Efficient Bookkeeping Allows Business Owners to Focus on Growth. Follow These Easy Tips for Best Practices

Efficient Bookkeeping Allows Business Owners to Focus on Growth. Follow These Easy Tips for Best Practices

by | Accounting News, Bookkeeping, Business Growth, News

Whether a small business owner is working with an accountant or on their own, it’s critical to establish a bookkeeping process in order to mitigate the possibilities of unexpected cash flow problems. Tracking finances and transactions provides stability for your business and allows you to focus on company goals and growth. Here are some tips for efficient bookkeeping.

Separate Business and Personal Expenses

This should be done as soon as you establish your business. Separating personal and business accounts is beneficial in that it helps to:

  • Avoid blurred lines on expenses that could prompt an IRS audit.
  • Limit your personal liability should your business ever be sued.
  • Clarify business expenses for bookkeeping practices

By opening business accounts, you will begin to develop business credit, which is separate from your personal credit history. A good business credit score translates to lower rates on insurance policies and increases your borrowing potential.

Track All Business Expenses

It might seem like a no-brainer, but tracking and categorizing expenses and revenue streams are essential for tax purposes and profit monitoring. Doing so allows you to easily spot different areas of strength and growth based on chronicled data. Whether you use an accounting software program, a basic spreadsheet like Excel, or even a pen-and-paper ledger, what matters is that you find a process that works for you and stick with it.

Keep a Consistent Schedule for Bookkeeping

Unless your small business offers financial services, it’s unlikely that you started your company due to a love of numbers and bookkeeping, so it’s understandable if this might be a task that’s tempting to push to the backburner. However, consistently scheduling blocks of time for balancing the books will help simplify your life, especially during tax season. If your business has grown to the point where you loathe the time it takes to keep up on bookkeeping, you might be ready to hire on a bookkeeper.

Be Prepared for Major Expenses

Even if you have meticulously maintained balance sheets and cash flow reports, you don’t have a crystal ball to predict surprising expenses. That’s why it’s crucial to plan for such expenses, especially unplanned ones, with a separate emergency fund dedicated specifically to your business. Aim to save enough cash to cover expenses for three to six months. Having cash stashed away also helps to avoid going into debt for your business. Operating with little to no debt means less risk and a faster profit, which means you’ll have more capital to put back into your business for growth opportunities.

Prepare for Personal and Business Taxes

Do your best to dodge surprises and errors with your small-business taxes by preparing throughout the year. Here are some things to keep in mind:

  • Income tax: The manner in which you’re required to pay income taxes depends on how your business is structured legally. For example, if you have a sole proprietorship, your business taxes are paid as part of your personal income tax known as “pass through” taxes. However, if you have a structure like a Limited Liability Company (LLC), you’ll owe self-employment taxes and no corporate taxes. Be sure that you understand how your business is structured legally so you know how you’re required to pay income taxes.
  • Payroll tax: In order to file payroll tax returns, you need a Federal Employer Identification Number (FEIN). If you operate across more than one state, you will also need a State Identification Number for each state in which your business operates. Payroll taxes are deposited either semiweekly or monthly and reported quarterly.
  • Sales tax: If you’re in the business of selling products, you need to collect sales tax from each customer. These taxes differ by state, county, and city. If you sell online or across multiple locations, it might be beneficial to consult a tax professional to be sure you’re collecting sales taxes correctly.

Consider Hiring and Accountant

While most accounting software programs have some form of technical support, the risk of user error is high. Real-world accounting professionals can offer an experienced set of eyes to ensure your records are accurate and your finances are organized. The hours you devote to keeping up on your business’s books and taxes could be better spent brainstorming new ideas, managing your team, and searching out new growth opportunities.

Establishing Long-Term, Sustainable Revenue for Your Business

Establishing Long-Term, Sustainable Revenue for Your Business

by | Business Consulting, News, Professional Services

Experiencing business growth is always exciting for an entrepreneur, but periods of growth aren’t always continuous given that every business has ups and downs. Implement growth strategies with the tips below to help your business become more sustainably profitable over time.

Define the Purpose of Your Business

A clear purpose propels growth, profit, and sustainable success, but business owners must regularly review their objectives to be sure that they’re still serving the company in an authentic way. Does your purpose still prompt strong engagement within the company as well as with clients? Does it still lend itself to focus, drive, and innovation? A genuine and straightforward vision helps both entrepreneurs and team members to create valuable and original products and services.

Maximize Operational Efficiency

Delegate, delegate, delegate. Transferring tasks and projects to qualified employees saves you time by removing the burden of smaller duties from your proverbial plate, which allows you to focus on larger aspects of running a business. Relinquishing some of this control also allows you to move into a business leadership and visionary position at a macro level rather than spinning your wheels at the micro level just to keep the business afloat.

Build Your Brand

Your business can grow by leaps and bounds when you develop a reputable and reliable brand. A well-considered brand will help you stand out among competitors and stay fresh in the minds of both new and potential customers. However much of your budget you can allot to marketing, make sure you pin point your target audience, connect with your audience in an authentic way, and keep your messaging concise, simple, and inspiring.

Cultivate Customer Loyalty

A vital factor of business growth and sustainability is your company’s ability to keep repeat customers. Not only does establishing client loyalty help to bolster sales, it also spurs word-of-mouth testimonies that will bring in more business. Be sure to implement expectations within your hiring, training, and review processes that will strengthen your company’s relationship with customers. Keeping in touch with clients and asking their opinions will also help to ensure repeat business.

Be Attentive to Budgeting

Maintaining a budget keeps unnecessary expenses at bay and necessary expenses within financial means. Additionally, acute awareness of your company’s funds means that you know how much can be spent on marketing, technology, new product, new hires, etc. in any quarter or season. Let your budget slip and you risk delving into debt, which will only slow the long-term growth of your business.

Embrace Change

Businesses can grow under the guidance of flexible and adaptive leaders who are willing to embrace new methods and processes, new technology, new industry standards, etc. All businesses unavoidably experience seasons of growing pains, but how you as an entrepreneur approach those seasons makes all the difference. You can continue to do the things the way you’ve always done them and risk a stagnant business, or you can embrace change and move your business forward.