3 Essential Accounting Hacks for Small Business Owners
No matter your industry or the services your small business provides, financial management is a key element of day-to-day operations. And it’s something that many business owners struggle with. Fortunately, today’s digital marketplace offers myriad solutions to all your accounting and finance-related problems. Not only that, a lot of them are both simple and affordable. Even if you don’t currently employ a financial advisor or accountant, you can successfully utilize a DIY approach to the financial management of your company.
Here are some of our favorite accounting hacks for small business owners.
Take Advantage of Tax Automation Software
According to tax professionals at Villanova University, automated tax preparation and calculation may reduce errors and time spent on the tedious task, as well as boost accuracy. Certain tax automation programs have proven to reduce the time spent on sales tax calculation by at least half.
The key to successfully implementing automated tax software into your business plan is ensuring proper connection between the software and your business’ financial information or spreadsheets. Furthermore, don’t make the mistake of completely replacing a human accountant or tax professional with software. The two go together when it comes to automated tax prep, as even the most accurate, efficient software isn’t autonomous. A set of human eyes to look over the final tax reports is integral to the process.
One of the most notable benefits of making tax software part of your business plan is its low overhead cost. The best tax software ranges in price from about $70 to $160. Keep in mind that you’ll also have to shell out filing fees at both the local and state level.
Don’t Underestimate the Power of Financial Statement Analysis
Increasing revenue and understanding where and how your business can improve are essential elements within the long-term growth plan of every small business. If you want a useable picture of where your business stands financially, you’re a prime candidate for financial statement analysis. Conducting a FSA on either an internal or external basis helps small businesses discover their liquidity and solvency potential.
An external FSA is one that’s conducted by an outside professional, such as a credit agency, government agency or investor. While it doesn’t seem like a priority, it’s best to be proactive regarding external analysis. Ensuring that your statements are transparent, up-to-date and well organized will help streamline the external FSA process.
On an internal level, objectivity is the key to analytical success. So, it’s best to turn the job over to a capable corporate accountant rather than taking on the job yourself. Your chosen financial professional will review a variety of items during the internal FSA process, including your company’s:
- Balance sheet
- Statement of cash flows
- Income statement
Your business’s potential for growth may directly hinge on the accuracy of your financial statements. A clear snapshot of your finances serves as an indispensable tool for making informed decisions regarding future investments.
Declutter Your Financial Statements
You can help streamline the analysis process by ensuring that your company’s financial data is easy to read and interpret. Keep in mind that there are many pieces within your company’s financial analysis puzzle. It’s in your best interest to make accounting a high priority and organize your paperwork every step of the way. Conduct regular audits, keep your eye on market trends and how they relate to your profit margins and always maintain orderly financial statements.
Creating an Excel spreadsheet is a simple way to keep your bank statements presentable and up-to-date. Your accountant or financial advisor will import your company’s bank statement in the form of a CSV file, clean up the bank activity page and then load it into PivotTable.
The file cleaning process involves removing any unnecessary columns or rows in Excel, adding new columns as appropriate, and labeling everything accordingly. Once the now-pristine summary is properly loaded in PivotTable, your accountant can easily verify the accuracy of your bank statement. Following your financial decluttering, it will be much easier for you to spot problematic expenses and identify your company’s economic strengths and weaknesses.
While it seems almost too simple to be a viable solution, business management software can help boost the efficiency and revenue capacity of your small business. The potential benefits of partnering capable software with effective accounting practices are myriad. They include, but are not limited to, improved communication, data that’s easily accessible and satisfied customers. These can all ultimately foster an increased bottom line.
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