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Many small businesses deal with the hassle of inflow and outflow of checks on a daily basis. As a business owner, you are involved in several aspects of business operations. Signing and depositing checks seem like a daunting task in your busy schedule. In a fast-paced era, a traditional approach for check management is time-consuming. Investing in technology and keeping up with safety measure makes for a more efficient way of managing checks. Here are a few accounting tips for small business that allow better check management.
Reaping benefits of technology
An accounting system involves several financial statements. Managing these ledgers can become complicated over years. With advancement in technology, today there are several accounting softwares such as QuickBooks, which make bookkeeping and accounting quick and easy. These softwares also allow for managing and printing checks. It also allows reconciling invoices with checks. The types of checks it supports include standard checks, voucher checks and wallet checks. Business entrepreneurs should ask banks for checks that are compatible with accounting softwares. Many banks allow you to order checks that can be electronically printed via accounting software program.
Safe check transactions
Check receipts and payments are a vital part of business. Although digital payments are on a rise, the expenses and additional record keeping that come with it are not ideal for all businesses. Therefore, while making check transactions, you must practice safety measures to prevent fraud.
These are a few basic pointers that ensure safe check transactions.
A good bookkeeping system allows you to manage checks efficiently. Keeping your personal and professional finances separate is essential for a well-organized financial system. Managing your expenses, keeping track of the budget, timely review of financial statements, a scheduled payroll system, etc are essentials for efficient financial management. While the task becomes easy with an accounting software, even otherwise, you can schedule time for financial review weekly or monthly to keep yourself updated. Staying updated on financial assets and liabilities allow you to manage check transactions.
These accounting tips for small business allow you better management of your finances. In a competitive era, as a business owner you juggle with several responsibilities, hardly leaving time for financial management. Hiring professional accounting services relieves you of the stress while ensuring efficient financial management.
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Reducing cost is one of the ways to increase your bottom-line. However, it is not easy to reduce cost. For this purpose, it is important to know about the different kinds of costs incurred by the business. The overhead cost that includes rent, repairs, office supplies, insurance, advertising, and interest is one such cost incurred by the business. These costs do not generate revenue directly but are necessary to carry out the business operations. If you want to maximize your revenue, you can do so by reducing your overhead cost. But how do you account for the overhead cost? The following are ways to account for overhead cost.
Know your overhead cost
Understand the difference between different costs incurred for your business. The overhead costs are costs that do not incur in the direct process of your products. They are indirectly incurred to run the business. Usually, the common costs involved in the making of the products include the cost of materials and labor. So be sure that you know your overhead cost before going further with the calculation.
List your overhead cost
Keep a record of all your overhead cost that you incur either for a monthly or yearly basis. Be consistent with the time period. If you are considering monthly records of your overhead costs, then the same should be with the direct costs. You can make use of computer program to keep a record of all the overhead costs incurred for the month.
Account for the common overhead cost
In every business operations, there are some commonly incurred costs. These costs are not in the company’s hand to reduce it. Therefore, if you are looking to reduce the overhead cost, make a note of these costs separately. Some of the common overhead costs include insurance, taxes, licensing fees and other legal expenses.
Calculate the overhead cost
Once you have figured out all your overhead cost, calculate the entire amount. Also, calculate the total amount of all the costs incurred by your organization. You can decide to calculate your overhead cost in percentage terms. Calculate the overhead cost percentage by dividing the overhead cost by the total cost and multiply by 100. This will give you the proportion of your overhead cost with respect to the total cost incurred by you. Similarly, you can calculate the percentage of overhead cost with respect to the sales revenue. Divide the overhead cost by the total revenue from sales to get the percentage figure. Compare your overhead cost percentages with similar businesses in the industry. If your cost is more compared to other businesses, you may consider reducing some of your overhead costs like the advertising expenditure or selling and distribution expense.
When you account for overhead cost, consider the size of your business as well. Large businesses may have a higher percentage of overhead expenses as compared to small businesses. Having the knowledge about your overhead cost is beneficial for small businesses to decide on the future course of action. For instance, if the overhead cost is less compared to others, then you may decide to spend more on expenses that are going to increase sales. Hence, it is important that all businesses are aware of their overhead costs so that you can cut the cost and keep your business afloat. If you need help in accounting cost for your business, then get in touch with an expert accounting firm.
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You never know what’s in store for your business in the new year. 2017 can present you with really good opportunities or threats for your business. Therefore, you should be prepared for what comes your way and thus, create a suitable plan to take advantage of opportunities and overcome any risks. One way to be prepared is to create a financial plan. Financial planning is important because any unforeseen events that affect your business can have a direct impact on your finances. So if you have not planned your finances for this year, here’s what you need to do.
