two can lead to complicated scenarios fast, so it’s better for them to keep things clean, record all transactions separately and make it as easy as possible for them to track deductible expenses. Handling personal and business transactions independently will help to stay organised and on top of the business’s finances.
Review those books regularly
They probably won’t want to hear this but you should explain to them that it’s in their own interest (as well as in their business’s) to set aside time to review the finances regularly. Spending just 15 minutes a week perusing the books can help them stay on top of things. What’s more, by being more aware of what’s going on with the finances, business owners can gain more insight into their venture, be more organised when it comes to money and hopefully, make more informed financial decisions in the future. Being in control in this way can also help reduce stress levels – and that’s never a bad thing.
Don’t forget the employees
The chances are that their largest expense will be labour. By tracking labour costs, business owners give themselves a better chance of sticking to the budget. Beyond that, they can also gain a better understanding of the spending within the business, therefore making the necessary changes or cut-backs required to improve their financial situation, if need be. Payroll by Sage One provides the ideal way to take control when it comes to all payroll related matters (plus, employees will love it too!)
Secure those payments
This may seem like an obvious one, but you’d be surprised at how many business owners don’t adequately track payments that are due and invoices that have been settled. An effective system needs to be in place that allows payments coming in to be recorded accurately as well as one that flags overdue invoices. At the click of a button, they should be able to see how much money has come in, how much is still owed and who is responsible for payment – it’s all these details that contribute to the smooth-running of the finances of a business, be it big or small. The last thing they’ll want is to realise way down the line that a large amount of invoices are outstanding - this can be devastating to the business’s future.
Call in a pro
There’s absolutely no shame in asking for help – in fact, when it comes to finances, many business owners are more than happy to welcome it. Accountants such as yourself have been the trusted allies to small businesses for a very long time and there’s good reason for it. Your knowledge and expertise allow you to provide businesses with the financial assistance they need and ultimately, get the job done right. Some people will think it’s more cost-effective to try and do this themselves, but in reality, they will save both time and money leaving it to the professionals.
Lastly, choose software that makes sense for you and your business
Your clients and other aspiring entrepreneurs need to do the necessary research before settling on a specific kind of accounting software. With so many options available, it’s important for them to choose a suitable online solution that will work for both them and their budding business.
Keeping a small business’s finances in order is never easy but with the right approach and assistance, it can be done. It’s really about committing and getting organised to the point where expenses can be minimised and profits maximised – and we’re sure you won’t mind lending a hand too.
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