A great business is one with dedication, focus and hard work. Creating a business by design versus a business by default requires vision and planning. One of the best ways to start this journey is to create winning habits around your business’ finances.
Here are a few ideas to get your business’ finances on the right track:
Key Idea No. 1: Don’t Delegate Your Accounting Too Soon
When you start a business, don’t outsource the accounting tasks of your business into the hands of a third party too soon. You may have been told to focus on your purpose and leave the rest to a professional but this could be dangerous for a start-up business. If you manage your own accounting at the start, you will have proper understanding of whatever you are delegating when outsourcing your accounting in the future. Doing your accounting in the early days will help you to educate yourself on the fundamentals of business finances & accounting prior to making a hire or finding an outsources service.
Key Idea No. 2: Build A Team
Yes, I know I just mentioned that you shouldn’t be delegating duties too soon. But after getting educated, you should employ the services of a third party. In the grand scheme of things, bookkeeping and accounting belong to those actual people who enjoy doing it and have experience doing it everyday. Because you have educated yourself, you are now positioned to know what to look for and can easily select a professional who has proper understanding of what you need.
What should you be looking for?
- Bookkeeper: Having someone stay on top of the numbers and figures will ensure proper documentation of all your financial activities. BooXkeeping is America’s #1 company for small business outsourced bookkeeping.
- Tax planner: Preparing tax payments will help to seal loopholes in your financial statements. You won’t have to worry or fear tax period because your tax planner would have it all looked after in advance.
Key Idea No. 3: Create Time to Analyze Your Financial Reports
You must spend time assessing and analyzing your reports. Having reports won’t do you any good if you don’t take the time to look at them. Reports keep your business intact. You can evaluate your reports monthly and yearly by breaking down the reports into different units for easy comprehension.
Here are some reports that you may consider using:
- Current year-to-date profit and loss
- Current month profit and loss
- Month-by-month breakdown of your P&L
- Detailed transaction P&L for a given month
- Balance sheet
- Statement of cash flows
- Your business metrics to help you determine how well your company is performing
Key Idea No. 4: The Goal Isn’t Merely to Pay Less in Taxes
Business owners often look to save taxes at the end of the year. They start buying things for their business even when they don’t need them. As your business expands, you make extra cash which means you pay more tax. Employ the services of a tax professional to assist you and watch how creating intention around your money will help grow your business!