History shows many business owners delay working with professional accountants as much as they can.  They don’t see the value of investing in an accountant, only thinking of it as an expense.  But the monetary saving costs them many hours of their time and eventually thousands and thousands.

So, are you now convinced that you should work with an accountant? If your answer is still no, let us walk you through some situations in which professional accounting advice can be valuable.

Writing your business plan

Are you in the process of developing your business plan?  Bring in an accountant on board and they’ll help you improve the plan. Accountants can use advanced software to predict the financial position of your business a couple of years down the road and also prepare various reports that give you valuable insights, allowing you to make key decisions.

Hiring accountants earlier on lets you utilise their financial knowledge and experience right from the start, helping you save time and money. You will also learn some critical things as well!

When determining the legal structure of your business

Every business has a different legal structure depending on various factors. The most common types include limited liability partnerships, limited liability corporations, sole proprietor and so on.  An accountant can explain each type in detail, along with associated legal implications so that you can select the one that best fits your needs.

Helping with finances

Business management appears too complex during the start-up phase. If you feel that you, spending too much or losing control over your finances, then reach out to an accountant and they’ll help you optimise them. They’ll evaluate your current situation, identifying areas where you’re overspending or can generate revenue and put a system in place for you to achieve it.

Accountants keep tabs on key metrics like debtor days, cash flow timings, inventory turnover, gross profit margin and return on assets, and identify revenue and expense drivers, providing you a good picture of your business performance. Moreover, they use advanced accounting software and add-ons that automate many tasks at your end and help you improve collaboration within your team.  If the software is in the cloud, you enjoy greater accessibility and security.

Focusing on your business

Running your own businesses means handling many different operations that fall under different areas. When you start spending too much time on these critical issues, you lose track or your basic purpose while also wasting your resources, as you cannot be expected to be an expert in all these areas.

But when you outsource operations like financial accounting and financial management, you get peace of mind and more time on your hands to deal with the bigger and more important issues in your business.

So, hand over your accounting tasks to an award-winning business like Higher Purpose Accounting. We’ll quickly set up a proper system for your business and take of other steps crucial to business stability and growth.

The post When Should Small Businesses Turn to Accountants for Help? appeared first on Higher Purpose Accounting.

If you are just starting out, you may be able to manage, but do consult a qualified accountant about the best structure to have, the internal financial and operational procedures for your business and how to comply with government obligations. You should also think about automating accounting with widely available software like Xero, QuickBooks, Reckon One or MYOB. Go through the features and the subscription pricing, and then decide the best software which serves your business needs and is within your budget.

So, let’s take a look at some of the most effective ways to sort out your small business finances.

Separate personal and business expenses right from the start
One of the biggest mistakes that new entrepreneurs make is mingling their personal and business finances. Never do this, even if it’s just the first day or your business. Keep your business and personal finances separate. Open a separate back account for your company and have a separate credit or debit card for your business.
Later on, when you sit down and reconcile your expenses, you’ll be extremely glad that you kept the two areas separate.

Track your expenses thoroughly
Label, and then categorise your expenses, keeping a critical check on your cash flows. Also try to use your business credit or debit cards for most of the purchases. Managing paper receipts is difficult but when you use payment cards, all transactions records are electronically. If you use accounting software, you can have a direct bank feed to the software or import all these records into the software, saving you and your accountant/bookkeeper time.

Plus, the more you use your credit cards, the greater rewards you earn. Many loyalty programs offer cash back, which can benefit savings.

Still there can be cases when cash would be your only option. Make sure that you take pictures of all paper receipts them and attach them to the transaction in your accounting software.

Take out time to update your books
As much as you feel like delaying bookkeeping, don’t do it. Take out time, every single, week and get all your records in order. Set aside a time for this, and then be sure to follow it. You may even get some help from a bookkeeper.

Look out for labour costs
Employee salaries are often the biggest expense of small businesses. So, ensure you record superannuation, PAYG Withholding, overtime and other details carefully. Using accounting software with a dedicated payroll module can help you here.

Look for help from the pros
The best piece of advice that we have to offer. Hiring a qualified accountant and/or bookkeeper may seem like and added expense, but it is actually worthwhile having them when they sort out and put your finances in order.

Get in touch with Higher Purpose Accounting to see how we can help you with these areas.

