Starting and sustaining a small business is never easy and running it without proper access to financing and working capital is next to impossible. Finance and Accounting plays an existential role in the management of any small business as any business without control over money has no control over the business. Most small businesses fail due to cash flow problems and research has shown that more small businesses fail in a given year than are being started.
The solution to financial discipline for small businesses is to sensibly balance needs versus wants. Small businesses must persevere and plan to make sure that their records are complete and as correct as possible. With the expenses and income of the small business properly accounted for, the flow of money can be managed and thereby direct the course of the business. Good accounting practices have the advantage of keeping the small business in compliance with the law as without good accounting the business may end up paying the wrong amount of taxes.
Here are 5 Finance and Accounting Tips to Meet Business Challenges:
Use Accurate Invoicing:
Invoices contain specific customer’s information so it has to be processed and delivered swiftly and require the highest standards of accuracy. Having accurate and efficient invoicing system is critical for small businesses as they can ensure that they are getting paid for the work they have done or the products or service they have sold. By reviewing the invoices, the expenses of doing business can be controlled.
Always Keep the Exact Records:
Keeping system in place and having proper record is essential for small businesses. To draw up true and fair annual accounts, it is critical that your accounts are up to date and accurate. Careful record keeping can also help the small business with tax returns and also in the prevention of theft and fraud. It also helps small businesses in tracking expenses, creditors and debts, apply for funding, save accountancy costs and pay accurate tax on time.
Hire a Tax Professional to Handle Taxes:
Small business owners tend to do their taxes themselves and try to save some money. But not hiring a tax professional can cost the small business a lot down the road. It is critical for small businesses to hire the right tax professional with specific experience and knowledge to help save money. It is advisable to build a strong relationship with the tax professional so that they can be called at any time year-round.
Practice Generally Accepted Accounting Principles (GAAP):
GAAP is centered on assured principles that dictate to the accountants the items that have to be recognized in the financial statements, how the amounts and items must be displayed, which amounts have to be reported and what disclosures will be beneficial to the readers of the financial statements. GAAP instills a sense of trust among the people and stakeholders that the true performance of the small business is being shown to them. Adoption of GAAP principles can drive the accounting management in a new direction.
Have an Up-to-date Accounting System:
Sound accounting system which helps businesses to produce accurate and updated financial information is a must adopt for small businesses. Effective and efficient filling and documentation systems are also included in such systems. The persons that are usually involved in preparing financial information are also highly qualified.
Such accounting systems not only make every day work easier to perform, they also record accounting activities in the background when documents are being prepared. Saving accounting system for a business enterprise is too significant to ignore.
It takes discipline and desire along with the right systems and controls to manage the finances of a small business. Access to the right tools and resources and leveraging technological advances can drastically narrow the financing and accounting gap for small businesses.
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