As a small-business owner, you may think it is important to be customer focused. However, it is just as critical to be finance focused. Small-business owners need to pay attention to bookkeeping and internal, day-to-day accounting functions such as recording expenses, invoicing and deposits. Bookkeeping is vital to properly managing business resources as well as ensuring that the necessary business records are retained for tax and compliance purposes. Paying attention to bookkeeping in earnest will make certain that you avoid costly errors later.
Bookkeeping is like studying; adopting simple, good habits early in the game is key. No, you can’t keep slips of paper in folders or drawers, or store the financial information in your head. You are building a business and you need a professional to help you manage your company’s financial growth and health.
Consider hiring a virtual CFO to help you set up business policies and procedures. This accounting professional can work with you to:
- Track your expenses. Record as many details as possible regarding expenses, such as the type of expense, suppler/biller, account number, date the invoice was received and amount owed. In many cases, business expenses can translate into tax write offs. However, you can’t write off what you don’t track. A standardized business process or system can help document car mileage, business-related purchases and receipts for business lunches and meetings. Receipts (paper or electronic) can substantiate your expenses in the event of an audit.
- Record deposits correctly. It’s great if monies are coming into your business; however, you must have an accounting system in place that details where each deposit comes from. This will ensure that you pay tax on income only. Cash infusions from your personal savings or small business loans are not taxable and risk being put in the wrong category if you do not have strong systems established.
- Set aside funds to pay taxes. Paying tax on income is inevitable. Be sure to set aside monies each month so you don’t get caught short when it is time to pay the taxman.
- Keep an eye on invoices. Be sure to provide your customer with enough information for them to be able to approve and process your invoice quickly. Note your payment terms; follow up if you do not receive payment within your required time period. Your cash flow depends on it.
- Plan for major expenses. Growing a business often means an outlay of funds for big expenditures. Anticipating and budgeting for major upgrades in equipment or increases in staffing costs will smooth out your business’ potential cash flow issues.
Bookkeeping can help you achieve and keep long-term goals, smooth out any seasonal cash flow dips, pay your taxes on time and ultimately, improve your profits. If you don’t have a head for numbers, processes or systems, a virtual CFO can be a cost-effective financial resource to help you put these bookkeeping tips into practice. A virtual CFO can give your company access to small business accounting and bookkeeping services and bring a new perspective to your business.
Many of Northern New Jersey’s fastest-growing companies rely on CFO Your Way for the financial management expertise they need with the flexibility they desire. These companies get the benefit of a financial professional managing the books and keeping an eye on the bottom line, at a fraction of the price of hiring an in-house employee—and without the headache of additional payroll or office space needs.
CFO Your Way is on your management team but not necessarily in your office. Schedule a Complimentary Consultation to discuss your needs in the areas of bookkeeping, financial forecasting, cash flow analysis and more.