As a small business owner starting a new franchise, there always seem to be new practices to consider. There are a lot of details to implement, tasks to complete, and customers to satisfy. Although you may start out taking care of your company’s accounting services by yourself, this will become increasingly difficult to maintain as you grow. Eventually, you will realize that you need to focus on other business practices while leaving the bookkeeping tasks to the experts.
Essential Accounting Tips for Small Businesses
Whether you are preparing to add more staff to your team or looking into the benefits of our Indevia online bookkeeping services, you might benefit from following these five essential accounting tips for small businesses while you are still on your own. You can implement these ideas moving forward so you can more easily transition to a bigger team.
Track All of Your Expenses
Every single transaction that happens out of your company should be properly tracked and recorded. You may think that older expenses become obsolete as time goes on. Still, you never know when you need to reach back into your financial archive after being audited or after another type of tax inquiry. Not to mention, you need to be aware of how much money you have in your account at any given time.
Know the Costs of Labor
No matter what kind of franchise you own, it is almost a fact that you will be spending most of your budget on labor costs. According to a Paycor study, payroll can take up as much as 70% of the total financial budget. Despite this, it’s important to account for different pay rates and bonuses to ensure you aren’t over or under-paying your employees (or yourself). You can consider hiring a professional or investing in an automated software program to help kick things off on the right foot.
Always Expect a Big Expense
The old adage “expect the unexpected” goes a long way when managing your own small business. There will always be sudden costs or expenses that you need to take care of, and it’s important to have enough stored up in your nest to handle them. This could be something like equipment replacement or repair, capital loans, emergency maintenance, shipping changes, or something else entirely. Fortunately, many small businesses can deduct a loan during the startup phase, which will help cover these higher costs in the long run.
Keep Business and Personal Accounts Separate
A major action that any small business owner should take right off the bat is to keep personal and business expenses separate. It may seem tempting – and easy – to muddy the waters when first opening your own franchise. Maybe you want to use personal funds to set up your company and rent out a space. You should create a dedicated bank account and credit card to specifically be used for business expenses. You can also keep debts and taxes down by establishing company expenses right away, especially with a franchise or an LLC.
Speaking of taxes, it is illegal to claim personal expenses on a business-related tax return. Rather than face penalties, you should ensure a clear separation between personal and business transactions.
Automate Important Accounting Practices
Without a permanent team of accounting and bookkeeping professionals, managing everyday accounting tasks can get really overwhelming really fast. Prevent falling behind by investing in automated accounting software to always keep you on the right track. One of the biggest benefits of automated accounting is that you can rely on customized software to track your expenses and transactions in a hands-off way. When the time is right, you can receive curated metrics and data reports to help you make the most informed decision for your company moving forward.
Get Automatic Accounting Delivered Every Month!
Indevia offers monthly bookkeeping services to help franchisees and small business owners manage and track expenses without falling behind. Whether or not you want to add more humans to your team, you can rely on advanced automation to keep your company’s status safe and secure. Learn more about how bookkeeping services work when you get in touch with one of our Indevia bookkeeping experts today.