Update the information
Before you begin planning your finances, keep yourself updated with the latest happenings in the business environment and also within your company. This includes analyzing your competitors’ strategies, evaluating of your marketing costs, settling transactions and others. Once you are aware of this information, it serves as a guide to planning for your finances.
Estimate your expenditure
You need to decide the amount of funds you will spend in 2017. A periodic estimation on a monthly or a quarterly basis is suggested. This is because in case you happen to overspend in a month, then you can control the spending for the upcoming months. As a result, you are able to keep control on the amount of money that you spend. Moreover, you need to decide how much funds need to be allocated for different departments within your company. For this purpose, you need to consult the heads of all the departments in your company.
Estimate your revenue
Once you estimate your expenditure, you need to decide how much profits you expect in the year. For this purpose, you should figure out the sources of revenue. Accordingly, you may consider your investment options, increase the prices of your products, reduce the discounts offered, and others.
Update on tax policies
Ensure that you are aware of the 2017 changes in tax policies. There may be some tax benefits that you can avail by investing in specified portfolios. Accordingly, you can decide in advance where to spend or invest your finances to get the benefits. If you are not well-versed with tax matters, then take the help of a professional tax consultant.
Check the latest salary guide
Check the latest industry salary guides to determine increment for your employees. Moreover, you can compare your pay structure with industry standards and alter your salary structure while recruiting new employees or providing incentives to the existing employees. Thus, you need to make sure that you have sufficient funds available if you need to increase their salaries.
Keep contingency funds
Risks are a part of every business, therefore; you need to keep aside a specific amount of funds in case of an emergency. Contingency funds should be able to keep your business running for a few months. If you do not have sufficient funds to handle a crisis, then loans or borrowing are your best options. Therefore, when you plan for your finances, do not forget to create a reserve account for your business.
When you carry out your financial planning, follow these points to ensure you do not miss out on anything. Good financial planning ensures that your operations run smoothly and you do not face any cash flow problems. If you need more tips on managing your finances, then get in touch with an expert accounting firm in Edmonton.
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Do you have some clients who always delay your payments? Are unpaid invoices affecting your cash flow? Is your client always busy or comes up with an excuse when you ask about the payment? Well, these are some of the commonly faced problems by small businesses. An untimely or worse unpaid invoice not only affects the profitability of your organization but also causes other problems in your finances. So how do you deal with overdue invoices? Here’s what you should do to overcome the problem of overdue invoices.
Warn About Late Payments
This is a precautionary step. When you deal with your client, it is important that they realize the implication of late payments. This can be in the form of charging an interest for the overdue amount. Charging an interest is usually best for a client who often delays the payments. If it is a client that regularly pays you on time but misses out on the payment once in a while, then you should give the client some leverage and not charge the interest. Instead, inform the client through calls or emails about the outstanding payment. It is important to realize that you do not lose out on a client for not making the payments on time for the first time. Late payments interest is best suited for clients who delay the payment often.
If you find out that the clients often delays the payment you can offer them rebates if they pay on time or much before the due date. The main aim is to get the money flowing into your business and avoid bad debts. So instead of chasing after clients for payment, it’s best that you give them some discount for paying early. However, care should be taken that you do not make it a habit of offering rebates to get payments on time. Moreover, you should consider offering rebates only if the amount due is large.
Hire the Services of a Professional Accountant
Are you caught up in dealing with unpaid invoices? One of the ways to keep you away from the collection process and focus on other important task is to hire the services of a professional bookkeeping and accounting company. Give the responsibility of collecting the amount that is due to your accounting partner. The accounting partner will ensure that they chase behind these clients in a professional manner and that you are able to get your payments on time.
Send Constant Reminders
If your client is very adamant on not paying for your invoices even after the due date, then you should start by sending constant reminders. You may consider sending an email or calling the client every day to ask about the payment. However, be careful that you do not lose your cool and ask the client in a friendly manner about the payment. If you don’t want to run after clients on long calls, then use the accounting software. The accounting software is able to generate automatic reminder emails that are sent at regular intervals until you receive the invoice in full payment.
Consider the nature of clients and decide whether you want to offer any credit to a particular client. Accepting credit cards from your customers or clients is another option in case the client does not have money at present. Collecting payments from unpaid invoices is a tedious job and in the process, you may get frustrated running after the clients. Therefore, it is recommended that you take help of a professional accounting service firm who look after the collection process and ensure that you do not miss out on any payments from your clients.
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Have you started a new business? Or, are you considering starting your own business? When you begin your business, there are multiple things that you need to take into account. One of the most important things is to create a balance sheet for your business organization. The balance sheet is important to show the financial transactions taking place throughout the year and thus, it is used as a mechanism to analyze the financial position of the organization. But, you may be wondering how to make a balance sheet. Here are some steps to help you create your balance sheet.
