Financial independence is not a concept that is limited to personal finances; also when running our own business, we must know in depth the processes to control the accounting of a venture. processes to control the accounting of an enterpriseWe can save ourselves problems at the end of the month due to unbalanced accounts or pending taxes to be paid.
Use these three steps as a foundation to start running your Accounting and Financials effectively.
1) Record the income and expenses of your operation.
The first step is to record the daily movements of your business, although this exercise should go beyond completing an Excel or a control sheet with the money that came in from Sales. An easy way to start is to automate the processes of Invoicing and Purchasing, which have the biggest impact on your business.which have the biggest impact on your income and expenses.
There are multiple programs that will help you create quotes, generate invoices or record the costs of materials you purchased to update your Inventory. And the biggest advantage is in the downloadable or synchronized reports to streamline your accounting analysis of each incoming or outgoing movement.
Video: How to Manage Small Business Finances
2) Classify your Accounting Accounts.
The Accounting Accounts are the backbone of the Accounting of a company or business, and adapting them to the needs of your company will be the key to efficient decision making.and adapting them to the needs of your company will be the key to efficient decision making.
Not all expenses or income are the same. Identify what classification each one will have, between active or passive records, and define basic aspects of your operation such as the purchase of materials ("Purchases" account, for example), or income movements to the bank ("Bank" account, for example). Among our accounting resourcesWe include a predefined Chart of Accounts to start with a basic accounting record:
- Box
- Bank(s)
- Accounts Receivable (A/R) - Trade receivables
- Merchandise and Raw Material Inventory
- Accounts Payable (A/P) - Accounts Payable (A/P) - Suppliers
- Loans Payable
- Equipment and Furniture Costs
- Fixed Assets
- Taxes and Withholdings
- Salaries
- Utilities
- Reservations
- Discounts and Returns
- Miscellaneous
By having a clear record of each of your Accounts, it will be easier to understand the performance of your business, such as determining which products are most profitable by comparing their costs against the revenue they generate. Once you begin these basic operations, you'll move on to big-league accounting activities such as creating a project budget, planning investments that are profitable over the long term, and being prepared to present accurate information to an accountant or auditor.
3) Dedicate weekly spaces to learn and plan better.
Running a business until it grows takes hard work; ensure that every week you learn how to organize every process of your production, so when the end of the month comes you will know what aspects to study to plan more sales in the next 30 days.
Also, you should aim to connect with an accountant or financial professional who will provide you with the resources to formalize processes such as the payment of taxes and other tax obligations of the country, depending on the type of taxpayer that is your business.depending on the type of taxpayer your business is.
Use this guide to learn more about Small Business Finance.
Once you integrate these routines into your day-to-day life, you can move on to the next step: moving from Excel spreadsheets to a more advanced recording system that allows you to control your daily balances from anywhere, thanks to the reporting systems available in the Cloud.