Accounting could be confusing, time-consuming, and uninspiring, especially for entrepreneurs with no background in the field. But it is a necessary part of your business as it is the medium that will enable you to keep track of your income and expenses.
It is also a source from which you can come up with an accurate assessment of how much money you have spent and what amount of profit or loss it has generated. Equally, accounting is important for a variety of external rationales including tax preparation and complying with regulatory requirements.
If you own or manage a small business, accounting will be one of the most challenging tasks. However, there are steps you can take to streamline and simplify your small business accounting. Overall, this will make your life as a small business owner a whole lot easier.
And once your accounting becomes streamlined, you can work on improving the financial position of your small business.
Here are the steps:
1) Find an Accounting Service That Will Assist You
Chances are that as a small business, you don’t yet have the luxury of hiring a full-time accounting team or creating an accounting department.
In that case, you should find a professional accounting service that will help you to manage your business finances.
If it is your first time in accounting, it is often better to get help with your accounting needs rather than trying to do everything yourself. This could be hiring a freelance bookkeeper or even a small business accounting firm.
This will give you more time to concentrate on other aspects of your business such as marketing your products or services.
2) Implement A Financial Management System
Implementing a financial management system (FMS) such as SunSystems or NetSuite Financials will enable you to effectively manage your accounting and financial needs. An accounting system will save you a lot of time, help you cut costs, and connect all of the different parts of your small business so that you get a comprehensive view of your finances.
Moreover, it will help you to manage your financials in a structured and effective manner, automate manual and repetitive processes, and streamline almost all aspects of your accounting operations including asset management, payroll, financial reporting, purchase orders and procurement, invoicing, and bank reconciliation.
A good financial management system will also integrate seamlessly with other business systems you already use, provide insightful business intelligence and analysis in real-time, and even let you manage multiple currencies with support for a multi-company setup.
To successfully implement a financial management system, you’d need to work with a professional financial management system implementation partner such as FinanSys to help you with the setup, testing, training, and post-go-live support.
3) Keep As Much Documentation as Possible
If you can keep all the documentation and receipts for your business transactions, your accounting will be a lot easier. Because of the lack of documentation or data, some small business owners go through financial issues such as not having enough funds to cover payrolls, income tax, and more.
If you can keep all the documentation as well as receipts with your ledger, you will save yourself the hassle of trying to find them later on.
This also gives you an accurate picture of your company’s financial status. You can use this data for future reference as well as for tax purposes.
4) Keep a Good Ledger
A good ledger is the heart of your accounting. If you can create a good ledger, the chances are that your accounting will be less confusing and also more accurate.
A ledger is a book where you list all of your transactions for each month or year. If you can do this, you can easily come up with a list of your income and expenses. You will also be able to track down your profits or losses, as well as your cash flow.
Simply managing your ledgers should not take up too much of your time. And once you have that, the task of keeping track of your accounting/financial transactions becomes easier and less confusing for you.
5) Keep a Detailed Record of Your Transactions
By keeping a detailed record of your transactions, it’ll be easy for you or anyone else to see what has been done.
It will also enable you to go back and confirm whether or not all your invoices have actually been paid, how much money was spent on advertisements, and if all expenses have really been covered.
The key thing when it comes to keeping track of income and expenditure is organization and focus on what matters most.
As mentioned above, even the smallest businesses need accurate financial information because without it, one would not be able to assess how his or her business is doing and whether or not changes need to be made.
6) Automate Your Small Business Accounting
One of the things financial accounting software will do for you is automating your accounting processes.
Automating your accounting can help you save a lot of time, ensure data integrity in your books, as well as increase productivity among staff members. If all of this is possible with the right software solution, then it means that you won’t have to spend countless hours doing data entry or setting up manual reports ever again.
You can even set your accounting software to do tasks on a recurring basis, such as getting wire transfers from a specific vendor when they are due each month or automatically entering invoice payments into the system after they’ve been processed.
This essentially frees up more of your time to focus on other aspects of the business.
It’s no secret that running a small business can be stressful. There are so many things you need to keep track of, and it can feel like there isn’t enough time in the day for everything on your plate.
Accounting is one of those tasks that seem to take up most people’s days, but with the steps above, I hope you’ll find accounting easy – even if it’s for your first time as an entrepreneur.