Apr 07 Small Business Accounting Necessities
Business owners start out with a variety of different motivations for starting a business. Some are motivated primarily by the potential for making more money. Some are motivated primarily by the increased independence with regards to decision-making that owning a business brings. Some enjoy the creative process of building something from nothing. Some might believe strongly in a particular product or service they can provide, and others may simply want to have a positive impact, economic and otherwise, on their community. Often business owners are motivated by many different contributing factors.
Along with different motivations, they have different visions for the long-term success of their business. Noble or lofty though their motivation and vision may be, business owners are often treated harshly by the marketplace. Roughly half of new businesses fail within the first year. Unfortunately for business owners, the numbers do not get better from there; in fact, more than nine out of every 10 businesses fail to stay in business for 10 years. The business so many envision that is able to sustain itself for decades by developing a loyal clientele, establishing a niche market or becoming a fixture a community is the exception, rather than the rule.
Rather than become discouraged by the realities of the marketplace, successful business owners simply accept it and improve their operations to avoid the fate of others. While there are many factors that determine a business’s ultimate success or failure, finances and accounting often play a significant role. Here are some effective strategies that all business owners can implement to increase their opportunities for growth and success.
It is important for small businesses to stay organized. While a larger business may be able to weather the occasional mistake stemming from a breakdown in the record-keeping process, small businesses must stay organized to keep things running properly. When it comes to organizing a business’s accounting system, the best general advice is to implement consistency; setting aside a few minutes every day or a few hours every week to consider the financial outlook of the business can go a long way. Often, problems stem from leaving certain accounting aspects on the back burner for too long. There are several areas that businesses need to focus on and address from a perspective of organization, including taxes. Good tax record-keeping involves a thorough record of income and expenses as well as possible deductions.
Like taxes, payroll is something that many business owners do not notice until there is a problem. There are many automated payroll systems available now to help businesses with their payroll processes, and many Clinton NJ accounting firms provide benefits management services that help employers choose the right retirement, healthcare and other benefit plans for their employees and for the long-term sustainability of the business. It is also important to consider the cost of labor, especially in the context of a business’s overall financial situation. Changing internal or external circumstances often necessitate an adjustment in the proportion of expenses that should be allocated to payroll, and many business owners are not quick enough in recognizing when a change is needed.
Tracking invoices and customer payments, refreshing long-term financial outlooks and knowing when to get outside help are some other ways businesses can stay on top of their accounting needs.