Three Key Accounting Strategies to Achieve Business Growth

Three Key Accounting Strategies to Achieve Business Growth Accounting for Your Startup

Three Key Accounting Strategies to Achieve Business Growth | Knowing how to manage your business finances has never been more important in these uncertain times. Discover the best accounting strategies to ensure the likelihood of business success.

Proper management of the financial aspects of the business and having someone in charge of that process are all critical to the success of startups and small businesses alike. Knowing how to monitor and distribute your business expenses and income is essential for every business owner, so it’s important to understand the fundamentals of accounting.

Accounting is the critical component of all financial transactions in the business. Smart record-keeping is key for tracking business expenses and finding new growth opportunities. This also allows them to budget their expenses accordingly and find avenues where they can save more money. For example, foreign corporations operating in the Philippines turn to local banks to control remittance costs. They avail of affordable remittance fees to pay for their workers or remote employees.

In these uncertain times, knowing the best accounting strategies is key to increasing the company’s bottom line. As the business grows, keeping your own books and filing taxes becomes more difficult. To avoid running into financial issues, here are some accounting strategies for startups and small businesses to manage operations effectively.

Separate personal and business finances

One of the biggest mistakes most business owners commit is mixing their professional and personal expenditures. While this is common knowledge, over a quarter or 27% of small businesses don’t have a separate business bank account.

When starting a business, most entrepreneurs need loans or financial support for startup capital, overhead expenses, marketing campaigns, and other expenses in the initial phase of the business. In the process, they end up messing up their financial records, where they mix their business investments and private money.

Having an exclusive business bank account for savings and checking saves a lot of precious time and prevents future confusion. It makes it easier to monitor and verify business expenses for tax deductions. In tough times, a business bank account protects personal liability by separating personal funds from business funds. It also provides a line of credit which the business can use for cash gaps.

Since contactless payments are becoming a huge thing during the pandemic, a business bank account will allow entrepreneurs to process financial transactions online. Customers’ payments will go straight to their savings account, which saves time and money.

Find the right accounting software (and professional)

Digital innovations have made financial management and operational accounting more organized than ever. Today, there’s a wide range of accounting software available that streamlines the whole accounting process. The best accounting software should track your expenses and income, categorize them in proper order, pay and send invoices and publish reports on time.

An important tip is to select the one that resonates with the business objectives and comes with a user-friendly interface. This will allow you to efficiently and accurately maintain the business finances.

Although new entrepreneurs would initially prefer to monitor all operations concerning accounting, sales, and marketing to save costs, it wouldn’t hurt to hire a bookkeeper to avoid human errors on your end. Ideally, find someone with a deeper understanding and experience working on books in your respective industry.

One of the critical factors in having well-maintained finances and accounting is an experienced professional to manage your accounts. While accounting software can do most of the work, you will still need human judgment to compute your money, monitor your expenses, and design the most appropriate financial plan for your business.

To start, hire a freelancer or part-time bookkeeper to avoid paying full-time salary for their services. As your business matures, you can hire full-time employees since having in-house accountants comes with notable benefits, such as personalized accounting, customizable tasks, and stronger confidentiality.

Back up your business records

Machines are still machines, so there’s always a possibility of data mishandling, unpredictable system crash, and other mishaps that can happen to your stored data. Thus, it’s important to always have a backup of accounting data and bookkeeping files to have an actual record of all financial information during technical glitches.

Recordkeeping is one of the critical duties of any business owner. For safety, always keep two to three copies of bookkeeping data. Gross receipts include forms, invoices, receipt books, deposit information, and cash register tapes. Expenses, on the other hand, consist of account statements, proof of electronic funds, canceled checks, and credit card receipts.

Finance is the lifeblood of any business organization. Regardless of your business nature, take note of the above-mentioned strategies to avoid financial discrepancies in the future. With the right strategies and people, accounting shouldn’t be very complex. In these times of financial crisis, learning the right accounting strategy can help you gain a stronger foothold in future circumstances.