In the past year or so, the term ‘equity and social justice’…
1. Tracking Cash Flows
Keeping track of your company’s financial situation is not only maintaining a record of your expenses and revenue. Without a clean business’s financial state, it will be challenging to seek ways to improve your business. Tracking your business liquidity levels allows you to better understand your payment cycle and effortlessly plan for your growth plans. Having accurate and factual cash flow statements allows for precise future business forecasting.
2. Factoring Cost of Goods Sold (COGS)
Cost of Goods Sold (COGS) is the cost of operations that a business incurs to generate revenue. This factors every amount involved from acquiring to the sale of the final product. Some business owners forget to include labor costs and rent in COGS. Ensuring an accurate record of fixed expenses reflects the total amount to make your gross and net profit calculation easy.
3. Keeping Bank Accounts Separate
Critical to separate personal and business finances from getting mixed up. With different bank accounts, it also makes things more effortless to keep track of your business finances. This is especially true during tax filing time. Moreover, when your business grows and requires funding from investors and creditors, keeping strong and clean business financial records can improve the likelihood of investments. But before you head down to any traditional banks to start an account, research the various business and compare their fee structures, the benefits of specific options, and the cost of running the account. Separately, you may consider open a digital bank account with Wise.
4. Develop an Accounting system
Bookkeeping and Accounting are two vastly different aspects of small business accounting and finance. Bookkeeping is the daily process of detailing transactions, categorizing them, and reconciling bank statements. Whereas Accounting is a more in-depth overview of your business’s finance data in the form of financial statements. As a business owner, you can decide how you want to develop your bookkeeping system. Here are some ways you could consider:
- Doing it yourself with accounting software, or simply with an Excel spreadsheet to keep track of your accounts payable and receivables
- Outsourcing to a part-time bookkeeper who is based locally or is cloud-based, allowing you overview access to the shared cloud software
- Hiring a bookkeeper or accountant in-house while providing system application.
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