Can you imagine the day when you finally launch your small business? You’ll probably be elated because the project you’ve been planning for days and nights has finally come to fruition. And because you have planned your financial management strategy ahead of time, you can also feel confident that your business funds are in place and will be managed well.
Do you wonder how you can make this picture come to life? A well-planned and executed financial management strategy can help. This article will give you a definitive guide on what you must do from day one of your business, so read on!
Set Up Your Bookkeeping and Accounting Right Away
As a beginner, you may still be slightly confused with the difference between bookkeeping and accounting. You might think that the two are the same, but they’re two distinct steps. Bookkeeping is the first stage of financial management. Bookkeeping is the task of monitoring all company transactions and recording and organizing them in books. Then, accounting is the stage when an accountant makes sense of the numbers through reports.
Get these tasks rolling with trained individuals before you launch your business. You can hire in-house experts or delegate the tasks to a bookkeeping company or freelancers, depending on which you think fits your business best. But first, look at the advantages and disadvantages of in-house, freelance, and agency bookkeeping and accounting before agreeing to anything. This ensures that you are making the correct decision and that your investment will be worth it.
Choose Reliable Software
Whichever bookkeeping and accounting assistance you sign-up for, your accountant and bookkeeper should be well-versed in the latest software. The bookkeeper or accountant should know how to use at least these tools: QuickBooks Online, Xero, Sage50 Cloud, or Wave. These bookkeeping and accounting software help automate financial data acquisition and categorization from various channels, without the risk of human errors.
These software are also equipped with invoice generation, ensuring that the payments you receive or make are on time. Despite being conveniently accessible on various platforms like phones and desktops, these tools are protected through cloud-based security.
Know Your Role as a Business Owner
While it seems like experts and software are enough to manage your finances, you have a role to play too. Exert effort to know basic accounting and bookkeeping terms, and learn to read and analyze data. As a business owner, you must be on top of your finances. It should be the first thing you check during office hours.
Begin your day by checking out the books to see if the details are correct. Work side-by-side with your accountant and bookkeeper to ensure data is accurate. Doing so will help you later during tax time, when you can be sure that the reports you see are accurate.
When you stay updated with your finances, you can also easily check whether your business plans are working well. If they are not, then you can immediately make changes to keep your business on track with its financial goals.
Arm Yourself with Tax Knowledge
Speaking of exerting effort to know more about business finances, taxation is also a field you at least must know a bit about. Know about corporate income tax, as this is an obligation you must pay. When you grow your business and hire employees, you’ll be handling their income tax returns. For every sale you make, you need to compute sales taxes, collect, and remit them.
Knowing these taxes will guide you in your scheduled book checks. You’ll know when the software jotted down the correct tax. You’ll also know how much your taxes are and your after-tax income for any investments to make in growing your business. If you want to strategize on how to lower your taxes, you can also do this through tax planning sessions with your accountant and bookkeeper.
Get Reports Regularly
Aside from checking the details regularly, you can also check the automated dashboard reports from software for your business’s financial health. Nevertheless, it is still best to hear from experts and meet with your financial management team for regular reports.
Experts suggest that the smaller your business, the more often you should get reports about your finances. This is so you can see alarming downward trends and address them immediately. And if there are positive trends, you can identify what you have been doing right and duplicate them for continuous success.
When you have an accountant on your team, they go the extra mile by giving sound suggestions to help you decide on your next steps. They’ll even guide you when it’s time to spread your wings and grow a new business.
Manage Your Finances from Day One
Managing your finances from day one is crucial to the success of your business. By setting up your bookkeeping and accounting correctly, choosing reliable software, and arming yourself with tax knowledge, you’ll be well on your way to keeping your finances in check. Finally, make sure to get reports regularly to track your progress and make necessary adjustments along the way.
Follow these tips, and you’re guaranteed a healthy financial future for your business!
Author’s Bio: Mike Pignatelli, CPA, is the CEO of Unloop Accounting, an agency built to meet the accounting needs of modern ecommerce businesses. As an experienced financial controller, Mike has worked with various seven-figure inventory businesses. Mike and his team are your go-to accountants if you need reliable data to make sound financial decisions.
