Author Bio: Karen is a small business owner who quickly learned the benefits of using professional accountant services when she made errors on her first company accounts and tax returns. Now, she always uses an accountant to ensure her finances are in order.
Keeping track of financial affairs isn’t actually as difficult as many people believe. The main reason people struggle with financials is because they’re intimidated. What if they don’t achieve their earnings target?What if they make a mistake on their tax return and have to pay a fine? What happens if they mess up their company accounts? Getting rid of the negative thoughts is the first thing to do. Park those, and it’s clear to see that all isn’t as difficult as it first appears.
However, there are some top tips you’ll need to keep in mind when doing this. To make it easier to visualize these tips and put them into action, we’ve used a virtual self-storage business as our example.
Keeping It Separate
The big thing many small business owners don’t realize is the importance of keeping personal and business finances separate. If you were running a self-storage business, for example, but you were moving house, you might decide to buy products or services and declare it as a business expense.
Not only is this illegal, but you’re also complicating your business affairs as you won’t have a true picture of incomings and outgoings. Ensure you keep everything separate, even if you make personal purchases that you could potentially pass off as a business expense.
Use Professional Experience
You want to focus on running your self-storage company and maximizing your personal strengths and expertise. Not only will hiring an accountant help you achieve this, it’ll also make it easier for you to get your finances in order.
Saving money is often an excuse given by those who don’t want to call on an accountant, but the reality is the time and subsequently money you’ll save or earn by doing it this way means it pays for itself.
Make it a ‘Must Do’
We’ve all had times where we’ve been behind with finances so have had to sit for hours at a time sorting out the books when we’d much rather be doing something else. Even if you spend 15 minutes on a Monday morning making sure the accounts are correct from last week, it will save you a lot of time in the long run. Missing this out even two or three weeks in a row can see you with a slew of unpaid invoices and problems that are now much more complicated than they should be.
Think About People Costs
Using the self-storage business example it is likely that your labour costs will be at a minimum, as you’ll probably only need to employ people in sales, and even then this might be you plus one. However, you should always think about this in addition to other expenses. If you plan to grow the business, for example, or you know you’re going to be busier than usual with clients in the coming months, think about how the people costs will influence your profit. Many business owners fail to do this and then get a nasty surprise when they look at their bottom line.
You need to remember to pay yourself, too, the method by which you do this can again be discussed with an accountant so both business and yourself are as tax efficient as possible.
Whether you’re running a self-storage business like in our example, or you work in a different industry, keeping control of your bookkeeping and accounting is critical to your success. Ensure you make it happen.