Owning and operating a small business is no easy task. There is no shortage of daily assignments that owners need to accomplish on a daily basis. Furthermore, limitations of capital, cash flow problems, and budgetary constraints may limit access to experts in particular areas. Therefore, owners and managers of a small organization may need to perform tasks that are either outside of their area of comfort or that are new to them. Many times, these tasks are either ignored or set aside. Among them are accounting and bookkeeping. The reality is that most small companies lack an understanding of its importance or do not emphasise the completion of the associated tasks. Nevertheless, accounting is a vital part of all healthy organizations, regardless of company size.
Simplify the work
Although accounting tasks cannot be made to disappear, businesses can simplify the work. One of the most common mistakes is using personal accounts mixed with business expenses. This makes sorting company-related purchases or deposits difficult. Therefore, it is important to separate business and personal accounts. Have a bank account that is specifically designated as your corporate account and only use that account for items that are specific to company activities. This includes credit cards. If the company does not have sufficient credit history for a business line, designate a personal credit card account for the company and do not use it for personal transactions. This way, all activity in that card is easily identified as being related to the businesses’ activity. Also, make sure to track expenses by labeling and categorizing. This will help during tax season. When depositing, ensure that each deposit is properly labeled. Mistaking a loan deposit with a sales deposit can seriously hamper the accuracy of business statistics.
Reconcile bank statements and track receivables
Organizing the paperwork for each month includes looking over the bank statements and placing them with the rest of the month’s information. Once organized, they are easier to work with. Understandably, if accounting is not your thing, the thought of reconciling bank statements will probably put you to sleep. However, this is a vital step in simplifying accounting chores. The more that this assignment is put off, the harder it will be in the future. Reconciling on a monthly basis and closing the preceding month is easier than having to perform the entire activity for the past 12 months. Furthermore, it is easier to make mistakes when the tasks are accumulated.
Take control of accounts receivables. If your invoicing and payments received is not well documented, it is easy to lose track. Even worse, messy paperwork or a failed business process in this area can lead to losses and problems with keeping up with expenses. Cash flow is an indispensable part of running a successful company and having past due receivables will hurt a businesses’ ability to manage payroll and other liabilities. Therefore, follow up on invoices. Use software that can help maintain accounts and payments organized. Also, consider offering flexible payment options to customers like accepting credit cards. This can help reduce delinquent accounts.
Know when you need help
Sometimes a company grows too quickly or outgrows its accounting system. This may require the company to either adjust their organizational processes to account for the volume of movement or become more formal in the management of operations. From hiring a cfo advisory service to look for formal positions to needing to staff a full-time accountant, an organization may need to look toward outside help for assistance. These are normal growth patterns of businesses. One way to recognize the need to expand is to review complexity. When managing accounting roles, personnel, or financial relationships become too complex for someone in your organization to handle, it is time to seek assistance.