Even though you might not see it in the foreground, your business’ accounting team drives growth and development. Ideally, if you don’t pay heed to your business’ accounting, it will eventually fall back on your business. As a business owner you should follow the proper ethics in accounting to experience substantial growth.
Following are the top 7 accounting tips that drive your business growth.
Start with a detailed budget
Every business has to set aside a detailed and well-articulated budget that includes expenditure, investments and salaries (if there is a team involved). Bootstrapping your business without having any idea about the business’s finances and budget will take things downhill pretty quickly. If you don’t have a separate accounting team, get down with a pen and paper and do the calculations yourself.
Choose a proper accounting method
As a business, you need to ascertain what kind of accounting method you’d follow. Will you rely on a business with 100% cash earnings or will you rely on accrual accounting? The choice relies on your business model, the kind of products and services you are selling and the platform you are selling them from. Always keep a check on your tax liability and legalities when choosing cash as an accounting method.
Keep your business and personal accounts separate
One of the biggest mistakes that most businesses make is managing their business accounts from their account. While it could be a possibility at the beginning of the business, it is no longer an option when you have expanded and grown your business to a larger scale.
Try to keep your business and personal accounts separate to ensure smooth functioning without any roadblocks in the middle of the process.
Try to keep your business and personal accounts separate to ensure smooth functioning without any roadblocks in the middle of the process. Make sure that you have a designated virtual credit card for business transactions.
Prioritize clearing the invoices
Another common mistake that most business owners do with accounting is not prioritizing the invoices. Not only do you have to raise invoices, but you also have to ensure that they are cleared by the clients on time. With so many different ranges and belts of clients, pick out your underperforming clients and follow up with them regarding the invoice to ensure they pay you the whole amount without further details. Having your invoices cleared on time is a good accounting practice for your business.
Have clear financial goals
So, your profit margin with your business last year was 7%. However, with the right strategies and better clientele, you need to set a better target concerning your financial goals. Having set goals concerning your business accounts ensure that you are right on track towards achieving them. Also, keeping track of the accounting metrics ensure that you have a clear idea about the cash flow, growth and the overall development of the business, all the while keeping a close eye on the overall profits by the end of every month.
Be ready for the tax season
When you open a business, you have to be liable for taxation. Don’t skip out on this, especially if you have tangible goals for your business over time. So, ideally, when you are managing your business accounts, prepare for your tax filing ahead of time so there are no loopholes or rush at the very last minute. You want things to progress smoothly and legally for your business, so paying your taxes on time is crucial for that.
With so many different accounting tips for businesses, these are some of the most important ones worth highlighting. If you want to showcase the growth of your business, maintaining the accounts is a part of the process. Never shy away from sorting everything legally and without any loopholes in the process.
- Make Sure You’re Up To Date With New Operating Lease Guidelines
As a new business owner, it can be hard to keep on top of changes to accounting standards. They do occur and change the way you have to account for certain items. Take operating leases for example. New lease accounting standards have changed how a business owner or accountant would account for operating leases. An operating lease is a contract where the lessor gives a lessee access to an asset. It can be quite complex which is why a lot of accountants use specific accounting software to help them calculate the correct amount properly. The accounting guidelines to keep an eye on in the USA are US GAAP, and IFRS. Accounting guidelines change and if you miss something important it can come back to haunt you later on.