Handling your business’ accounting can be tricky. There is plenty of room for a mistake to be made and it’s easy to overcomplicate the process.
One reason overwhelm may start to creep in is because you don’t have a good understanding of your finances, however, you are not alone. A recent study shows 60% of businesses reported feeling they don’t have a good working knowledge of their finances/accounting.
It’s a huge problem, but it doesn’t have to be.
As a small business owner it is important you have at least a general idea of what is going on within your accounting system, and it’s even more important to find ways to simplify that system.
Here’s how.
Create and Implement Processes That Work For Your Business
Nearly every aspect of your business’ accounting is completed by following some sort of system or process you’ve put into place. You’ve either created them or they fell into place somewhere along the way. You likely have a process for:
- Payroll
- Accounts receivables
- Generating reports
- Creating sales goals
- Etc.
The easiest way to start simplifying your accounting as a whole is to start simplifying your individual processes. If these are quick and understandable, you’ll avoid frustration and be able to comprehend where your numbers are coming from.
While it’s important that the system you chose works best for your business, automation is a superior option. It virtually eliminates any work by hand, calculating everything for you. It can be as simple as inputting the right numbers.
Pay Close Attention to Your Budget, Expenses, and Forecasts
Once you’ve figured out the easiest processes for your business, you should start paying closer attention to the reports you (likely) created at the beginning of the year. They give you a great idea of what is and should be going on in your business.
Budget and Expenses
Because your expenses are used to create your budgets, these two go hand in hand. You’ll want to make sure your spending throughout the year is following along closely with the budget you created at the beginning of the year. This keeps your spending on track.
If you begin to notice areas of over or underspending, you’ll be in a great position to make adjustments. The adjustments now will save you from any surprises at year-end.
Forecasts
Your forecasts are also a great tool for keeping you on track. Again, if you notice areas of your actuals that are not closely aligned with where you predicted you’d be in your forecasts, there is likely an area of your finances that could use some adjustments.
Once you get into the habit of making these adjustments throughout the year, there will be no surprises at year-end, and closing the books will be a breeze.
Set Goals
Setting goals creates a benchmark for your finances. When goals are in place, you have a clear focus and they can serve as a point of reference for decision-making.
To get the most out of your goals, you should have overarching goals and smaller goals that feed into them.
Here is an example:
Overarching goal: You want to increase sales this year by 15%.
Smaller goal: You will make an extra three sales a month because that will get you to a 15% increase for the year.
This creates focus and will put you in a position to make financial decisions that drive your business forward.
Establish a Routine
Creating and establishing a routine is a very important step in simplifying your business’ accounting. Staying on top of it, and not waiting until tax time, eliminates the stress and allows you to keep a closer watch on everything throughout the year.
It may seem daunting, but establishing a routine is actually simple with a little effort. All you have to do is carve out set times each week or month to create a certain task. For example, managing your cash flow is key to a strong financial position and should be monitored often. Set a time at the beginning of each month to really dive into your cash flow to see where you are at. Setting a plan helps you get around the “what should I do now moment” and will keep you on track.
Work With an Experienced Accounting Partner
Creating and implementing processes that work for your business, paying close attention to your expenses, budgets, and forecasts, setting goals, and establishing a routine will do wonders in simplifying your business’ accounting. However, one of the more effective ways to do this is by working with an experienced accounting partner. They will ensure all of these steps are being done, as well as take the complicated and confusing aspects of handling your finances off your plate.
Adian Professional Corporation is the perfect accounting partner to turn to. We will work with you to simplify your accounting and bookkeeping, optimize performance and drive higher profits, and proactively plan your taxes to make your business thrive.
To learn more ways Adian Professional Corporation can help you, see our full list of services here.