When running a business, you need to understand how to run and track your money well before your business can commence, which areas of your business you can automate or outsource, and which experts you should consult for the guidance you need to help you do well.
This guide will teach you how to get your business on track and put your new business on the path to success. Here’s is how:
Keep Track of Your Expenses
If you want to run a successful business and keep it on course, you need to keep track of your expenses so that you can quickly adjust when you discover that you are spending more than your income.
Make sure you keep the records of your income and expenditure including evidence of payments, invoices, canceled checks, bills, receipts, the financial statements from the online bookkeeping service of your company or bookkeeper, and any other documentary proof that supports an item of deduction, income, or credit as revealed in your tax return.
It is recommended that you form the habit of keeping every document safe in a particular place to make things easy. Doing this will stop you from shredding the wrong document by accident.
Storing and capturing all expenses quick and easy is possible with the expense-tracking apps. The Expensify is one of such apps you can use to track your expenses. The moment you get your receipts, this app allows you to snap photos of them, and you will avoid missing information when it is time for tax returns.
You have more than a few options in the cloud if it comes to where you will store your digital receipts. OneDrive, Evernote, Google Drive, and Box give you the chance to securely store huge volumes of data online.
Open a Business Bank Account
Open a business bank account as soon as you register your business. This is where your income will be going. Entrepreneurs and corporations are mandated to keep the finances of their business separate from their personal accounts to avoid mixed up.
Tax season will be less complicated when you keep both your private and business finances separated in business and personal bank accounts. This is because you won’t need to bother about unraveling your business and personal finances when it is time for tax returns.
Moreover, you, your accountant and bookkeeper will be able to monitor the progress of your business more easily when you manage your money in separate accounts.
Opt for a bank that meets your requirements if you are opening a business bank account for the first time. The bank should have a local branch near you for easy accessibility both online and personally.
Beginning with two business accounts— savings, and checking—will help you in keeping your money controlled. For example, you could deposit income in your checking account, and leave a fraction in your savings account to settle taxes at the end of the year.
Set Up a Bookkeeping System
You should get bookkeeping done every month, despite the fact that it may look boring. Go through your guide on the discrepancy between accounting and bookkeeping if you are not completely certain of what bookkeeping is all about.
In general, you have three choices you can choose from when you want to do your bookkeeping.
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Hire an internal Support – You can employ a bookkeeper to work in-house, when your business is big enough to necessitate it.
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Outsourcing – You can decide to outsource the bookkeeping tasks online to a team of experts or a part-time bookkeeper, so that you can pay attention to the most immediate issues of your business.
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DIY – Some easy accounting software and strong Excel spreadsheet are available to assist you in managing your financial books if you want to use the hands-on approach.
Choose how You’ll Get Paid
With technological advancement and various methods of payment available nowadays, it’s not possible to do all of your business transactions in cash. Therefore, you will need to opt for a payment method that works best for you. You can choose to accept online payments only, POS payments only, or by POS system and in-person payments.
Team Up with a Chartered Professional Accountant (CPA)
The services of a CPA together with a lawyer and a bookkeeper are crucial to a small business. An excellent CPA can be of assistance in the areas of treasury and cash management, lease negotiations, and ongoing cash reporting—particularly one who is a professional in working with businesses in your particular niche.
Such a professional Chartered Professional Accountant should be ready to get in touch with you for a free consultation. As a result, you don’t need to be afraid of shopping around until you get an accountant you believe can work well with your business and service the needs of your business.
Keep Refining Your Methods
Your business is going to change over the years–you are better off accepting it rather than trying to fight it. Consider using data protection software, if your data gets lost, you'll be happy you invested in it when you did. The same goes for e-purchasing tools. This type of software will help you manage purchase orders and easily track them. Tools like this will make work more efficient. Plus, your company will be able to keep up with competitors.
Establish a Payroll System
You will be employing employees and contractors as your business keep expanding. Payroll is an important time and energy consuming job that can distract you from operating your business, just like bookkeeping. Gusto is one of the best solutions to solve this problem.
However, prior to introducing new team members, endeavor to categorize them appropriately as either independent contractors or employees. You will be sanctioned seriously by the IRS if you mix this up.
Establish Your Tax Obligations
It is the structure of your business that will determine what the IRS needs from you when it comes to tax filings. Conglomerates are separate entities; and their taxes must be filed separately from that of their owners. Depending on the income generated, they will also be expected to file quarterly likely taxes.
In addition, nearly all sales-related businesses will have to pay sales tax, which can be a complicated matter.
Increase Your Gross Margin
Staying on top of your gross margin is one of the best ways to grow the income of your business or company. You must know how much it costs you to manufacture the goods or services of your company in order to compute your gross margins. This becomes easier when we know the Cost of Goods Sold (COGS) and the gross margins.
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Cost of Goods Sold (COGS) – This is the direct costs a company incurred in the course of production. It comprises of the price of labor and raw materials.
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Gross Margin – This is a percentage or proportion stating the overall revenue collected by a company after incorporating the COGS.
Gross Margin is calculated thus:
Gross Margin % = (Revenue – COGS)/Revenue
The ability of your business to keep going depends on the difference between the price of a product and the cost incurred in manufacturing it.
Accounting and bookkeeping may look like the most boring part of running a business, but the fact is that it is at the same time very essential to keep your business on track—particularly at the startup or early stages. Keep these tips in mind when it comes to running your new business.