Every manufacturing or small business owner knows how hard it is to stay on top of your finances. A common mistake most first-time business owners make is to ignore good accounting practices because you have ‘just started out’. Sorry to burst your little bubble, but this lapse in keeping your finances in order could cost you dearly. Worry not! We’ve put together five easy tips to help you get your business’s accounting in order.
Separate out your bank accounts
Most first-time business owners think it’s okay to use your personal bank and credit card accounts for their business needs. But this could only become complicated and troublesome later on. By separating out your business and personal accounts, you will be able to keep track of all deductible expenses and save you hours of work and re-work in the future.
Track every expense
Make a habit of keeping track of every expense in your business, however small it may be. Categorise every expense and track your cash flow. Using your business credit card to pay for your business expenses makes it easier to track and reduces the number of payment receipts in your wallet. But if cash transaction is the only option, remember to update it in an accounting software to save yourself hours of sifting through receipts.
Update your books
Bookkeeping is an important aspect of accounting. Set aside some time every week to regularly go through and update your company’s books. And once you’ve set that time aside, make sure you stick to it no matter what!
Account for labour costs
Many a time, business owners forget to account for wages paid to labourers or daily wage workers. Make it a point to write down or keep a track of every penny spent on factory floor wages or paid towards such costs.
Make sure you get paid!
Remember to follow up on any kind of payment due to you, invoices or receivables. Maintain proper records so that you do not have to collect payments late. Late payments could affect your business’s cash flow and make it hard for you to stay afloat. Keep a tab on when invoices are paid, which customers pay on time, which customers default, etc.
If all else fails or if you find accounting too daunting, hire a professional accountant! The money you spend today will save you so much more tomorrow! It’s important to learn good accounting practices to ensure the financial well-being of your business. And we hope you can use these tips to achieve just that!