Back to Blog
It is 2019, and not everyone is made for the 9 to 5 life today. People seeking to do their minds are everywhere and entrepreneurship seems promising for a life that doesn’t need a boss. Starting up your own business as a source of income is what many of us seek, but things go sideways for some. Reasons could be someone being treacherous or employees not liking the form of your work. A lot of times, the reason is just incomplete for the expenses you make for the business to run smoothly. Sometimes, in putting a business on the tracks and making it run, the capital input of the company dries in the first few years of initiation. This is the result of lack of experience for many young entrepreneurs.
When starting a business, the basic flow of thought of any beginner is towards the work that they will be doing in their business facility. For the financial management of the business, the easiest option would be to outsource your accounting through business services. But, there are some aspects of running a business in which the expenses go unnoticed and the business ends up having more expenditure than its profit. Hidden costs that can mess with the growth of your businesses must be on something you can’t turn a blind eye from.
Licenses and Permits
The days of barter are gone, and everything you earn has a share for the government as taxes. So eventually, the government needs to be informed before you set your foot in the market. Every new business needs permissions from the government and the local business community. Licenses for sale of objects and functioning hours are required for you to legally be on the track. Licensing and permits are seldom one time fees and require renewals as per the nature of your business. Always set aside some money for the renewals. You can join the local business networking organizations for benefits in the market and update of events and dates. Or you can hire a business service for consultation on starting a business.
Facility and Utilities
Running a business comes along with the requirement for a space to formalize your ideas into working for your profit. A start-up with just the founders or partners might not need anything more than a home office if its an online business. But as the nature of the business changes, having a professional space for working away from daily life becomes an obligation. Also, the utilities of such a facility that houses your work staff and other electronic gadgets, like computers, can run heavy on your pockets while they go unnoticed. Before you rent an office space, ask yourself what kind of facility is required for the nature of your business and see if a temporary office space works? Hiring a bookkeeper from business services for the proper calculation of your expenses can save you time and money.
Maintenance of Equipment and Upgrades
Even a small retail shop on the street corner requires equipment for functioning. At the beginning of a business, most entrepreneurs are into the development of their product or services and focus on the apparatus involved in the production and sale. In the enthusiasm of production and management of supplies, the smaller factors of the business, like the office equipment (computers, fax machines, copiers, etc.) and maintenance of the facility, are neglected. Sometimes, even the opportune equipment up-gradation in your workspace can save you future financial troubles on their maintenance. You can buy second-hand products and office equipment like desks and chairs on websites like eBay. However, you should never neglect the computers and laptops in your office and keep upgrading them according to the changing tech in the market.
Employees and Payrolls
Taking care of the people that create the wheels of your business and do their best to keep it rolling must be the most important point of focus. Proper budgeting of the employees who work under you is necessary to keep the running costs under control. The salaries, leaves, health insurance and training costs add up to external expenses. For the proper management of the compensation your employees get, you can hire a business service for payroll management. If you fail to provide the proper work environment, satisfactory salaries or wages and added benefits, you will most likely lose some good workers. Replacing an employee costs a part of the previous worker’s salary and might even require giving away more compensation to the replacement. Provide perks in your office space like refreshments for zoned out staff or allowing casual dressing with flexible timings.
Inventory loss or shrinkage is the loss of goods of sale to things like theft, damage, burglaries or faulty products. Shrinkage costs losses up to CA$ 4 billion every year to an average of Canadian retailers. Shrinkage costs add up over time and come up as a heavy loss on your hand. Inventory loss can be caused by both customer and employee theft. Prevention of shoplifting by employing security measures can decrease the amount of shrinkage. Insuring your warehouses from accidental damage will help you cope with the loss if the goods were lost to an accident like fire. Give allowances to employees to shop at the workplace for leaner rates. It will induce a sense of ownership and prevent internal thefts in your facility.
Running a successful business requires money and most of all, it eats up all of your time. Time is the most important resource for all of us. Tasks that are time-consuming and non-productive at the same time, are going to be an opportunity-killer for you. Tasks like bookkeeping can be outsourced to hired specialists from companies with business services. While the work is on someone else’s timeline, you can use the time to find opportunities for expansion or maintain a work-life balance to keep your happy juices flowing.
Starting a business is not a mammoth task but ensuring its success is. Not having complete information about the obligatory procedures and the risks involved in the earlier stages can lead to the business failing miserably in the market. If you’re someone setting off on a journey of business and entrepreneurship, hire a start-up consultant from a company providing business services in Alberta.
