As an entrepreneur, you must be structured and not overlook anything. You must have an action plan to be able to reach your future goals. You also need to know how to reach your customers through effective marketing. Finally, it is important to be on top of your finances in order to make the decisions best suited to your situation. In order to do this, keep ALL your invoices and receipts. These will give you a comprehensive picture of your financial situation.
Read on to discover our tips to help you manage your business accounting successfully.
1- Sort your expenses by category
Sort your receipts and place them in different envelopes or in a compartmentalized binder. Also, since your expenses may not all be fully deductible, find a way to categorize items by deductibility. You could write a note or put a special stamp by category (100% deductible / partially deductible / non-deductible).
2- Keep up with the evolution of your sales
If you have an accounting software, you probably already know the evolution of your sales. You can also pull out a cash flow statement allowing you to know your profitability in the short term. In the event that you are not profitable, you could consider different solutions:
- Review your prices. Have you set the right price for your services? If you have doubts, try this magic formula to calculate your hourly rate:
Hourly rate = (desired annual salary + annual taxes + expenses + holidays and statutory holidays) / Number of hours worked
- Review your marketing strategy: are you targeting the right niche? Do you have good marketing tactics and strategies in place to target your potential customers?
- Look at your expenses: are they too high? Where could you save money?
- Look at your service offer: is it comprehensive enough?
3- Establish a billing method
As an entrepreneur, you most likely have to charge your customers. It is therefore important that you:
- Send professional and personalised invoices that include all essential elements to make them effective
- Keep a record of your invoices
Did you know you can accomplish all these tasks easily with Kiwili? Kiwili also takes care of your accounting, project management, CRM, and more!
4- Don’t forget to do your bank reconciliations
Many entrepreneurs are tempted to neglect this part. Yet bank reconciliation (or account reconciliation) is important if you want to get a fair picture of your financial health. It can happen that you have figures in your accounts that are not registered on your bank statements and vice versa.
5- Review your financial statements regularly
When you are starting out, review your financial statements monthly. This way, you can easily gage your financial health. You’ll also be able to verify whether or not you’re sticking to the financial forecasts set in your business plan. When you move from the start-up phase, quarterly financial statements are sufficient.
6- Consult your accountant
As an entrepreneur, you must have someone to rely on to make sound financial decisions. Your accountant can advise you on what steps to take next in your business and what strategies to follow. Your job is to run your business, not to do the accounting – another reason Kiwili is there for you!
About the author : An entrepreneur since the age of 22, I sold my beauty business to start a family. I now work in accounting with the aim of becoming a CPA. Ever attracted to the world of business, I strive to learn more and to inform other.