1. Know the Basics
The balance sheet has two separate columns: liabilities and assets. The liabilities include all the debts of the company and the owner’s share capital. The debts include all the borrowing in the form of loans from financial institutions, debentures, and bonds. The assets include all the resources of the organization. This would include long-term or fixed assets such as building, plant and machinery, office equipment and furniture. The short-term, or current assets, includes cash in hand, bills receivable, inventory and prepaid expenses to name a few. The asset section would also include intangible assets such as goodwill, trademarks, copyrights and others. The sum total of all the liabilities equals to the total of all the assets.
2. Prepare the Format
When you prepare the balance sheet, the company’s name should be mentioned above as the header along with the time period for which the balance sheet is made. The time period can be either quarterly or on a yearly basis. However, for convenience purpose, professional accountants recommend preparing the balance sheet for the entire year.
3. List all Your Assets
The next step is to list and calculate the worth of all your assets for the given period of time. Make a separate section for fixed and current assets. The fixed assets are assets that can be used by the business for more than a year. It includes the intangible assets as well. The current assets are assets that can be turned into liquid cash within a short period of time, usually within a year.
4. List all Your Liabilities
Make a list of all the current liabilities for the year. Current liabilities are liabilities that are due within a year. It includes payment to creditors, accrued liabilities, interest on loans and others. Then, make a list of long-term liabilities that includes the capital invested by owners and the borrowings from others. The owner’s capital would include the amount invested by the owners, the retained earning that is available in the form of reserves and surplus and the net profit after the necessary deductions.
5. Calculate Assets and Liabilities
Calculate the total of all your assets and mention it as "Total Assets." Similarly, calculate the total of all your liabilities and mention it as "Total Liabilities."The total of both the columns should be the same. If the amounts do not match, then recheck your balance sheet in case you missed out on any information or made calculation error.
Now you know how to make a balance sheet, so get started with making one for your business. Make sure that you keep a record of all your transaction in order to prepare an accurate balance sheet. Initially, you can find it easy to make a balance on your own but as the business grows and transactions increase you need an accountant to manage the work. In case you are not able to handle the excess work, then outsource your bookkeeping to a professional accountancy firm in Edmonton or hire an accountant for your company.
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A bookkeeper forms an important part of your business operations. In case your bookkeeper decides to call it quits or you decide to release him, you should be prepared with a backup plan. The immediate solution would be searching for a new bookkeeper from an accounting service in Alberta. But before you go ahead with hiring a new bookkeeper, you need to get back all the details from old bookkeeper. Here is a list of things that you should consider when your bookkeeper leaves.
Inform Your Staff
Make sure that you inform your staff immediately that your bookkeeper has left. This may mean that your employees would need to be prepared for additional work in the future until you find a new bookkeeper. The staff that deals with the accounting work should be informed that any details of your future transaction should not be shared with your accountant. This is important because your current staff may provide all the details to the ex-accountant if they are unaware. Moreover, if the accountant does not respond back then you may lose out on some important financial transactions. Therefore, tell your staff not to be dependent on the accountant for any work unless you find a suitable replacement.
Get Your Data Back
This is another important thing that you should do without fail. Although you may not want to get in touch with your ex-accountant, you should get all your financial transactions and data that were managed by him. It is your right to get the desired information of all your latest financial reports and files. The old bookkeeper may send all the details through a QuickBooks file or another bookkeeping software. So when you hire your new accountant, ensure that your new bookkeeper is aware of the latest technologies.
Hire a Temporary Accountant
You can hire someone who is used to deal with your ex-accountant within your organization itself. Take the help of this employee to manage your accounts temporarily. Another way to manage this crisis situation is to get in touch with a professional accountant firm in Edmonton. In case you are unsure if the accountant is right for you, you can take help of their services for a short time and then decide accordingly whether you want them as a permanent solution for your bookkeeping needs.
Plan for a New Accountant
This goes without saying but you need to get a new accountant for your business. In fact, you should consider outsourcing your bookkeeping service. If you outsource your bookkeeping service, you don’t have to worry as such an incident won’t happen again. Before you select an accountant here are some of the things that you need to consider before hiring a new accountant are:
Also, provide all the necessary information about your business that the accountant needs to know before going ahead with hiring the professional service permanently.
These are some of the things that you need to do when your accountant leaves. Also, when it comes to choosing a new accountant, get in touch with some accounting services in Alberta to help you out. A professional and specialized bookkeeping and accounting firm will ensure that you are not abandoned halfway through the financial year. Furthermore, a professional accounting and bookkeeping firm will offer other financial services like tax consultancy in Edmonton or payroll services which are beneficial for your business.