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Keep personal and business finances completely separate

That dinner you had wasn’t part of a meeting with client, yet you used your business card. Those computers that you bought were meant for work, but you ended up using your personal payment card. Yeah, you can pay yourself back from your business or pay back to your business from your personal account. But DON’T!

It’s that simple.

Personal and business finances should never ever be mixed together whatever the circumstances may be. Generally, when you spend on your business, you should record a transaction. If you don’t or if you combine personal and business finances, then things can become a pain pretty soon and it will be hell for you to track down all the expenses.

So, separate the two accounts right from the start and you’ll be saving yourself a good amount of time and pain in the future. And let’s not forget that this will be a huge help when you lodge your tax return.

Set aside some time

For organising your finances that is. Spend around 15 to 30 minutes every week and the only thing that you should be doing during this time is to sort out your finances and make sure that they are in proper order.

And by the way, this little activity can even help you gain insights especially if you make good use of your accounting system.

Track salaries

Yes, there is a need to mention this separately. Whether you are the only one working or have a team of staff, track costs associated with salaries, benefits, leaves, overtime and other relevant expenses separately.  This will let you know if your labour costs are within the budget or outside it. Accordingly, you can decide if you should spend more on incentivising your team or if you need to cut down on some benefits.

Call the professionals

We mentioned this at the start of our discussion, but let’s talk about it again for emphasis. Accountants are a vital part of any team.  They are an expert in maintaining accounting and finance systems and have done it for so many businesses just like yours. They know exactly what works, what doesn’t and which deductions you should utilise.

Agreed, you may want to refrain from hiring an accountant for anything other than tax and other compliance areas, but trust us, bring a professional accountant and trusted advisor on board and the improvements made will more than compensate for their hiring costs.

Higher Purpose Accounting can help you in setting up your accounting system and managing your finances. Visit our website or give us a call on 0434 349 704 for more information.

The post Organise Your Small Business Finances appeared first on Higher Purpose Accounting.

Open a separate bank account

Once your business is registered, earning income and paying expenses, you need a place where you can record and manage these. Open a separate bank account for the purpose so that distinct records are maintained. Don’t forget that this will make your life so much easier when it’s tax time, for GST accounting and for tracking and setting aside monies for staff related expenses.

You can initially start with a basic account, and then later on, move to an interest earning savings account.  Needless to say, do some shopping around here and compare offers from various banks. Go with the one that is more affordable whilst meeting your needs.

Keep a track of your expenses

From day one you need to keep good records of your expenses and spend wisely in the areas which will set the foundation for the future. You may be generating income but if you are spending money fasting than you are earning, you will come into trouble in the future with cash flow.

Establish a proper system to organise your receipts and maintain your records making sure that you are safely storing expense records for your tax deductions and for for later referral.  These days you can scan and store documents within your accounting software.

Set up a bookkeeping system

Bookkeeping is the process of recording daily transactions, categorising them and then reconciling the records with bank statements.  Choose appropriate accounting software, and decide if you want to recruit someone for the job or outsource the task.

Generally, it is best to hand over all your bookkeeping to a third party so that you can focus on your core business.  It is a false economy to try to do it yourself!

Establish a payroll system

You hire one person at the start, then two, and eventually a team. And some of them may be part time employees as well.  Consider whether your staff should be independent contractors or employees. The amount of work to be carried out and the type will help you decide here - remember if you only need one or two people part-time, it will be less compliance to have them as contractors who can invoice you as each project is completed.  That said, check with your tax account that you are meeting the compliance requirements for a contractor or an employee and organise someone to process payroll if this is the road you take.

Decide how you want to be paid

Are your sales rolling in? Great! Decide acceptable payment options. If you’d be willing to accept credit and debit cards, you’ll have to set up a merchant account or sign up with a payment processor. Also, consider automated debtor collection if you raise invoices and accept payment by EFT.

Determine tax obligations

Tax obligations widely vary depending upon your type of business structure.  Income tax, GST, FBT, PAYG may apply - talk to an accountant or a tax expert, and they’ll guide you through what is required for each type.

Re-evaluate your methods

Re-evaluate your accounting procedures and systems every now and then. If you are using the right methods and appropriate solutions, you are saving time and increasing efficiency.  Also ask for some advice from an accountant bookkeeper or business owners in your industry to determine how you are going and what you could improve.

Higher Purpose Accounting can help you in setting up your system and managing your finances. Visit our website or give us a call on 0434 349 704 for more information.

