Accurate accounting is necessary to succeed as a small business owner. Accounting is about more than making your payroll. Successful small business accounting is about using your financial information to move your business forward.
#1 Set Up a Dependable Invoice System
First, set up a dependable invoice system. You need to send out invoices right after your business does a job. The invoice should ideally be sent out the same day the job is complete, or the next business day after. Sending out invoices in a prompt manner can help ensure your invoices get paid. Make sure your invoices have a set deadline on them.
Don't just rely on mailing paper invoices; if you work with companies that do most of their communications and transactions online, respect that by sending them an email invoice as well.
As you get close to the deadline, send out a ten-day reminder and a five-day reminder. Sending out reminders can help make sure your invoices are paid on time. Make it even easier on your customers by offering online payment, and perhaps a discount for paying early. You need to make sure money is coming in when it is supposed to be.
#2 Have an Inventory System
Lost and stolen inventory can really cost you, especially when you run a small business. That is why you need to have a solid system for keeping track of your inventory. You need to have a system which allows you to keep track of the date items are purchased, assign stock numbers to your inventory, and keep track of when the items are sold and at what price they are sold at. The more organized you can be, the less money you will lose on lost and stolen inventory.
#3 Plan for Major Expenses
Finally, you need to be planning for major expenses. Major expenses do not have to be a surprise. You are going to have to replace things such as equipment and technology on a regular basis, which is why you need to have a dedicated savings account to funnel profit into. That way when you need to purchase equipment, you have your money to draw on and don't have to always take out a loan or take out a high-interest loan because you don't have a good financial profile.
Accounting is about more than your payroll. Accounting is about having a dependable invoice system, having an accurate inventory system, and planning ahead for major expenses. For more information, reach out to companies like Vlasac John M & Co.