Most business owners do not know their numbers and are unable to determine the financial health of their business. Taking pro-active steps in your business finances is essential to enjoying the profit. Let’s dive right into – Maximizing Your Profits with Bookkeeping Best Practices.
Keep your eyes on the records
Those day to day expenses adds up quickly. It’s important to make sure, right from day one, that you consistently track your spending, file your receipts, and monitor your income and expenses with an easy, reliable accounting system. Cloud-based accounting software (like QuickBooks or other online accounting software) can help you know exactly where your finances stand in real-time—with secure access to accurate, up to date financial data anywhere, anytime.
In addition to being able to collaborate more efficiently with your bookkeeper and accountant so you can get advice whenever you need it, you’ll avoid the stress and hassle come tax time—and be empowered every day to make better, smarter business decisions, thereby increasing your profit margin.
Make sure your bank accounts are reconciled
On a monthly basis, you should be reconciling your cloud-based accounting software transactions to your actual bank and or credit card statement. While it is time-efficient to have your cloud-based accounting software automatically upload from your bank, there could still be double uploads and or missed uploads. These situations can create havoc in your financial reports and deeply affect your bottom line profit margin.
Don’t do “bank balance accounting”
‘Bank Balance Accounting’ is looking at your stated bank balance and making financial decisions based on that number. This number is not a reflection of your business’ financial health. Most business owners and entrepreneurs do not understand their financial reports, understanding these reports will help you increase your profit margin. Knowing the difference between your income statement and cash flow statement is important as one tells you the net income and the other tells you the cash position of your business. Also, understand your balance sheet, this report is the snapshot of your business. You should review these reports monthly (if not more) to understand where your profits are or are not coming from.
Spend your time wisely
As a business owner and entrepreneur spending time with your clients and addressing their needs is crucial in creating profit for your business.
It can be incredibly difficult for business owners and entrepreneurs to trust someone enough to hand over any aspect of it. Many business owners work themselves to exhaustion because they can’t let themselves to take a weekend off. They neglect their most important relationships and never get to enjoy their successes because there’s always more to do.
When you outsource the timely bookkeeping tasks to a virtual bookkeeper you will gain more time and experience profits. A virtual bookkeeper will help you avoid financial pitfalls that could cost you profits and help you capture business tax advantages.
The most successful business owners and entrepreneurs know they can’t do it all—nor should they—and build in time for rest so they can be more productive at work.
Are you ready to start Maximizing Your Profits with Bookkeeping Best Practices now?
Looking for more bookkeeping information or tips? Check out our post on 5 Common Bookkeeping Pitfalls – and How to Avoid Them