One of the crucial parts of managing a business is bookkeeping or accounting. It is a job that people may not want to do but is very important to the growth and survival of any business. One of the reasons that a lot of people are put off by accounting in their business is because it tends to involve a lot of stuff and can seem quite complicated.
But it may not be too much of a hassle if you can organize beforehand what are the essential things that you should focus on and how to streamline the process of accounting. We have decided to compile a list of 5 ways in which you can simplify accounting in your business.
So, it doesn’t matter if you are using an online accounting software or just doing it manually, these tips can help you sort a few things out to make your accounting a bit more simplified.
Segregate Personal and Business Finance
One of the first things to do if you are looking to simplify the accounting process for your business is to separate it from your personal finance. You should not mix these two as it tends to complicate things and you cannot see things clearly from the perspective of your business.
One of the outcomes of doing accounting for your business is to understand the financial situation that your business is in. So, if you mix it with your personal stuff then you will not have a clear picture about your business. Try to use a separate credit or debit card or any other form of payment for your business.
This is to ensure that you are not receiving one bill for your personal expenses as well as your business expenses. So, try to maintain separate accounts for your business and personal finance. This will save you a lot of hassle trying to figure out your business expenditure as well as your personal expenditure and you are bound to make a few mistakes along the way if you are just starting out. So, keep a separate bank account, credit cards, debit cards etc. for your business.
Calculate Minimum Monthly Profit
One of the crucial parts to keeping a business afloat is to understand and calculate the monthly profit that you are earning and how much you actually need to continue running your business. So, you have to keep track of all the invoices, bills, payments, expenses etc to figure out how much revenue you are generating every month and how much profit you are earning.
Now, factor in your expenses, taxes and other costs to come up with a figure which represents the amount you need to keep your business from closing down. Once you have this number you can easily tell how well your business is currently doing.
Now, look at your goals and come up with a figure that you actually want to earn as a profit every month. This will help you understand how much an amount you need to earn. So, keep a track of all the invoices, payments, bills, expenses to calculate your profit and your expenses.
Online Accounting Software
If you like using pen and paper and just a digital spreadsheet to do your accounting then no problem but if you are finding it time-taking to do everything manually you can opt for various online accounting software which gives you a lot of tools to automate many of the tasks of accounting.
Over the last few years, these software have evolved a lot. You can now use cloud-based software to manage your accounting tasks. You do not have to sit at your office and do all the stuff. You can store all your financial info on the cloud and you can remotely access the data from anywhere in the world and do your accounting. You can even process payments and allow access to financial information of multiple users.
Even if you need someone’s advice you do not have to bring them to your office but rather just open your laptop and show them what you need to. It is also more secure and if anything happens you can rely on the support team. Of course, you need to choose a decent software company otherwise you may end up having other problems.
Hire A Pro
If you have the budget for it, then one of the best solutions to simplify accounting is to hire a professional accountant who can regularly take a look at your finances and give you an accurate report at regular intervals. A professional accountant has more experience and a greater expertise than new business owners.
A good accountant will work with you and not only give an accurate representation of the financial situation of your business but also give you relevant advice to help improve the state of your business. They also have a good understanding of the law and can help you out with tax breaks etc.
So, if you want to ensure that quality work is being done when it comes to the accounting of your business while not stressing yourself out then hiring a pro seems to be a right choice. There are lots of freelance accountants whom you can hire when you need them if you do not have the budget for a permanent position.
Follow a Schedule
Sounds simple, doesn’t it? But nope. It is one of the most difficult things to do. A lot of business owners keep putting accounting off to next week or the next weekend which is not fruitful at all. Yes, doing accounting regularly may be tough to maintain but just half an hour every week can simplify your overall accounting because every time you will only have limited data to look at.
If you keep putting it off then one day when you finally sit down to do it you will find that there’s a lot of numbers to crunch and a lot of stuff to process. Also, if you do it regularly then a lot of the transactions you made be it expenses, payments, invoices etc will be fresh in your mind helping you do a better job. This is one of the best ways to simplify accounting. Taking processing small financial data regularly so that you do not have to deal with a bunch of stuff at once many of which you have already forgotten about.