Sunday, July 21, 2024

Useful Accounting Tips for Growing Your Small Business or Start-up

Growth is a critical objective that contributes to increased revenue. It helps acquire assets, attract new talent, and fund investments. By crafting strategies focused on growth an enterprise can boost its market share, realise scale efficiencies, and increase brand awareness. If wealth is properly measured, managed, and better understood, the organisation benefits. This requires accounting, to build robust finances. There’s a significant impact of good accounting on the growth and sustainability of small businesses and start-ups. Business decisions are supported by quality financial information, which is relevant and delivered in a timely manner. 

If you want to improve your financial standing and increase your profit, keep in mind the following tips. 

Keep Business and Personal Expenses Separate

You should separate your business and personal finances. If someone brings legal action against you and the court can’t clearly delimitate between you and your enterprise, you’ll be personally liable for any business debt. Additionally, you can’t deduct your personal expenses from your business taxes, so it’s better to keep things separate. Use a separate business account. After you’ve obtained the company registration number, don’t waste any more time and open a business account. It will be much easier to monitor and substantiate expenses, you enjoy personal liability protection, not to say that you can open a line of credit. 

Pay yourself a salary from your business. You can do that by simply withdrawing cash from the business. Withdrawals are regarded as profit and, of course, are taxed at the end of the year. Better yet, take money from your business account and transfer it to your personal account, once or twice per month. Decide how much you should pay yourself. Putting yourself first is the golden rule, according to the experts. Last but not least, don’t store business receipts where you keep personal receipts. It’s a good way to build a scalable system for the future. 

Consider Hiring a Professional, Even If Temporarily 

Who should you turn to when you need strategic or operational advice about running your business? An accountant, of course. A professional will help you avoid costly mistakes. You can expect an accountant to help with budgeting, forecasting, and cash flow management, tax planning, software recommendations, and so forth. Speaking of which, if you don’t know what accounting software to use, it makes sense to get professional advice before signing up for a payment plan. There’s so much choice that you’ll be overwhelmed. As your accountant to help you understand the features of your program of choice and aspects that you might overlook. 

If you don’t know exactly what you want, you can hire an accountant temporarily to come in and assess your needs. When hiring an accountant for a short while, you can choose from a wide range of specialists, which you’ll certainly need in the upcoming months. If the accountant is good at what they do, they won’t need direction to satisfy your requirements. Because most work is done remotely these days, you can save time and money as the accountant doesn’t have to be in the office to get the job done. Temporary help can come in handy for specific projects, such as an enterprise upgrade. 

Make Sure Customers/Clients Are Paying

After being in business for some time, you understand that having customers/clients paying without delay is essential. When people pay their invoices in a timely fashion, you can maintain financial health. Au contraire, when customers/clients are late with payments, you incur additional expenses, not to mention that it’s impossible to keep up with the budget, growth plans, and so on. If you’re not getting paid, that’s not good. So, think about improving your invoicing process. There are two fundamental aspects to focus on: accuracy and timeliness. At times, conversations can fix these issues. 

If you have your mind set on improving the invoicing process, invest in a solution such as QuickBooks. You can automatically generate and send invoices to customers and obtain timely payments. The process of creating an invoice from scratch is relatively simple. You select the customer and job from the dropdown menu and complete the fields (date, invoice number, bill to/ship to, terms, time/costs, etc.). When dealing with accounts receivables, your small business or start-up is at the mercy of customers/clients who pay. Without accounting software, you open yourself up to costly mistakes, fraud, and possibly embezzlement. 

Create Financial Projections for Future Years 

Financial projections are useful as they help you estimate future income and expenses, in addition to anticipating if you require financing or should make capital expenditures. Include your expenses and revenues into a cash flow projection. To do this, you can use an Excel or spreadsheet (or any other tool available in your accounting toolkit). Your projection will help you analyse the impact of different strategies on your business. Growth will allow you to expand your operations and it can be achieved through various strategies, such as adding new locations, investing in customer acquisition, or expanding the product/service line. 

Financial projections can be used to attract future investors. They provide them an idea of your organisation’s overall anticipated financial picture at a certain moment in time. Long-term projections tend to cover three to five years. You don’t have to be a financial whiz to put together a good financial model. There are certain things that investors want to see in a financial forecast, namely cash flow, audience, market segmentation, and customers, gross margin, operating expenses, and liquidity, just to name a few. A financial projection isn’t a mere sequence of numbers; it’s a communication tool. 

All in all, you can grow your business, even in a down economy. Develop growth strategies based on financial data and set reasonable expectations for the future. Analyse every step and decision you make. Most importantly, think about where you want to be in the future and what you can do right now. Pursue the most effective vehicles to put your chosen plan into effect. Take into account your resources, culture, and risk tolerance. 

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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