Accounting is all about building blocks. The stronger your foundation, the better prepared you are to handle situations in your business as they arise.
Did you ever wish you knew a way to make accounting easier?
Here are a few tips & tricks to help you get fiscally fit.
- Exercise Organization
- Having organized files and a great folder system makes accounting easier for you and anyone else that you employ.
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- Work out Routine
- The best practice is to have a regular routine. This may include setting aside the same time each week to perform these tasks.
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- Baseline Readings
- Just as your heartbeat regulates your stress levels, these baseline readings tell you what is happening in your business. They work together to give you a complete picture of your total business operations.
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- Strength Training
- There are other ways to look at your business. These methods help you to build the strength of your company by measuring what the company has done in different ways.
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- Sculpt & Tone Your Future
- We all dream of retiring and doing those things that provide us with bliss. By practicing these exercises, you will ensure that you actually have the control you need over your future to accomplish those dreams.
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Permanent files – these files would remain in your file cabinets from year to year. Usually they include files relating to the Balance Sheet Accounts such as Assets and Debts. Other files you will refer to annually such as Insurance and warranties should also have files in this drawer.
Annual files – these files will be cleaned out each year and put into storage. Usually they include files relating to the Income Statement Accounts such as expenses or Vendor files. Other files you will not need to refer to, such as Bank Account Reconciliations and deposits should have files in this drawer.
Daily or Weekly files – these files would be the files you access the most. Usually they include information relating to Appointments and Current Projects. They should be placed in the most accessible place in your office or desk.
Payroll – you should start here, especially if you invoice for your time. Without having your time assigned to clients or projects, you won’t be able to invoice for the work you and your employees have performed.
Accounts Payable – Next, you would want to enter in all your Vendor Bills. Again, if you have Bills related to current projects, you will need to get these entered into the computer to adequately reflect your costs.
Invoicing – now you are ready to invoice your customers. Most businesses have the most problems in this area. It should not take hours to perform this task. It should be easy and enjoyable. After all, you are finally going to get paid for the work you have performed!
Reconcile your Bank Account and calculate your Cash Balance regularly – No one can operate blindly. If you don’t know how much money you have in the bank, then you don’t know if you can take that prospect out to lunch or buy needed office supplies.
Balance Sheet – This report should be looked at monthly. It show you what your company owns and who you owe money to. By having knowledge of these indicators, you can make decisions on the stability of your company.
Income Statement – This report should be looked at monthly. It shows you how your company has been performing, usually for the month and year to date. By having knowledge of these indicators, you can make decisions on increasing or decreasing sales and expenses.
Statement of Cash Flows – This report should be looked at monthly. Basically it answers the question, “Why is my Net Income not equal to the amount of cash I have in the bank?” It provides a bridge between the Balance Sheet and the Income Statement by showing the sources and uses of your cash from Operating, Investing and Financing Activities.
Common Size Financials – This report would show you your Balance Sheet as a percentage of Assets or your Income Statement at a percentage of Sales. These indicators allow comparison as a percentage within the firm over time and between this firm and others of varying sizes.
Comparative Financials – It is very beneficial to look at how your company is doing compared to last year, to your budget, and/or to other companies in your industry. These indicators may point out areas where you are performing better or worse, how you stack up to what you thought would happen this year, and whether you are doing as well as other companies.
Ratios – These indicators allow you to evaluate your company’s strengths and weaknesses. In addition, comparing ratios over time can highlight improvements in performance or problem areas needing attention.
Budgets – If you don’t know where you are going, any road will get you there. Wouldn’t it be better to choose where you want to be and then lay out the path you want to take? Budgets help you to do that.
Cash Flow Projections – Cash is the lifeblood of your business. A Cash Flow projection will highlight when cash may be tight and when cash may be plentiful.
Financial Planning, including Pensions and Insurance – Pensions help you achieve security and financial dignity in retirement. Having the right insurance in the correct amounts is a must.
Debt Reduction & Obtaining Financing – Interest is the cost of borrowing money. If you reduce your debt you actually save money because you are not paying that cost any longer. One step may be to consolidate your debts and get a lower interest rate.
Tax Planning – By working with a competent tax preparer you can keep more of your hard earned money in your pocket rather than paying it out to Uncle Sam.
