With an abundance of cloud accounting programs up for grabs, it’s now easier than ever for small businesses to keep their own books in order. But with so many different options, are business owners properly informed or are they overlooking important details when managing their company’s finances?
As a small business owner, creating and maintaining a reliable budget is important to keeping your finances in check. However, you will also want to look into the array of cloud accounting technology out there that takes over time-consuming tasks, offers your financials at a glance, and makes growing your business that much simpler. Here are a few tips to managing your small business finances.
Switch To The Cloud
As a small business owner, you have plenty of time-consuming tasks to worry about—sitting down to do your bookkeeping doesn’t have to one of them. The efficient and time-saving mobility of having your data and software on-the-go with you allows you to track your income and expenses on the fly. Received a payment from a customer in person? Instantly record that transaction on your phone so you don’t have to sit down and recount later.
Turns out we’re not the only ones who suggest cloud-based accounting. Senior Director of Product Marketing of Oracle + NetSuite, Tom Kelly, says “If you are not leveraging the Cloud to streamline your accounting processes, you need to be. Everything from your ERP to how you manage the travel and expense report process should be Cloud-based.”
He adds, “Cloud based accounting allows a small company the ability to focus on the things that matter most versus focusing too much time and resources on administrative activities.”
Have all your financial reports (your income statement, balance sheet, and more) at the palm of your hand without any additional effort. Kashoo gives you the ability to see exactly where your company stands financially, at any given moment.
Automate Your Bookkeeping
Of all the benefits that automating your bookkeeping can offer your small business, the ability to connect your books to your bank account is definitely a key feature to note.
Sync your bank accounts with Kashoo with over 5000 bank data feeds. This allows you to keep track of business profits and expenses using an app that directly syncs with your bank account which will automatically pull transactions into your accounting software. Eliminate the task of manually verifying your transactions will save you tons of time and empowers you with real-time profit and tax estimates—allowing you to spend more time on growing your business. Not to mention it makes reconciling THAT much easier.
If you are operating on a project-to-project basis, you know that every client is different and no two projects will have the same result. You can rarely predict when a project will go over budget.
According to Doug Keller, Financial Planner at Peak Personal Finance, “so much of business is planning and reacting to the unexpected.”
Failing to anticipate an expense or its magnitude could prove disastrous and cripple the organization before it was able grow. Overestimating expenses can counter this, and protect small businesses from the unpredictable—including financial risk.
Look Closely at Your Sales Cycle
Fluctuating through busy and slow periods over the course of the year is completely normal. If your business has an “off season”, you will need to pay extra close attention to your expenses during that time. In fact, there is much to learn from your sales cycle, including your downtime.
Use your downtime to ramp up your marketing efforts to prevent profit generation from screeching to a halt. Slower seasons are a great time to revisit your marketing and customer acquisition plan to determine how to market to your customers in new and creative ways.
Another tip to consider is to try to have extra money in your bank during the off season. Whether you do that by putting money aside throughout the rest of the year, or cutting down on expenses during this time, it’s important to have some wiggle room while your business is slow.
Separate Personal vs. Business Expenses
One of the biggest red flags that the CRA looks for is conflation of personal and business expenses.
Many small business accounting apps now allow you to isolate personal expenses from business expenses. However, the best way to avoid getting audited is to create separate personal and business accounts.
According to Joshua Zimmelman, owner of Westwood Tax & Consulting, setting up separate checking, savings, and credit card accounts for your business allows you to “keep track of your business spending without it getting mixed up with your personal spending.” He adds, “It will make figuring out your deductions and filing your tax return so much easier.”
For example, if you use your cell phone for both business and personal purposes, you can deduct a percentage of the expenses on your tax return based on the percentage of use but you’ll need detailed call logs and other documentation to back it up. Mileage to and from business meetings work the same way—save those receipts, or better yet, log them in Kashoo so that you never have to look for them again!