When the first flowers poke out their heads, small business owners begin the entrepreneur’s version of a spring-cleaning ritual in preparation for filing tax returns. But a springtime cleanup of bookkeeping and accounting is also a great reminder of what you can do to be more proactive year-round, allowing you to achieve better results as well as preventing another messy situation next spring.
This year, approach tax prep as a springboard to adopting a proactive stance to business accounting. That’s not to say you can skip the reactive chores of tax time entirely, of course. Things like closing out the books, bringing accounting up to date, and verifying data remain critical jobs. But by creating accounting efficiencies in the current year, you help ensure that these basics demand a lot less hassle to complete when tax time rolls around next year.
Dust Off Your Budget
How does that budget you prepared for the new year compare to your actual first-quarter numbers? If it diverges significantly, now is a good time to explore why and revise your predictions. Is revenue meeting your expectations for the first part of the year? Look at expenses, too, and see if there are any you can reduce or eliminate.
Evaluating sales, new business, marketing effectiveness, and staffing needs now can help you identify problems or areas that may need your focus. You might want to consider outside assistance for an objective eye and fresh ideas to help you meet your goals for the year. An outsourced CFO can help you align all the elements and set priorities, so you can optimize business profitability while keeping risk to a minimum. Accounting systems that encourage you and your advisors to collaborate in real-time while studying your organization’s financial results can help make quick work of this.
Declutter Your Data
Reducing paperwork is an effective strategy to streamline business administration. Check for any recurring bills you can manage online and actively seek other ways to simplify routine bookkeeping tasks. If you’re still spending time invoicing, entering bills, and tracking vendor payments manually, there’s a better way. A virtual bookkeeper can free up time for you and your staff so you can focus on strategy and business improvement. And to go paperless all together, consider using accounting systems that allow all of your bills and invoices to be stored electronically.
The same goes for time-consuming yet crucial business accounting tasks such as generating financial statements and reconciling bank statements. Automating the bank reconciliation process saves time and improves your ability to monitor cash flow; a high-quality outsourced accounting provider can help you better understand and leverage the insights hidden in your financial statements, and make sure these documents are completed accurately and on time.
Getting organized to file taxes isn’t most business owners’ idea of a good time, but it’s more rewarding when you recognize the opportunity it represents. Taking care of your business is a year-round job, and the more efficient you can make your accounting systems and processes now, the easier it will be to run it profitably and sustainably in the months to come. Contact the business advisors at CRI for more ideas to make your business better and your life easier.