Despite the fact that owning and running a business is incredibly rewarding, it can also be extremely time-consuming. For example, more than 40 per cent of small business owners say they don’t take vacations or spend enough time with family and friends.
Even if you’re a hugely successful business owner and manage to maximise your profit margins, the one thing you can’t buy is time. For this reason, several entrepreneurs do whatever they can to find more hours in the day, starting with their accounting duties.
The following five tricks will do more than just save you time too – you’ll also end up with more money in your pocket to take that well-deserved vacation or buy the family some much-needed gifts.
1.Separate business and personal expenses
“Having a dedicated business bank account for checking and savings saves you precious man-hours when it’s time to tally up deductible business expenses,” says Forbes small business columnist Miriam Reimer. “Out of the gate, get used to using different bank accounts for business and personal purchases.”
Going through your personal banking statements every time you want to run a cash flow report or file your quarterly tax forms will take time that could be better spent elsewhere. You may also miss crucial expenses, which could lead to inaccurate financial reporting.
2.Automate accounting practices
No matter whether you use a bookkeeper or not, automating your accounting practices with the latest and greatest software makes perfect sense. All you need to do is link your business bank account to your software of choice and it will track expenses, send invoices and run reports automatically.
You may also be interested in accounts receivable software, which will send reminders for unpaid invoices and handle any late fees.
3.Regularly clean the books
Keeping the books might seem daunting, but with regularly updated records you can eliminate frantic searches for invoices or bills, make tax preparation faster and create financial reports for better business decisions.
“The best place to start is by bringing revenue, inventory and expense data up to date in your accounting software,” advises Alison Ball, Global Influencer Strategy at Intuit. “Next, reconcile bank accounts. Then set a regular time each week to keep everything current. You’ll quickly notice the extra time.”
4.Expect and allow for major expenses
From replacing broken machinery to upgrading computer equipment, every business will have certain expenses that can’t be avoided. The trick is to allow for and expect major ones.
Thankfully, the IRS provision called Section 179 lets you deduct up to $1 million of business property and equipment in the year of purchase, instead of depreciating the equipment year over year.
5.Establish clear payment terms
If your business has an invoicing system that requires you to wait for full payment, you could find yourself struggling with cash flow. Sending an invoice is only the beginning of the process of getting paid.
“It’s important that you establish clear invoice payment terms from the get-go, so your cash flow isn’t held up by late payments from customers who don’t understand your accounting needs,” says Eric Goldschein, editor and writer at Fundera.