Entrepreneurs are by definition an eclectic, creative breed. Each entrepreneur has his or her own way of tackling accounting. There are many different techniques and tools in accounting for entrepreneurs to choose from, but which techniques are the best? There are some proven accounting techniques that can assist any startup in turning a profit.
Profitable Accounting Techniques
Understand bookkeeping, develop a bookkeeping system, and work it consistently. Simply put, bookkeeping is the act of keeping track of day-to-day transactions. You can establish a working, efficient bookkeeping system using something as simple as Excel spreadsheets, but specific bookkeeping software has its advantages. If your startup is turning enough of a profit, consider outsourcing your bookkeeping.
Diversified Management Services, Inc. offers small business bookkeeping services on a contract basis – we’re only there when you need us. We use Quickbooks accounting software to keep your business on track.
With a bookkeeping system, it is possible to track your expenses, and one of the best ways to increase profit margins is by cutting expenses. This seems obvious, but often there are ways to decrease expenses that are missed. Some particular areas to look at when cutting expenses are:
- Meals and entertainment. Meeting clients at a restaurant is often a good practice, just be aware of how much you are spending to wine and dine them.
- Business traveling. Do you really need to be in first class? Can you claim repairs to your car as a business expense?
- Technology spending. Are you spending too much outfitting your employees with phones or other technology?
- Better rates. This can mean getting a better price on something you’re buying or increasing the efficiency of using what you have to squeeze more out. Always have your eye on insurance rates for all aspects of your business.
Learn more about small business tax deductions on our Tax Tips page, or contact us for help with your small business planning.
Constant revaluation is a key concept in the success of any business. What works for accounting now may not work as your startup grows. You may need to replace simple Excel spreadsheets with specialized software. Use accounting to track what has made you money in the past, what is making you money now, and project what will make you money in the future and plan accordingly.
The techniques mentioned here can help your business, but some might help more than others. After all, your startup is unique, and it has unique financing needs. Unfortunately, knowing how to customize accounting techniques to your specific needs is a specialized skill set. Consider hiring a personalized accounting service to tailor accounting practices to your specific needs. This could help your startup turn an even greater profit than by using the universal techniques above.