The post Small Business Accounting: Starting Up appeared first on Higher Purpose Accounting.

Understand working capital

Do you truly understand your working capital? Working capital is your current assets minus your current liabilities and includes cash, inventory, accounts receivable and payable, payroll, loans/credit and unpaid taxes.

Now, have you decided the amount that you consider to be required? Before you do anything else, make sure that you have the answers to following questions:

• What should be your minimum inventory level?
• When do you invoice customers, how regularly and how long does it take for them to pay you?
• How much do your customers owe you? Or do you owe them any products or services for advanced payments made?
• How long does order preparation or service delivery take place, right from when you pay your suppliers to getting payments from your clients?

Have enough cash on hand

The next step is to ascertain that you have cash on hand to meet your basic expenses.  Do you have some kind of buffer in the form of a term deposit, an overdraft, revolving credit facility or even personal funds?  Having enough cash to cover 6 months operating expenses is a good buffer to call upon when unexpected times come and you need access to additional cash.  Remember, when you do this you’ll need to identify where you could generate extra sales easily and look to delay non-discretionary expenditure.

 Plan for the future

At least for this year anyway.  Predict your incoming and outgoing cash flows for the next few months. Ascertain that you have or would have enough funds through this time to keep your business running. If you can’t forecast sales, then plan your outgoing cash flows first. Now figure out the amount of income that you need for your outgoings.  That’s the target that you should have in mind.   Next year you will have more data and experience so you should be able to plan for a longer time frame.

And then plan for the month

Great, you have a yearly plan. Now let’s work on a month by month plan.  Do you have enough cash to meet all your expenses by the 20^th of this month?  Create a plan for every month from now onward, and if you’ll ever have to face a shortage, you’ll know sooner rather than later and make the necessary adjustments before issues arise that negatively affect your business.  Excel is great for this or you could use the function available in many of the cloud based accounting systems.

Review your existing systems

Analyse your existing finance and other administrative systems which are not great for many of the small businesses that we have come across. When do you invoice and do you do this regularly? How soon do you get your receivables? How do you collect – direct debit or monthly account and is follow-up automated?  What reports do you use to know what you owe to suppliers and what your customers owe to you?

Ensure your customers can pay you easily

How many payment options do you accept? Allow customers to pay you through any means that they find convenient. Accept credit cards, PayPal, EFTPOS and see if payments can be automated. Fees you incur having these are small compared to time spent chasing up outstanding amounts.

Bring in an expert from outside

The best tip that we can give you is to use professional accounting, advisory and bookkeeping services, experts who will reduce unnecessary expenses, save you time, automate your systems and optimise your finances.

If you would like to know more about any of the items mentioned in this article, please use the Higher Purpose Accounting Contact Form at:

http://www.higherpurposeaccounting.com.au/

The post Small Business: Are You Managing Your Cash Flows Effectively? appeared first on Higher Purpose Accounting.

Firstly, identify what activities you will undertake and break these down into revenue earning or cost incurring ( or investment) and determine the time frames for each type.

Next, review each of these and make adjustments on a periodic basis  to measure the impact on the business.  Having a yearly budget together with a cash flow forecast, regular reviews and re-forecasts will give you a solid foundation towards financial success.

If you would like assistance with any or all of these areas, arrange a consultation with me now using the details below:
www.higherpurposeaccounting.com.au

The post Get the planning and monitoring right appeared first on Higher Purpose Accounting.

A major factor to consider is the structure of your accounting system and how transaction information is captured.

Remember garbage in, results in garbage out. Know what it is you want to track and what are the drivers of revenue and costs.  Then set up your accounting ledger and client management system to capture this information on entry and in a categorised way.

This means the information will come out in a meaningful way when you run your reports and enable you to make useful decisions in a timely manner.

If you would like assistance with any or all of these areas, arrange a consultation with me now using the details below:
www.higherpurposeaccounting.com.au

The post Have good accounting information appeared first on Higher Purpose Accounting.

You need product and service goals, sales and marketing goals, financial and operational goals as well as self-development goals.

It may seem like there are a lot of things to do, but if you focus on one area at a time, after having taken a few steps, you will start to see positive results, that will in turn spur you on to achieving even more.

Remember though, if you neglect any of these areas, you run the risk of setting yourself up for failure.

If you would like assistance with any or all of these areas, arrange a consultation now using the details below:
www.higherpurposeaccounting.com.au

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