One of the crucial parts of managing a business is bookkeeping or accounting. It is a job that people may not want to do, but it is very important to the growth and survival of any business.
One of the reasons that a lot of people are put off by accounting in their business is because it tends to involve a lot of stuff and can seem quite complicated.
But it may not be too much of a hassle if you can organize beforehand the essential things you should focus on and how to streamline the accounting process.
We have decided to compile a list of 5 ways in which you can simplify accounting in your business.
So, it doesn’t matter if you are using online accounting software or doing it manually. These tips can help you sort a few things out to make your accounting a bit more simplified.
Segregate Personal and Business Finance
One of the first things to do if you are looking to simplify the accounting process for your business is to separate it from your personal finance.
You should not mix these two as it tends to complicate things, and you cannot see things clearly from the perspective of your business.
One of the outcomes of doing accounting for your business is to understand the financial situation that your business is in.
So, if you mix it with your stuff, you will not have a clear picture of your business. Try to use a separate credit or debit card or any other form of payment for your business.
This is to ensure that you are not receiving one bill for your personal and business expenses.
So, try to maintain separate accounts for your business and personal finance.
This will save you a lot of hassle trying to figure out your business expenditure as well as your personal expenditure, and you are bound to make a few mistakes along the way if you are just starting.
So, keep a separate bank account, credit cards, debit cards, etc., for your business.
Calculate Minimum Monthly Profit
One of the crucial parts of keeping a business afloat is understanding and calculating the monthly profit you are earning and how much you need to continue running your business.
So, you have to keep track of all the invoices, bills, payments, expenses, etc., to figure out how much revenue you are generating every month and how much profit you are earning.
Now, factor in your expenses, taxes, and other costs to determine the amount you need to keep your business from closing down. Once you have this number, you can easily tell how well your business is doing.
Now, look at your goals and come up with a figure you want to earn monthly profit. This will help you understand how much an amount you need to earn.
So, keep track of all the invoices, payments, bills, and expenses to calculate your profit and your expenses.
Online Accounting Software
If you like using pen and paper and just a digital spreadsheet to do your accounting, then no problem, but if you are finding it time-taking to do everything manually, you can opt for various online accounting software which gives you a lot of tools to automate many of the tasks of accounting.
Over the last few years, this software has evolved a lot. You can now use cloud-based software to manage your accounting tasks. You do not have to sit in your office and do everything.
You can store all your financial info on the cloud, remotely access the data from anywhere in the world and do your accounting. You can even process payments and allow access to the financial information of multiple users.
Even if you need someone’s advice, you do not have to bring them to your office but rather open your laptop and show them what you need to do.
It is also more secure; if anything happens, you can rely on the support team. Of course, you need to choose a decent software company. Otherwise, you may end up having other problems.
Hire A Pro
If you have the budget for it, one of the best solutions to simplify accounting is to hire a professional accountant who can regularly look at your finances and give you an accurate report at regular intervals.
A professional accountant has more experience and greater expertise than new business owners.
A good accountant will work with you and not only give an accurate representation of the financial situation of your business but also give you relevant advice to help improve the state of your business. They also have a good understanding of the law and can help you with tax breaks.
So, if you want to ensure that quality work is being done when it comes to the accounting of your business while not stressing yourself out, then hiring a pro seems to be the right choice.
You can hire many freelance accountants when you need them if you do not have the budget for a permanent position.
Follow a Schedule
Sounds simple, doesn’t it? But nope.
It is one of the most difficult things to do. Many business owners keep putting accounting off to next week or the next weekend, which is not fruitful.
Yes, doing accounting regularly may be tough to maintain. Still, just half an hour every week can simplify your overall accounting because you will only have limited data to look at every time.
If you keep putting it off, one day, when you finally sit down to do it, you will find that there are a lot of numbers to crunch and a lot of stuff to process.
Also, if you do it regularly, a lot of the transactions you make, be it expenses, payments, invoices, etc., will be fresh in your mind helping you do a better job.
This is one of the best ways to simplify accounting. Taking processing small financial data regularly so that you do not have to deal with a bunch of stuff at once many of which you have already forgotten about.