No matter what kind of small business you own or planning to start, you need to stay on top of your accounting solution. If you fail to do so, it will create unnecessary obstacles that can prevent your business growth. Here are 4 tips that can help to simplify your accounting…
1. Utilize Secure and Compliant Software
As a small business owner, when you use third-party software for your accounting needs, you have to be sure, the software keeps your data safe and secure. Make sure that the data you are sending to your accounting software is protected with 256-bit SSL encryption and the server on which the software resides is constantly scanned for vulnerabilities. That’s why Inoxo uses Visma business or Visma eAccounting for small business owners.
2. Keep Current Profit and Loss (P&L) Statements
Profit and loss statements are the main two metrics for running a small business. If you only track your P&L statement quarterly, then you could possibly be in for a rude awakening.
Small business experience surges and dips in sales all the time, and while some things like seasonal sales can be prepared for in advance, there are many factors that are out of the business owner’s control. Keeping an up to date P&L statement allows you to quickly get a snapshot of the overall health of your business at any time.
Your P&L statement should add the cost of goods sold, revenue, operating income, operating expenses, net profit, and gross margin. These are the terms you should include in your P&L statement.
3. Always Try to Be Improving Your Gross Margins
COGS (Cost of goods sold) is one of the most overlooked features of accounting. It applies to both products and services in every small business. You have to track the COGS and working to lower the cost. As your business grows and you are selling more, whether it’s physical products or re-selling a service like a web design, for example, there is always room to negotiate lowers costs. Use your volume as leverage to lower your COGS.
4. Manage All Kinds of Applicable Taxes
This is pretty obvious that all local businesses need to collect payment in person, but it can be tricky for service-based businesses that accept credit cards to collect payments from all over the world.
Not all invoicing clarifications provide smooth taxation, so you have to figure out all taxation for your small business. If you manage your accounting on the cloud, adding taxes to an invoice is a simple task by using accounting software. However, always consult with an expert like INOXO REGNSKAP AS to find out the proper tax to collect for different customers based on their location.
By taking proper steps for your accounting solution can organize all the data of your small businesses and help to avoid accounting disasters down the line that can cost lots of money.