Being engaged in business is not a simple task. You must take care
of a lot of things to keep the business going and the money flowing.
However, many do not become successful at their attempts to put up a
business because of loss of track of their finances and cashflows.
If you intend to stay in business for a long time, you need to know and understand your financial situation.
Taxes
Compliance to the law regarding taxes will keep you out of trouble.
Keeping track of all your income and expenses is necessary for you to be
able to ensure that necessary tax payments are correctly made.
Taking Control of Your Business
Using financial data is one of the best ways for one to achieve
better control of their business. Monthly reports will show you how good
or bad your business has been performing and in what particular area is
improvement required. Things to watch out for are:
- Overheads - to see if costs are under your control
- Profit margins - to know if your profits are within the margins
- Turnover - to see if it is high enough
- Net profit - to see if you are actually making profits
Cashflow
Without cash, your business can succumb. Cash is needed to run your
business no matter how much profit you are making on paper. If have not
enough cash, your creditors might try to have your business liquidated.
Reporting
Varying types of reports and submissions need to be submitted to the
authorities, as per the law requires. Cashflow, balance sheet, and
annual profit and loss statement are examples of these reports.
Self-employed or small businesses still need to make annual reports,
though they are not that burdensome compared to large enterprises and
corporations.
A Good Accounting System
The importance of a good accounting system is something a business
owner (or an aspiring business owner) must know of because it can define
if your business will stand the test of time. Putting up a good
accounting system does not have to be all too complicated. Computers do a
great job in making bookkeeping easier than before when they used to
keep handwritten records.
One must also choose the best accounting
softwares to use (most CPAs are aware of this and know the right
software to use). A good accountant uses the right tools and employs the
necessary skills to be able to perform his duties well.
Hiring a
Chartered Accountant is a very wise step to make if you would want
convenience, great profits in the long run, and staying power for your
business. You will have more time to focus on other aspects of your
business and be at ease with leaving accounting tasks to a professional.
