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Last Updated on October 31, 2018 by Work In My Pajamas
Keeping track of business finances is incredibly important, especially if you run a home business. Carefully tracking your income and expenses is vital for tax-related issues, but also so that you can monitor profit, determine areas where you can reduce costs and get a transparent overview of how your business is performing. Tracking business finances can be tricky when you have many outgoings and a large operation to monitor, but fortunately, there are a few excellent ways that you can keep track, which could have a huge impact on your finances in the long run. Read on for a few of the most effective methods.
Separate Personal & Business Accounts
The first step to take is to ensure that you are keeping separate accounts for your personal finances and business finances. It can become very messy and complex when you use one account for both, as it becomes near impossible to track business expenses. This can interfere with both the business and your personal life so make sure that you have an account which is purely for business and never use money from the company for personal reasons and vice versa.
Delegate/Outsource
Managing your business finances can be complex particularly if it is a large operation with a number of expenses. It can be hard to do yourself when you do not have much experience which could take time away from running the company. It is for this reason why it can be helpful to delegate this to an employee with experience in accounting, or alternatively to outsource the work to a specialist. Although outsourcing is another expense, it can reduce stress, free up time and ensure that you are keeping accurate records.
Software
Accounting has been made much easier thanks to the development of intelligent accounting software systems available from places like www.sellercloud.com. These systems can help you to keep accurate records to give you control of your bottom line and easily identify areas where you could be making savings.
Financial Reports
It is good practice to generate quarterly profit and loss statements even if you do not have to present to a supervisory board. This will give you a clear overview of how the business has performed in the last 3 months compared to other quarters and could help you to identify improvements that need to be made to reach the next level. In addition to quarterly finances reports, it can also be helpful to set a small amount of time aside at the end of each working day to review your sales and expenses to keep records accurate and monitor cash flow.
Every business owner needs to carefully track their finances, whether they are a freelance worker or the owner of a large corporation. There are a few effective ways that this can be achieved with the above being a few of the easiest and most straightforward. In addition to making sure that you are tax-efficient, careful tracking of your income and expenses can help a business to reduce costs and streamline their operation.
