Accounting is always regarded as the “language of business”; this is why every business owner should at least understand basic accounting principles. This method helps anyone who wants to start up their own business and monitor it in the long run. Not only do you need to make more money but you should also be careful about the money you already made. By establishing a strict accounting technique, good billing habits, and deploying accounting software like QuickBooks Online, MYOB, and etc., you can be confident that the financial aspect of your business is well-covered and the records are precise.
11 Useful accounting tips to help your retail business:
Do accurate invoicing
To keep the record of a sale is the most basic purpose of an invoice. This is a way to track the date a good is sold, how much money was paid and the outstanding balance. Invoicing is an extremely useful tool for accounting; you can track which employees make the most sales and what items they are offering the customers. The invoice should look clear and well-structured. Placing the right information is as important as choosing the font and layout that represents your company.
Determine a way to accept payments
Money is the lifeblood that keeps your company running. It is crucial to building relationships, but without a healthy stream of money rolling in, it will be irrelevant. You usually provide your customers with a lot of luxury to keep them connected to your business. You make them subscribe to your email lists; give them plenty of parking space, open at convenient hours and at practical locations. Collecting money follows the same rules as well. It will be good for your business if your customers can pay you easily. You can do it through checks, credit or debit cards, mobile payments like Apple Pay, COD or Cash on Delivery, and many more.
Collect donation and contribution receipts
Donation and contribution receipts are proof of your gifts to charitable organizations or funds and collection. You may enjoy the tax benefits of these activities outside of your business, but you must also make sure that for every organization you help, you should ask whether they can generate a receipt for the amount given. This may seem like a simple request, but it may make a difference on a contribution or donation being a tax write-off or it being denied. Don’t make it harder for you and the charity.
Talk to an expert
No matter how money savvy you think you are, you can’t keep all your finances on track all alone. Seek advice from a bookkeeper or accountant and let them look over your business’ financial operations. They’ll give ideas on how to save money, eliminate irrelevant expenses, and can keep you from making any mistakes that might cause you problems along the way.
Take charge of your tax liabilities
As a business owner, you manage a lot of expenses and one of them is your tax liability. Tax liabilities are the money you owe to tax authorities; these include the government, local, and state. These are short-term financial obligations that you incur from your everyday business operations that should be paid at the end of every year. There are three types of tax liabilities: Sales tax liabilities, Earned income liabilities, and Payroll tax liabilities. You must know your tax obligations, know when to pay for it, and stay up-to-date with tax laws because if you don’t, you might face government penalties or even jail time.
Calculate Gross Margins
Gross margin is the total sales income minus the cost of goods sold. It represents how much the company retains after sustaining the direct costs associated with producing goods and services it sells. It is important to compute this every now and then to know the production costs related to your revenue. This allows you to see if you should cut labor costs or increase prices and boost sales.
Find new ways to improve your operations
The market is fierce and the competition is very tough. As a business owner, you need to find new ways to reel customers in. You need to innovate the way you market your products and services. The key is to have a vision of what you want and seize every moment to take action about it. You can evaluate your pricing and find solutions to improve your business’ weak spots; institute measures to assess your business’ performance in the market, keep your employees involved in the operations and improve your marketing strategy to be more visible in the community.
Separate personal and business expenses
For small businesses, it may be tempting to use the same account for both personal needs and business needs. The problems with this approach are many. For one, you may not remember later which payment was made from which wallet, and to whom.
Over time, this can lead to tons of confusion. What’s more, maintaining separate accounts also limits your legal exposure (as an LLC) if you ever go bankrupt. If you make a capital contribution from your personal wealth, document this process clearly according to local laws.
Consider hiring a professional accountant
One of the biggest pain points for small retailers is knowing whom to hire and which cost to avoid. If you have reasonably good cashflows, think about hiring a qualified accountant to maintain your books. Not only do you avoid the hassle of number-crunching, but you also get an expert opinion.
Plus, as an independent entity, an accountant is better qualified to read your business reports and offer honest feedback.
Make automation your friend
Nearly every aspect of a business can be automated today, and accounting is no exception. Software like QuickBooks Online can help you maintain more accurate books. Even better, QBO now integrates with Primaseller so you effectively manage inventory and accounting in one go. From updating COGS to referring every invoice to QBO, Primaseller can help improve your daily retail operations significantly.
Did you know that you could sync your purchase orders, inventory, orders, invoices and more with your accounts on QuickBooks automatically with Primaseller’s QuickBooks Integration? Click here to learn more.
Follow up on your invoices
Most B2C sales happen at the moment, which means that the payments are received instantly. If you also sell B2B, it is likely that you have several pending payments.
First, find a way to keep track of every pending payment. While QuickBooks Online does maintain a record, also consider maintaining a spreadsheet you can refer to.
Second, set deterrents to late payments such as an incentive for paying early, or a penalty for paying later. Most of these need to be signed as a contract beforehand to be enforcible later.
Third, follow up consistently. There can be many reasons for an invoice not being cleared. What matters to you is that you need that cash flow to stay afloat. So, do not hesitate to ask.
These are our top 11 accounting tips to make your numbers make sense. Which one of these would you use?
John Lee is a freelance writer and business enthusiast who loves reading and writing about business trends. He currently works for Quickbooks Online, a business solution software company in the Philippines.