Building a business ground up is not an easy undertaking. As a small business owner, it is understandable that you want to be involved in every detail of your business to ensure that things work according to how you envisioned them. While this approach may give you the best result in the least possible time, it is also the same approach that can damage the growth and success of your business in the long run.
A study conducted by the Small Business Association shows that 28% of businesses goes bankrupt primarily because of the poor financial structure of the company. However, many of these challenges can be tackled and avoided if proper accounting practices are put in place.
My Virtual Workforce put together four easy business accounting steps that will help your small venture up and running through the years to come.
Start by Opening a Bank Account
After you have legally registered your new venture, you need a safe place to stock your business income. Separating your business funds from your personal funds will keep your financial information distinct – making your life easier when tax time comes around.
Remember, government mandates LLCs, partnerships, and corporations to open separate bank accounts for business. Although sole proprietors are exempted from this rule, it is still highly recommended.
Keep an Eye on Your Expenses
The backbone of a strong business bookkeeping is learning to monitor your expenses efficiently. This step enables you to track the growth of your business, create financial reports, audit deductible expenses, fill-in tax returns, and back-up what you file on your tax return.
A good way of keeping an eye on your expenses begins with developing a system for organising receipts, financial documents, and other critical records. This process is actually very simple and easy to do. With the advancement in the Internet technology, you can take advantage of several sophisticated yet affordable accounting softwares like Xero, Zoho and Quickbooks.
Outsource a Bookkeeping Service
If you’re having problems monitoring your business expenses and entering them into a ledger, probably because you are not an accountant, or you don’t have a natural affinity for numbers, then hire a virtual bookkeeper. With thousands of options out there, you are sure to find a bookkeeping service that will suit your needs.
This might come as an additional expense to your part, given that you are still starting a new venture, but it pays off to have a bookkeeper that works remotely than managing all the books yourself when you barely know how to do it.
Check out our previous post – 5 Telltale Signs You Need to Hire a Bookkeeper Now – to help you determine whether or not it’s time to bring in a third-party service to help you run your business operation.
Get Comfortable with Your Financial Metrics
Along with your bookkeeper, discuss your cash flow metrics and other financial statement metrics. Take note, the simplest financial metric is actually the most critical to keep track of.
Understand how much money you are making in a daily/weekly/monthly basis and examine which days you are earning more. The frequency depends on you, but it is highly advisable to do it regularly. What we want to imply here is that you should become familiar with the numbers going in and out of your day-to-day operations.
Effectively managing your metrics makes the decision-making process a whole lot easier. The results will help you evaluate things like the amount of money you need to make per day, the time to hold your sales, and whether or not you need to apply late charges for clients who pay invoices beyond the deadline.
While starting a business can be a stressful process, if you keep this list in mind, you can be definite that your new store’s finances are in order from the start. From opening the right type of bank account to examining your financial metrics, these guidelines will all pitch into the success of your business – today and tomorrow as it continues to grow.
The post Bookkeeping 101: How to Get Your Small Venture on Track appeared first on My Virtual Workforce.
from My Virtual Workforce http://ift.tt/1HssSmk