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Helpful Tips To Make Managing Your Business Accounting and Finances Easier

There are a lot of things you need to think about when running your own business. One of the most important is keeping on top of all the financial aspects and knowing what to do if anything goes wrong.

If you’re not sure where to start, we’ve put together some useful tips that will help make managing your business accounting and finances easier for you.

Keep track of your business’s financials 

Know what you’re spending and where you’re spending it. Having a clear view of how much money is coming in and going out will help you achieve your financial goals.

It will also help you avoid getting into debt and give you the opportunity to make any changes that may be necessary when cash flow isn’t going as planned.

Keeping accurate financial records also means you’ll have better information on which to base decisions. This will ensure that you’re making the right decisions for your business, rather than basing them on assumptions or gut feelings.

With the current recession, many small businesses are hanging on by a thread and struggling to make ends meet. By doing regular reconciliations and keeping clear financial records, you’ll have a clear advantage over them.

In order to do this, try using accounting software, which can help your business streamline its operations. Software such as Dynamics 365 Business Central can make your life easier, enabling you to grow your operation.

Should you opt for trying cloud accounting software, you can have a handle on your business finances so you can make any necessary changes to stay profitable or use a software escrow.

Find out how much money your business has coming in and going out by undertaking a monthly review of all the bank statements that are relevant to your business’s financials; namely, cashbook, credit card statements, cheques for deposit, and the like.

filing taxes and receipts

Pay your taxes

The other reason why it’s so important to keep good financial records is that they can help you with tax time. In order to minimize your tax and get the biggest refund possible, you need to have accurate records of all your business income and expenses.

Make sure you file all returns as needed. This is a legal requirement if you’re operating as a business. You’ll also need to maintain logbooks for your business to track trips, kilometers, fuel usage, and the like.

Another important part of tax time is knowing what expenses can be claimed as deductions. This will save you money at tax time and make your business more profitable. 

Have an idea about how much money you’ll need for each month, quarter, or year ahead of time 

This will ensure that you are ready for any changes and make sure you have enough cash to meet your financial needs. This is especially important if you have a business loan.

Try using a cash flow forecast template to help work out how much money you’ll need over the next 12 months.

Make sure your accounting system will allow you to get information about all your business finances. An accounting program is an essential part of any business, regardless of the size or type.

It’s important that you have a system in place that will allow you to access all account information easily and quickly, so you can manage your money well and make informed decisions based on real-time figures.

You may need more than one system to manage your finances, depending on what you do and the size of your business. However, a small business may only need to have one system for all their accounting needs.

If you use an accounting program like Xero, MYOB, or Reckon Accounts then it’s easy to come up with solid reports and print them out at the touch of a button. If you’re using Google Docs or a spreadsheet to track your finances, it’s important to keep an eye on how much information you’re storing in these programs.

In the practical application of keeping detailed financial records, one vital practice is transforming your paper-based bank statements into digital formats like Excel, CSV, or QBO.

This process not only streamlines your financial management but also aligns seamlessly with using accounting software for effective tracking and reporting. Converting your bank statements to Excel is a step forward in ensuring your financial data is accurate and readily accessible for analysis and reconciliation purposes.

You don’t want to accidentally delete vital data – especially if that data is your only record of income and expenses.

Keep detailed records for at least three years

It’s standard practice for businesses, regardless of size, to keep detailed information about their financials for three years. 

If you are taking advantage of certain tax loss provisions or claiming depreciation on assets, it’s a good idea to hold records even longer.

If anyone ever asks to see your financial records, you need to make sure that they are complete and correct. Otherwise, you could be penalized for having incorrect or incomplete records.

Be sure to have enough funds in reserve 

In case something happens that will affect your cash flow (e.g., sudden drop in sales)  you should always keep some liquid funds in reserve. You can do this by making a few months’ worths of cash flow forecasts and then seeing how much money you need to get through the next month or so.

You can also use your past cash flow figures as an indicator for future trends, which will help you plan better and predict where things are going.

Cash flow forecasts are particularly important for bigger businesses.

Let’s say you’re a company that has to pay $10,000 every month to lease a building from your landlord; then you’ll need to make sure that you have enough cash flow in place to cover these payments, should you experience an unexpected drop in income.

If you can’t afford to pay back a loan on time, contact your lender 

This is to be done as soon as possible so they don’t charge late fees or interest rates. Banks are not always understanding or flexible if you can’t pay back your loan in full. If you’re really struggling to make payments, then try and speak with your bank before the due date.

See if they will let you arrange a repayment plan that will allow you to keep up with payments without incurring extra fees. This is especially important if your company is still growing.

We hope that this blog post has helped you understand the basics of managing your business accounting and financing. Cash is the lifeblood of a business and as far as possible, you’ll want to keep that blood flowing with proper management of your accounting and finances.

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