We’ve talked to a lot of small business owners during the 40 years we’ve been in the financial services industry. From this experience, we’ve put together our list of accounting tips for small business, to get you moving in the right direction.
1. Delegate your bookkeeping
Number one on our list of accounting tips is to delegate. If you’re spending long nights slaving over your bookkeeping, you could be wasting time. Remember that often repeated adage:
“Work on your business, not in your business.”
It can get to the stage where you can’t see the wood for the trees, and, as a business owner, it is essential to keep your strategic vision and big picture in mind. Good bookkeeping isn't just about having someone reliable. It's about automating bookeeping functions, leaving you with time to grow your business.
2. Establish the right business structure
Of all our accounting tips for small business, this could make a massive difference to the amount of tax you will need to pay. You can choose between:
- Sole trader
Your business structure will also determine how your assets are protected. You can also use a business structure to make succession planning more manageable, to bring in outside investors, and to set up your business for scaling and growth.
3. Switch to the cloud for paperwork
This is one of our accounting tips for small business in the 21st century. Cloud software can come in handy for many accounting-related functions. You can have a cloud-based filing system for all your papers instead of old filing cabinets and folders. Similarly, receipts can be scanned from a phone camera into Xero. Xero is a cloud accounting software that enables you to automate tracking your driving kilometres, so you'll no longer need to use manual log books.
4. Use inventory management systems
This is one of our accounting tips for businesses with stock. By using inventory management systems, you can automate and reduce the number of hours you spend tracking stock purchases and sales. Correct inventory management prevents you from running out of stock and ensures you don’t over order, which can tie up cash flow and waste money. Some more sophisticated inventory management systems provide you with automatic notifications when your stock is running low, which helps you to order accurately.
5. Get yourself a good accountant
Of all our accounting tips in this list, this is no newsflash. But, it is fundamental! A good accountant is invaluable to a business owner and can help with with:
- To get the best possible business structure set up.
- Overseeing tax compliance issues.
- Managing cash flow and strategic planning.
At Liston Newton Advisory, we offer a holistic business advisory and accounting service that can help you to achieve your business goals. We have over 40 years of experience at guiding business owners through the business growth process.
6. Don’t forget to plan and set goals
We use Xero, as well as other software such as Spotlight Reporting, to forecast cash flows, budgets and quarterly reviews. With such reports, you can be proactive in anticipating seasonal trends before they happen. Setting goals ahead of time and measuring your performance against other competitors in your industry will show you where you can improve. Your business adviser can help you with this.
7. Get external HR support
Hiring third-party HR support or payroll assistance is next in our list of accounting tips for small business. They can help you to meet all requirements concerning updated award rates and regulations (which may vary per industry). Third-party HR support can also assist you in understanding employee leave entitlements and overtime obligations.
If you are using Xero, you will already be automating your payroll functions and staff superannuation payments and reconciliations.
8. Integrate your systems
One of our general accounting tips is to avoid any double handling of paperwork at any stage in your business. These days, your point of sale system, accounting system and filing storage can all talk to each other digitally. Using Xero will help you to get real-time data on your business performance without a having to go through a thorough and time-consuming process to collect this information. With real-time data reporting, issues can be pre-empted just by clicking a button on your mobile device.
9. Know your numbers
Integrated into Xero is a digital dashboard that shows you all your business numbers collated together conveniently. From here, you can keep that big picture view in mind. You can keep track of which money is going where, and when. You could even figure out your breakeven point – how much you need to sell in a day to avoid running at a loss. Having a separate bank account to put money away for tax and GST is a good idea, too.
10. Get a specialist in accounting for franchises
Franchises have higher setup costs and overheads than other businesses, and they often work on selling units of goods at a lower profit margin. Plus, franchises need many staff from their opening day to run, which means getting on top of payroll functions. At Liston Newton Advisory, we have a lot of experience in valuing, planning and accounting for franchises, and we can give you the expert advice you need.