Accounting is one of the essential elements of any business. Implementing a few simple ideas can really help your business financially. Outlined below are seven practical methods to use accounting to grow your business.
Ideally you will have a business plan that includes financial goals, such as expected growth, turnover, projected staffing increases, what your business strategy is (eg growth, acquisition, winding up the business etc).
Your business financial goals should be measurable over a period of time, for example, to grow your business by increasing turnover in the next 12 months. Ideally you will review these goals at least quarterly. If you are not sure where to start with setting some financial goals, then speak to your accountant for suggestions.
Developing a budget can help you decide what your financial goals are and help you achieve them. The easiest way to develop a budget is to write down a list of all your income and all your expenses. Consider splitting your expenses into two groups:
Regularly review and monitor your costs. Look to see how you can grow your business by cutting costs, find better suppliers, negotiate better deals with suppliers, reduce unnecessary purchases etc.
Set cost control systems so that you have a process whereby you or someone in an executive position approves all purchases – or all purchases over a certain amount. Encourage your employees to validate all purchase requests.
There are a lot of easy to use Accounting software packages or budget planners on the web – search the web for “budget planner” for a number of them.
Make sure you have a simple but accurate way of keeping your financial records. For some people this might be in a shoebox, but I would recommend a simple filing system – either two-ring binders or manila files in a filing cabinet. Remember, having an accurate record keeping system will make life much easier at tax time – and probably save you bookkeeping and accountant fees!
Your record keeping systems should include:
Micro businesses (defined by the Australian Tax Office as those with turnover under $2m) pay 11% of the tax collected by the ATO and employ nearly 22% of all people employed in Australia, and are comprised of nearly 1 million sole traders, consultants and contractors, 700,000 companies and 420,000 partnerships – it should not therefore come as a surprise that these businesses fall under the tax office’s radar in terms of tax compliance!
You need to keep copies of all records for five years, no matter what stage you are at with grow your business or maturation. This includes records of sales (including sale of the business) and purchases, payments to employees, and payments to other businesses.
Once your business starts to make a profit you need to think about how you can turn this into more wealth. One of the best ways to create wealth is through leverage, which can offer great tax breaks in the accumulation of capital growth assets.
By leveraging your existing cash balances or cash flow to hold as many capital appreciating assets as you are comfortable with, you will increase your wealth. One example is to consider purchasing a premises (rather than renting).
Invoice fraud is one of the biggest types of fraud that small business is susceptible to, and small business owners juggling lots of demands can make easy targets for scammers.
According to the Queensland Office of Fair Trading (OFT) invoice fraud is common. This occurs when a business is sent a fake invoice requesting payment, usually for advertising in bogus directories or publications. The invoice looks legitimate and is often paid by businesses who don’t check they are genuine.
To avoid being scammed, OFT recommends traders:
If you are too busy to keep your books then hire a qualified bookkeeper or accountant to help you. You will probably find it a lot cheaper than you think (many charge an hourly rate), not to mention the time if will free up for you to spend on grow your business or even just doing the more interesting things in your business.
Services a bookkeeper or accountant can take over include paying salaries, coordinating and handling accounts receivable and payable, balancing ledgers and bank accounts and organising financial information required for business plans, loan proposals, cash-flow statements, etc, etc, etc.
The goal for most Australian websites (besides e-commerce and some not-for-profit ones) is to generate business leads.…
We all know and appreciate how important customer service is for the average business. It takes great customer service…
When you are a business owner, there are so many things to focus on. You've got marketing, sales, systems, IT, finance,…
The Australian Software Guide features a hand curated list of the best Australian built software products.