The Importance of Reviewing Your Books
Set aside an hour or so each week to review your books. Learn how money flows in and out of your business. This data can help you make important decisions concerning expansion and help you determine ways to cut back.
Compare past financial statements year-to-year, or quarter-to-quarter to see positive or negative cash flow trends. Not only does this help you make better financial decisions, it also keeps you connected to your business – after all this is your business, you’re solely responsible for how successful (or not so successful) your business becomes.
Cash In, Cash, Out
Are you overspending for computer equipment/software, office space, or product distribution? The amount you can spend largely depends on the amount you’re taking in each month. Creating and sticking to a budget is the first step in controlling money flow. The second step is to make sure you’re taking in enough each month to cover all business expenses.
If you’re paying for business expenses out-of-pocket or from personal accounts rather than business accounts, you may need to make some changes. Recognizing cash flow imbalance and then correcting it will help you become more successful over time. Develop good spending habits now to avoid debt down the road.
Why Having a Bookkeeper is Awesome
Even if you maintain business books yourself, you may still be unaware of leaks in cash flow. Professional bookkeepers not only keep numbers neat and tidy; they can also identify areas where you can save some money. Bookkeepers can also point out areas that bring in the most revenue.
Meet with your bookkeeper every quarter to go over your findings and to pick their brains. Bookkeepers with accounting experience can provide even more insight because of their training in tax preparation. You may learn new ways to save on your tax bill which can help you plan better for the future.