Accounting/Bookkeeping
Running a small business presents plenty of challenges in both the short-term and long-term. Once you reach the point of making financial decisions, it can be hard to determine when, how, and where to spend your money and hit your financial goals. Sensible financial planning should be a critical part of your business plan so that your own business stays healthy.
No matter how well you think you are at making money-saving decisions, there are always ways to cut costs and make sound financial decisions, no matter the type of business you run. Here are ten ways to help you save both time and money the next time you’re about to make a financial decision.
Automation software is becoming more popular among small business owners. Automating small daily tasks allows you to focus on more important tasks that can help improve your business.
You can try accounting software to automate your accounting needs. Most small business owners use this software independently, but you can also have an accountant or bookkeeper manage the software for you. You can link your business credit card or bank account to this software, track your income and expenditures, pay and send invoices, categorize spending, and create reports.
The two aspects you can automate with online software are invoicing and expense reporting. With an automated invoicing system, you avoid getting stuck with a stack of unpaid invoices at the end of the month. The software can tweak the way you send invoices or help you incentivize fast payments from a customer. This can be achieved by scheduling invoicing apps to send the invoice on time so the client can act before the payment is due.
In terms of expense reporting, accounting software saves you time on data entry. Both you and your employees will benefit from automating this process. You’ll also be able to code receipts, write checks, or track down reports. Plus, your employees can take pictures of the receipts and not enter them manually. These time-saving features can be critical for a new business or startup.
Different accounting software will include different premium services, so you can choose the one that works best for you. You can do internet research on the best accounting software since discussing them is outside the scope of this article.
Sometimes, you can save money by spending money. This is true when relying on professional bookkeepers or accountants to settle your financial documents. Don’t ignore them just because they cost money to hire. Managing your business’s financial health is a taller order than tracking your personal finances after all. Their expertise in business accounting can provide key insights into your financial business decisions.
There are at least three reasons why you should hire a bookkeeper and leverage their know how for your small business.
Regardless of your small business specialization, the most challenging aspects of every business lie in the details. Bookkeeping can be such a time-consuming task that it takes precious time away from you.
A bookkeeper that takes care of your taxes prepares you for when it’s time to make a payment. If you want to fulfill all the filing requirements, a professional bookkeeper will help you with that.
A professional bookkeeper also helps you with cash flow management. Proper cash flow management is a sign of great fiscal health of a business, as it shows the amount of money you have to run your business, pay the staff, invest, and grow back.
A service provider such as Swyft Books is a great example of a bookkeeping service that can help you keep track of your finances and manage your books effortlessly without having to share your office space.
Some business expenses like tax deadlines, equipment purchases, and software upgrades shouldn’t take you by surprise. You can expect some larger expenses during your slow months, so be prepared for that situation in advance.
Financial projections are a great way to ensure your business will stay positive for years to come. Reports and financial projections can help you estimate where you’ll be in the future. It can also help you decide where to invest your revenue or when it’s time to apply for a business loan.
However, forecasting of this kind can be tricky. You need to understand how your expenses can change depending on the natural forces and client decisions. Revenue-wise, you’ll have to consider price changes and the change in customers your marketing can bring each year.
If you haven’t done this already, make sure to open a separate account for your business. This will save you tons of time when it comes to tallying up the deductible business expenses. Maybe you contribute some of the capital from your personal account to the business. In that case, make sure to document those contributions.
Another reason to get a separate account is to limit legal exposure to business debts. This is especially true for LLCs. Deducting your personal expenses on your business tax return is not allowed. For example, if you use a car or office for personal use and business, the time you use the property for business will be the only deductible factor. You aren’t allowed to deduct personal expenses on your business tax return. Otherwise, you risk paying up to 75% of extra tax in penalties.
Every expense you make in your business should be properly labeled and categorized. Again, it’s crucial to track your cash flow to make sure to get the most out of your credits and tax write-offs. You can use accounting software to track these expenses and keep copies of checks and invoices inside the program. If you only get to pay with cash, you can keep digital receipt copies in the software.
It’s super easy to lose track of important cash injections. That’s why keeping track of your cash flow is crucial. Otherwise, this can result in overpaying taxes, IRS penalties, or a lack of an emergency fund . The accounting method you use will help you determine when you need to record your income. The great news is that this is yet another task that can be automated.
If you plan on scaling your company, make sure not to do so too early. You’re sure to need talent from a variety of backgrounds. But do you need them all now? Adding a new person to your payroll comes with all the expenses required to pay, train, and keep them. And finding a reliable full-time (or even part-time) worker is expensive these days.
The next time you’re about to post a job ad, make sure you need that position filled. Maybe there’s an alternative. What about hiring an independent contractor or asking your team for suggestions?
Being a small business owner means making purchases on a regular basis. But there’s a simple way to tweak how you spend cash that can help you save both time and money in the long term. For example, conducting small research before making a payment can help you understand different offers, more affordable prices, etc. Evaluate your choices so it doesn’t feel like you’re paying too much for a service and get little results.
Whether you’re having an operational or human resource problem, you can always brainstorm different ways to solve them instead of choosing the most popular or expensive option. For example, maybe you’re a CEO of a small business that wishes to settle a healthcare plan for your employees. You can talk to your people and ask them for ideas. Maybe they’re up for different packages with health saving accounts etc.
You can provide affordable yet meaningful healthcare and other benefits to your employees without breaking the bank. You just have to do the research and be open to new ideas.
Running a small business means working 24/7. Endless projects, ideas, and financial obligations are the most challenging part of being a business owner. However, not everything has to be black and white.
With the ten simple tips above, you can master time and money management to help make healthier financial decisions and upscale your business before you know it.