Are You Adding Value to Your Bookkeeping? – A Few Measures to Success for Small Business Startups
Sit back for a moment and consider the benefits of carefully kept books for your business, no matter how small it is. Record of every dime that you make, better understanding of your sales structure, fewer troubles with the tax department, along with a great many perks are what lie in store for you.
Most of our clients often complain about how tiresome their bookkeeping gets, while a few think it’s not worth their time and efforts. Up to date financial records is a trailblazing way towards better exponential growth, while ensuring absolute peace of mind. There are quite a few things many small business startups do wrong with their bookkeeping. So if you think you are not doing it right yet, here is how you can nail it.
Regular Entries and a Great Deal of Discipline
Experts at Bookkeeping Monster suggest regular updates of profit and loss statements, balance sheet and cash flow statements. Here’s why you need to be disciplined about these entries.
Profit and Loss Statement of your business gives you an exact idea about where your business stands in terms of revenue. It lets you analyze your expenses at a periodical cycle in relation to your income, giving you an estimation of the profit you have made. Profit and Loss statement or income statement are the best tool to find which of your products or services are doing the best and where you need to do some cost cutting. It keeps you on your toes; always ready to take business changing decisions.
Balance Sheet is the best way to summarize the assets of your business and keep track of your liabilities. It helps you find your net worth, which means it keeps you in track of the cash in hand, enabling you to structure your inventory in a better way and know your position at the end of financial year.
Cash Flow Statement reflects the flow of cash over a specific period of time. This is very important as to know the exact amount of money you have in hand. At times your sales figures may reflect profit, but the flow of cash might not be in sync. This happens for many reasons like untimely payments of dues on behalf of your customers. An up to date cash flow statement would enable you to analyze your cash position at any point of time in the financial year.
You Need To Do More Than Basics
Bookkeeping is all about basics, but as a visionary business head you need to stay ahead of your competitors. That is where you need to do more than the basic stuff. Engage your resources to make reports for a monthly period and address the issues which arise in that monthly report. Sort any gap that arises in funds and keep transparency all together.
Always try to consult a bookkeeping firm for your business; it has its own perks. Ask as many questions if you have doubts, and try getting the best out of the bookkeeping service provider you are working with. These reports enable you to formulate your strategy on actual number and facts rather than lousy contemplation.
Itemization is the Key
Instead of rushing things at the last hour, keep track of your expenditure and sales receipts. This basic data entry stuff need not require a costly accountant, but someone good with Excel and cloud based applications would do the job. The monthly business outgoings of cash on basic requirements will add up to a hefty sum at the end of the financial year, and your bookkeeper just might be able to leverage this into some lucrative tax deduction.
Keep Money On Hand for Tax
Filing tax returns may get tricky. At times you might find yourself short on time to calculate the actual amount, or run into money constraints when the date arrives. By following the basic bookkeeping must-dos, you would rarely find yourself in the former situation, but what if you get stuck with the latter? It’s a good habit for small business owners to keep some money aside to file timely tax returns.
Take Extra Measures to Manage Receivables And Liabilities
Once you start growing, your customers would owe you money. You, on the other hand, would also owe money to others. This causes a cash lapse in your financial records, so organize your channels and chase payments that are due. Keep track of the money which is yours, but is still not in your hand!
Once you start hiring, you are liable to pay your employees and file payroll tax returns with the authorities. As an employer it’s your responsibility to maintain reports on withholding, employer matching, unemployment and other things for your employee. So maintain these records to avoid any trouble whatsoever in case the taxman comes knocking at your door.
While someone else is keeping your books for you, you can channelize all your resources and time to expand your business. Isn’t that a great? With a good bookkeeping service guiding you through your ups and downs, you can look beyond the horizon and expect to do more than what you’ll actually do over a specific period of time.
You can formulate long term growth plans and do more with your funds. Once you start keeping track of every penny you make, you are actually creating more opportunities for your business.