To maximize your company’s profits, you have to be deeply aware of its finances. However, it’s difficult to stay consistently vigilant. Keeping track of every expense and source of income can quickly get overwhelming—you’re not an omniscient deity (at least, we don’t think you are). Owning a small business requires you to wear many hats and it’s natural if something falls by the wayside.
There are some steps you can take to make monitoring your company’s finances easier and take up less time. Some will require upfront work, but they’ll pay dividends down the road. With that in mind, here are five options to consider that will make your workload lighter over time.
1. Hire an Accountant
The clearest way to keep track of your company’s finances is to hire an accountant. That way you can offload the recordkeeping to someone else. They also can provide financial consultation and help with regulatory compliance.
Smaller companies should generally outsource their accounting to an outside firm and let the larger corporations hire full-time accountants. It just depends on the volume of transactions your business is involved in. If you have the extra cash to employ someone new, then consider making your next hire an accountant.
2. Use Software
If you don’t have the budget to onboard a new employee, there are also plenty of cheaper options that are effective. Programs like accounting practice management software can make the process a lot smoother without costing as much as a full-time accountant. Cloud accounting tools such as Microsoft Access Cloud Database hosted on Cloud Desktop can be handy for your accounting/bookkeeping needs.
These programs will assist with organization and make your bookkeeping more efficient. You’ll be less likely to make mistakes while saving time in the process.
3. Keep Personal & Business Accounts Separate
No matter how personal your business’s success is to you, it’s banking should be separated from your finances. That means opening three accounts for your business:
- Checking – Put money here that needs to be easily accessible
- Savings – Cash transferred into this account should be for long-term projects and emergencies
- Credit Card – Use this credit line for day-to-day purchasing
Having a separate business account will make things much easier. Bank statements can be used to check up on your finances every month. You’ll know exactly what your business expenses are, and doing your taxes will be a lot easier.
4. Stay on Top of Invoicing
Coming at the end of a job, it can be easy to forget or put off sending out invoices. Take enough time to distribute them and you’ll have a messy pile of invoices that don’t make sense anymore. You can prevent this by making sure to send them out in a timely manner.
If you don’t bill your clients and leave a clear paper trail, you might even miss some income. A lot of accounting software will also include invoicing options that allow for a more integrated workflow. Utilize those features to make sure you avoid the painful task of going through a backlog of invoices.
5. Digitize Hard Copies
Purchase a flat-bed scanner to turn all of your papers into digital files. From there, you can organize all of your important information through intelligent software. The physical paper copies can be stored in a file cabinet (for those with some Luddite-tendencies) after being entered into the system as well.
Going completely paperless is an option too. That will get rid of the need to scan anything and is environmentally friendly to boot. Either way, digitizing your new and existing files can help with organization, accountability, and tracking your company’s finances.
The View from the Panopticon
Running your own business will never be easy. You already know how much work is required of you. Anything that allows you to maximize your profits with less effort should be taken advantage of. With a complete understanding of your small business finances, you’ll be able to make smarter decisions and scale your business.