Welcome back, this time we are here with a few major points that need to be understood well to handle the accounting tasks of the small business unit. It is not an easy task to manage business finances. It requires hard work and strategic decisions to create a feasible plan along with maintaining the budget and recording the transactions. Also, the reviews must be made regularly to keep an eye on the records and actions taken. Also, the accounting person should be able to manage all the three essential accounting statements that are the income statement, balance sheet, and cash flow statement.
There are a few things that must be taken care of regularly to maintain the accounts and manage the financial activities of your business. Also, tracking these functions is important to maintain the state of business and make sure the tax payments are on time. A few tasks need to be followed daily, others monthly or some even quarterly or yearly. Let us move forward to the checklist without waiting much.
Cash flow review
- For a Small Business, it is important to manage the cash flow as the startups usually face financial challenges in their starting years. The future estimates of the required cash flow in the upcoming weeks or months help to reserve a fixed amount for tasks such as bill payments, as well as payments to the employees and suppliers. Also, this can help to make informed business decisions along with planning how to spend money to need Accounting Software.
Check cash status
- Cash is the asset of the business unit that needs to be managed to have it in plus. One never wishes to run out of cash as it can create serious problems in managing the tasks. Understanding and knowing how much cash will be received, how much must be paid, how much will be earned as profit helps to make crucial decisions and save you from running out of cash.
- It is crucial to record each entry including the receiving cash, billing customers, paying vendors, credit sales, and much more in a proper daily or weekly manner. Even though the recording of transactions was done manually or in sheets, it is not much preferred in modern times. Recording the transactions and entries becomes much easier with the latest software and techniques.
Check and ask for unpaid bills
- Every business unit manages an unpaid sheet for the customers who opt for the credit sales or after payment sales that need to be managed differently. These sheets include all the data such as billing date, due amount, to be paid date, and much more. Prepaid advantages are also allowed and hence that must be checked will.
Always go for invoices
- Invoices are major papers of any business unit and it is suggested to include the payment terms on the invoice along with all the important details. The most important thing to be included in the due date of payment hence one must opt for the invoice template that has the due date field. Also, other fields such as payment address, payment terms, charges, and much more must be included.
- If your business unit involves an inventory[Inventory management software], it is crucial to managing it well. If the inventory is not managed, there are chances of having wastage of products or undermanaged products that can lead to financial losses. The goods or products which are not available should either the ordered as early as possible, or should be marked as not available till new stock arrives. The regular checks result in neither shortage of goods nor overloaded goods.
Reviewing balance sheets
- The balance sheets need to be compared regularly with the previous sheets. The comparison helps to manage the assets properly. This reviewing process helps to understand the receivables or payables and hence helps to manage your assets and liabilities properly. If a balance is not maintained between the two, complications can be raised.
Balance the checkbook
- If you have a personal savings account, you always check the account statement from time to time. In the same way, the business transactions also need to be checked every time and every month to manage the correct cash position. This checking help to correct and mistakes or errors in the transactions either by the employees or by the bank and avoid the loss made by such mistakes.
Compare actual profit with past years
- Apart from the balance sheet, the profit and loss statement is also an important part of any business unit. This helps to understand your earnings and spending with date and year. The current profit and loss statement can be compared with the previous statement to understand whether your business has improved or deteriorated compared to the previous years. This comparison helps to understand the actual numbers compared to the planned activities and highlights whether plans are achieved or not. This helps to make required changes in the plans.
Payroll and tax payments
- As you plan and schedule the payments to employees every month, you also need to plan for the payroll,[Payroll Software] tax payments based on federal, state, or local rules and regulations at different places and different times. Every registered business needs to report and deposit the income tax, Medicare, social security, and disability taxes on exact dates to avoid penalties or late payments.
Keep eye on due receivables
- Many business units manage separate columns for the data showing the days passed with due receivables. This helps to understand the payments that are due every after the due date. This data can be used to remind the customers of their due payments.
- These were a few of the points that need to be included in the checklist that can help to handle the small business. Comparatively small businesses tend to suffer more when the point comes to accounting and financial activities and hence they need to manage those well. There can be even more points depending on the business activities follow by your unit but these were major common points for all types of businesses.