Back to Blog
Your business's accounting system is based on the bookkeeping process established to manage your company's funds. Bookkeeping records the financial transactions that are carried out during the course of business. When your business finances are in order, it becomes simpler to equip strategies that would bring success to your business. Here are a few strategies that would assist your business to achieve perpetual success.
Maintain Separate Business and Personal Finances
When running a business, it is important to engage organization funds for business use only. Using them for personal purposes not only affects the quantity in your business fund but also can invite legal complications. It could be a reason to pierce through the corporate veil and harm your business finances. Small businesses are managed by limited people, which makes it easier to cause a default whilst accessing the finances for the business. You should make it a point to open separate accounts each for personal and business finances. Using distinct bank accounts and credit cards for your business will not only help during tax filing processes but will also help you distinguish between the nature of your finances, thus uncomplicating the task of bookkeeping.
Hold Internal Control in Place
Having internal control over the company’s bookkeeping procedures and policies can expand your control over various finances and outtakes occurring in the business. When a transaction takes place, it is better to have an employee take down the transaction while another collects the fee. A third person can authorize the dealing. This measure of dividing work amongst the employees would keep more than one person in the loop and maintain accuracy while inputting data.
Plan Your Taxes Through the Year
Keeping in touch with your tax filing dates and requirements will not only save you time but also help you organize your expenses. You can plan the tax filing amounts and strategies well in advance to implement and pay smartly to avoid any costly penalties or burdens.
Follow a Specified Accounting Method
The standard accounting systems comprise of two accounting methods to be used in your business: cash basis accounting and accrual accounting. In the former method, cash is recorded when it is received by the business. This method is usually recommended to be used in businesses that strictly require making cash payments. In the accrual method of accounting, the matching principle of accounts is implemented, where the revenues and expenses are recorded as they occur. This method could be complicated because of the various rules it requires to be followed. Nonetheless, accrual accounting is your best choice while you opt for invoicing to clients. Your bookkeeping strategy should be built with an appropriate method that suits your business.
Track Expenses with Accounting Software
Recording expenses on a timely basis can be effective in many ways. From assisting in tax filing to helping in maintaining the books, a thorough record of the business finances is promising. Different accounting software are available to be used for tracking expenses and managing your accounts. Planning your expenses well in advance and building categories for them will ease the bookkeeping process. Choose to use an accounting software system that will not only help you with your current bookkeeping requirements but extend to a larger scope of work needs.
Focus on Tracking Performance Rather Than Plans
The best bookkeeping strategy to put in place is tracking the performance rather than plans built for the business. Most businesses chart plans or projects to undertake, which are then used to track the company's ongoing progress. When a plan is put in place, the financial budget of the business would be tracked and manufactured accordingly. On the other hand, if more focus is engaged in tracking the overall progress, it gives you a wider scope to compare financial figures compared to previous numbers and conclude strategically. Evaluating financial data monthly assists in building bookkeeping strategies for better results. For example, if growth in a company's finance margin over a period is visible due to a particular product, decisions of investing more into it can increase the annual cash flow.
Access Real-Time Data
Immediate access to the financial data of your business gives a larger scope to planning your company's finances. Your business may require you to deal with various critical information of outstanding account receivables or payables. With access to real-time data, it would be easier to develop strategic decisions and evaluate the current status of the business.
Follow Up on Bank Statements
Your bank statements are a compilation of the balances in your account and information on the complete stack of transactions. Conducting regular follow-ups makes it easier to review business proceedings thoroughly. Ideally, you can compare the information you’ve put in your company's books with the bank statement. This ensures a check over the presence of any discrepancies or any unauthorized transaction that may have taken place during the course of business.
Structure Accounts in Order
Structuring accounts according to categories eases the bookkeeping process. Well-categorized accounts would also make it easier to go back to them in the future if the need arises. The business’s receipts, records and any other information important for the bookkeeping process should be maintained in an orderly manner to suffice any requirements. This ensures efficient bookkeeping and aid in picking out any discrepancies.
The basic strategy your company should follow to is avoiding making bookkeeping mistakes to accomplish continuous success. Having said that, the above-mentioned strategies when implemented with prior consultation can help you achieve greater results. While you consult professional accountants, make sure to give them a true and fair view of your company to achieve the best results.