Having trouble with your business records? Small business owners wear a lot of hats. They’re entrepreneurs but they also invest most of the capital. They manage everything from hiring new resources to making sure front-office amenities like Cox cable keep running smoothly. That’s not to mention keeping track of employee attendance, making workplace policies, and identifying areas for improvement. However, in functions like accounting or finance, winging it is a very bad game plan. One that could potentially be disastrous. Read on to find out why, and how to improve your small business accounts and finance systems to prevent this.
Why Small Businesses Need Better Accounts and Finance Systems
Accounting and finance are hard skills. Meaning, you require a background in both academics and real-world experience to manage them yourself. Moreover, most countries follow GAAP or IFRS as the benchmark for financial recording and reporting. Not following the relevant financial standards could get you into trouble with tax authorities. It could also put off any future investors or even merger/acquisition opportunities.
The accounts and finance functions are crucial in many ways. They should offer accurate and complete records, to enable better financial decisions. They should also adhere to best practices and the applicable financial standards. Even more importantly, they should be structured in a way that prevents fraud, misappropriation, and misstatements. Therefore, attempting a basic pen-and-paper ledger system, especially without accounting or financial expertise, can prove harmful to a small business. Luckily, there are several ways you can improve your existing system, including the ones below:
Use Better Data Tools for Improved Access
To make the right financial decisions, you need access to the right data at the right time. With an ad-hoc financial management structure, this may prove quite inefficient. Having to go through files of vouchers to find a single one can often take up a lot of time. Conversely, the use of modern digital OCR systems can offer a user instant access to the necessary documentation. This doesn’t just ensure timely access to data when needed, but it also encourages consistency and integrity in the records you maintain.
Automate Bill Payments to Reduce Workload
With so much to do, it is easy to overlook regular expenses like your internet or electricity bill. However, if your services get suspended, so do many of your business operations. Luckily, you don’t need an accountant to keep track of your upcoming bill payments. Most service providers from the energy industry or the internet services sector allow you to automate your payments. All you have to do is configure your business bank account to pay bills automatically well before they are due. This relieves you of keeping track of billing and payment dates and allows you to focus more on other tasks requiring your direct attention.
Use Timesheet Management Tools for Accurate Labor Costs
Timesheet management is essential in nearly any business that employs workers. You need to be aware of the hours and overtime your workers have put in to compensate them fairly. While physical timesheets can often be misrepresented or tampered with, a digital timesheet management system can streamline things much better. With the right software, you should be able to track employee work hours and productivity, even in remote working formats.
Include Automation and Authorization For Expenses
Expenses aren’t always the same. Petty cash expenses like getting a new box of paperclips are frequently far less significant than buying new machinery. But since both are expenses that you’re managing, both will involve your time and effort. A mixed system of prioritizing expenses based on their significance can help streamline how they are managed.
For example, a minor business expense may not always require your direct approval. In fact, it could be managed much faster if the request did not have to be routed through a cumbersome process. Therefore, you could designate a certain threshold, below which expenses may not require detailed scrutiny. However, more significant expenditures would require your direct approval. If nothing else, this may help you reduce some of your workloads without slowing down business processes.
Keep On Top of Changes in Tax Laws to Avoid Legal Problems
All countries and territories have their own sets of taxation laws. As a business owner, you are usually bound to follow the tax guidelines and requirements applicable to you and your small business. However, tax regulations frequently change and new requirements or documentation may frequently pop up. A visit from a tax auditor is usually unwelcome, so keeping a close eye on tax laws relevant to your business is often a far better option. In case of any significant changes, you should be able to get your paperwork in-line for a smoother return filing.