By innovation-sa on November 9, 2017 in Blog
Small businesses are the primary growth drivers of the world of commerce since the last decade.
Entrepreneurs look for the right opportunity and instantly act on them to build the perfect venture
for themselves. But the job of small business owners is not an easy one. It is a rollercoaster ride with
lots of ups and downs making it difficult for small businesses to sustain and make it to reach the
moments of glory. An entrepreneur strives to tackle the big problems and dream of the greater
picture as they get engrossed in countless hours of hard work and diligence. However, they often fail
when it comes to the most vital aspect of the small businesses which is Maintaining the Finance and
Accounts. Finances are a major aspect concerning all businesses and the failure to efficiently handle
it often results in failures and facing roadblocks difficult to surpass. Accounting mistakes can greatly
hinder the growth of small businesses and hence it is very important to understand the right way to
maintain the financial records and Accounts.
There are various ways in which small businesses can combat accounting and finance challenges and
the following 5 are the main aspects:
1. MAINTAIN ACCURATE ACCOUNTS
It is essential to maintain accuracy in bookkeeping records for transactions related to the
business. The accurate and up to date accounts make the day to day tasks easier to handle
and track in a less stressful manner. Careful tracking of the finances helps track the current
financial status of the business, prevent theft and fraud and help being prepared to account
for tax returns. It keeps the owners informed about the status of creditors, debtors and
expenses thus resulting in smooth handling of the budget and resources.
2. INVEST IN LATEST ACCOUNTING SOFTWARE
With the advent of digitization and the penetration of apps in the day to day space, there
are numerous efficient and simple softwares available in the market for smooth financial
planning for the small businesses. Such Accounting softwares help to keep the owners
updated and guided with the accurate financial information of theie business. The owners
can well organize the revenues, expenses, invoices, receipts, vendors, and employee list
through this softwares and instead focus more on the other aspects of business leaving the
accounting worries aside.
3. RECRUIT A PROFESSIONAL TAX ACCOUNTANT
Small business owners may be on a constricted budget and hence be reluctant to spend
additionally on professional tax accountants. While they may prefer to handle taxation
issues on their own, not hiring the right professional tax accountant can actually cost them a
lot. The professional accountants possess specialized experience and knowledge required for
tax saving and hence benefit the business monetarily. They are also updated on the ever-
changing tax laws hence capable enough to offer the right and desired advice to tackle the
potential tax hikes.
It is therefore very crucial to hire them in order to gain the best organized information for
expenditure incurred on business. Remember, good professional bookkeeping is wisdom
when it comes to investment that will continue to reap good results.
4. MAKE PROPER FINANCIAL PROJECTIONS AND KEEP CASH RESERVED FOR THE EMERGENCIES
It is very crucial for entrepreneurs to make proper financial projections for each year for a
minimum of 3 years. They must be able to predict the amount they expect to make from the
venture they undertake and keep a proper track of the budgets and simultaneously track the
minute details such as staffing plans and equipment expenditures.
In spite of efficient planning of the finances of a business, the future of financial status of
small businesses is often uncertain owing to unpredictable circumstances that they may not
be prepared for. Owners may often fail to sustain due to improper cash reserves. To be
believed, it is wise to invest a small amount of profit made in the business in a cash reserve
for the future. One must keep a track of this reserve on a quarterly basis and make sure that
it is enough to keep the business running safe for at least six more months at the times of
business crisis.
5. SET APART BUSINESS AND PERSONAL EXPENSES
Newer entrepreneurs often fail to understand the importance of a separate account for the
business and personal expenses. They mostly end up using the personal account for business
purpose and end up with lots of confusion and mess leading hassles that lead to improper
profit results. This also creates lots of chaos while maintaining the records of the
transactions and dealing with the accounts and taxes of the business.
It is very important to use a separate bank account for the business to avoid such stress in
the future.
Maintaining the finances and accounts may seem complex to most of the small business
owners but effective planning can simplify the task greatly. The above-mentioned tips are
easy to follow an equip businessmen with the capability to keep the business afloat even
during the times of tough financial crisis.