Arguably, one of the most common reasons why new businesses fail is that most of these businesses didn't set up solid financial systems from the beginning. Too many small business owners fail to keep clear and accurate records of their revenue and expenses. Then they find it difficult to determine whether their business is making enough profit or not.
If you happen to be one of those business owners who overlooked the necessity of setting up your books properly or have not been keeping good financial records, there's no reason for you to postpone establishing good financial systems for your company. Don't forget that accurate and up to date financial systems will not only help your business grow, it will also keep you out of trouble when tax time rolls around.
If you have a bookkeeper, set aside some time to make sure they know what they're doing. A freelancer who dabbles in bookkeeping on the side is probably fully aware of all the tax deductions you are able to claim (heat, electricity, phone, rent, etc). It may be time to find a dedicated (but virtual - hey, you need to save money) bookkeeper who actually has an accounting degree. Unfortunately, many self-proclaimed bookkeepers do not, and this could be costing your business thousands of dollars in overlooked deductions.
If you don't already have a bookkeeper and have been attempting to handle your books on your own, you really need to find one ASAP who knows what they're doing. They can help you set up a good financial system if you don't have one in place, or even clean up the mess left over from an untrained bookkeeper.
Setting Up Your Financial System
A professional bookkeeper will be able to keep records of all of your financial transactions. From setting up a Quickbooks account to charts of accounts, they'll then record all your earnings and your expenses. To keep everything simple, it's ideal to keep all records and receipts in the cloud. This will prevent the dreaded shoebox of receipts to go through at the end of the year. A professional bookkeeper will keep on top of everything, alert you when things don't match up, and reconcile like a champ. All of your bills and receipts will be in a secured folder that can be shared with your accountant later on for purposes of filing your income tax returns.
The great thing about using accounting software is that you do not have to keep a lot of papers on hand in your office and you do not have to bother writing things down a number of times. With the use of good accounting software, all your bookkeeper needs to do is to enter your financial transactions for the month and the software will do the rest of the work.
Most accounting software programs will also give you complete financial statements after your bookkeeper has uploaded all the necessary information so you get to save a lot of time and efforts in computing your earnings. What is more interesting about this computer software is that some of these (like Quickbooks) can also help you project your future income and calculate your estimated internal rate of returns.
How Much Will the Accounting Software Cost You?
The price of the accounting software will depend on the complexity of the program that you need. Besides, you can always put the cost of accounting software as part of your business expenses. Get organized early in the game (or NOW if you've been procrastinating) and avoid the pitfalls that may come later.
If you need more tips, Entrepreneur Magazine has a great article called "Keep Your Business Finances in Order With These 6 Tips". Ready to hire bookkeepers who can tackle your business's financial systems? Give The Bean Counters a call at 912-376-9918.