If you're the owner of a new business, it's important to understand the importance of good accounting practices. Proper accounting is vital to the survival of your business, and many new businesses fail within a short time due to lack of this.
For those who've never run a small business before or hired an accountant, it can be difficult to know where to start. Luckily, it's not too difficult to get your financials in order with the right help.
Accounting Software or Bookkeeper?
New entrepreneurs may feel like they have all it takes to be the CEO, head of sales, accounting, marketing, etc. This is also an approach some take to lower their expenses. However, being able to track your expenses, sales, and other financial information is vital for tax purposes, expansion of the business, determining if the business is actually making a profit, etc.
For this purpose, a new business should either hire a bookkeeper or start using accounting software. Using accounting software will, however, take some learning. There is Quickbooks online training to make learning easier. It teaches you the software and walks you through different bookkeeping scenarios to help you apply what you have learned.
Keep Loans and Receivable Payments Separate
Loans need to be paid back sooner or later and, therefore, a small business owner should never lose sight of what is actually theirs. During the early days, a small business owner may be getting funding from multiple sources. Keeping the receivable payments separate helps to keep you grounded and able to gauge accurately how the business is doing.
Ensure Clients Pay their Balances on Time
Any amount appearing in the receivables column doesn't actually count until the money is in the bank account. Having a large number of receivable payments is only a good thing if the clients are making payments. If a client stops making regular payments, don't let them access more services or materials until they pay for their previous orders. This is necessary to keep your business afloat.
Start Keeping Record of Daily Expenses
When many businesses start, they only budget for the big things. The small things, such as stationery, are quickly forgotten until they actually need to be bought. This is when many new business owners start to understand how quickly the small expenses can mount up. This can make your budget highly inaccurate.
To be able to draft a more accurate budget for subsequent months, start recording everything purchased on a daily business. No amount is too small to be recorded, especially if the expense will be recurring.
For professional help, get in touch with a company like Blueback Accounting.Share