Effective accounting is a quiet but key ingredient of business success. Without a rock-solid approach to accounting, even the most promising of companies can collapse regardless of how dashing their website is or how effective their products are.
Poor accounting decisions often lead to hard-to-notice losses that start to drain the company slowly but surely. To make sure your business doesn’t make the same mistake, here are some effective accounting practices that are adopted by the most successful organizations in the world.
- Do Not Neglect The Month-End Close
A close refers to the time where business owners formally evaluate each line on their balance sheet and make necessary rectifications. In the end, this evaluated period is locked down, so it cannot be altered. Most successful companies you know do this on a monthly basis, right after the month ends.
This helps you get an accurate balance sheet that leads to an accurate income statement. A formal close keeps your focus on the monthly results and final numbers. This leads to timely reaction to trends and better financial results. If no one in your company has the expertise or time to do a formal closing, you can hire a remote accounting team to do it for you.
- Check The Cash Position of All Accounts
As the owner of your business, you must always know the cash position of all of your business accounts. This information can affect the cash flow for expenses and deliverables. If you fail to follow the right accounting practices, your business could experience an issue with the cash flow that leads to unhappy vendors and overdraft fees.
Make sure you regularly log into your banking website to see the summary of all your business accounts. If your accounting expert uses software, this information can be viewed through that way too. However, make sure that regular reconciliations and daily data entry tasks are performed to ensure the accuracy of these reports.
Never make any major financial decisions without determining exactly how much cash is available on hand. This involves having a clear picture of your bank account balances and upcoming transactions.
- Calculating Tax Burden For The Year
Most business owners do not have the experience, expertise or time to evaluate their tax burden. Moreover, they don’t have the time to study the financial reports to see where their business is regarding taxes that are owed, tax brackets, profitability, and more.
The best solution is to work with an accounting professional to help you with crunching the numbers. They can help you see if you can use any tax options before the fiscal year is over.
- Documentation And Filing of Receipts
Documenting every business transaction is critical so that you can take full advantage of available tax write-offs. Keep this documentation organized and on file so you can provide the records if necessary.
Do not overlook the importance of recording small transactions and keeping their receipts; these transactions can add up over time. For example, if you spend $6 on coffee at business meetings 3 times a week, you could have a $936 write-off at the end of the fiscal year.
Work With Certified Accounting Professionals You Can Trust
Looking for help with your accounting checklist? Talk to our team here at Remote Accounting Online. We help business owners take control of their financial futures by offering them highly customized services to match the needs of their business. To learn more about how we can help with your accounting needs, please give us a call at 541-772-5555 or write to us online.