Simple and rudimentary bookkeeping measures will go a long way to maintain your small business’ viability for years and keep your investment growing. It will also help you prepare early on for filing a realistic tax return. Take a look at these following tips:
- Hire a bookkeeper
Small-business owners normally take more roles than they can handle, for instance, as manager for accounting, sales and marketing all-in-one, in order to save on salaries. At times though, getting a full-time or part-time bookkeeper might be the better and wiser option as the task requires a deeper and more extensive understanding of accounting books. A freelance bookkeeper can help you save on salaries more as you pay only when you actually need the service. Nevertheless, the U.S. Small Business Administration can likewise help you manage your expenses on your own to save even more. Or you can avail of free accounting software from GnuCash.org and do it yourself as efficiently as others might do it.
- Separate your accounts receivables and borrowed funds
This seems obvious; but many fail to practice this simple step. Small-business owners require financial assistance to cover their start-up capital or operating expenses and other initial business expenses. Make sure you use software that does not incorporate income with your loan proceeds. The goal is to always know what belongs to you and what does not. Unlike magnets, positive and negative funds do not attract or mix. Keep your eyes on the former (Be Positive!) in order to cover, that is, remove the latter.
- Follow-up on clients who have payables
Receivables look good on paper; but they are useless until you have them in your bank account. Make your clients pay regularly, as much as possible. You can enforce this by not delivering materials or services until outstanding balances have been settled. Your personnel in charge with collection have to stay firm and uncompromising in order to keep your business viable.
- Itemize your daily expenses for the coming weeks
Detailing your expenses on a daily basis (taxes, professional fees, advertising, utilities, etc.) will help you become more aware of what is happening in your finances. That is the role that accounting does for business. So, instead of the bi-weekly computation of salaries, daily or weekly itemized expenses will let your budget ahead more accurately and prepare you for any unforeseen expenses or deficits.
- Determine a reasonable monthly profit
It takes great effort and patience to operate a business and to maintain a proper accounting system. Develop an efficient accounting strategy which will monitor your expenses and payables in order to compute for an acceptable minimum income on a monthly basis. Stick to that minimum profit target for your business. Once set, you can concentrate on what needs to be done to achieve that goal on a regular basis.
These are tried and tested steps any beginning small-business owner can put into good use. A simple, well-maintained and practicable accounting system is all one needs to learn the essential tricks of the trade and grow from there to more fruitful gains.