So, you finally decided to go into business for yourself. You opened a fashionable, healthy restaurant in a chic downtown location. You hired a few waiters and waitresses and a manager. After this, you made your first order of supplies, including different meats, 20 pounds of fruit puree for natural juices and desserts, and a week’s worth of vegetables.
Now what? Well, whether you are in the food or any other kind of business, setting up an enterprise is the easy part. What comes next is difficult, namely maintaining profitability and achieving growth.
From a financial perspective, a profitable business is not only one that sells many products and services. It is also one that engages in best practices that help the firm stay afloat. It is essential in new enterprises as resources are often limited, and the company is not well-known.
With that in mind, let us explore four accounting and financial management tips that will help your business thrive right from the start.
Business Is Business
One of the biggest mistakes many entrepreneurs make is not drawing a clear line between business and personal accounts. The main reason is that doing this will more than likely create a lot of confusion, ultimately leading to unnecessary headaches.
For instance, imagine you own the restaurant we mentioned above. If you have a single account for your personal and corporate expenses, you run the risk of not knowing what food is for your household and which one is for the enterprise.
At first, this might not seem like a big deal. Still, as the firm grows and there are many more details to consider, not establishing a proper distinction will make it more difficult for you to handle your company’s finances.
Know the Law
Did you know that according to American corporate tax law, small business owners should file their firm’s taxes along with their personal ones? If so, were you aware that the date to do this is April 15th? If you did, then pat yourself on the back as you are well ahead of the curve.
If an IRS agent ever comes knocking at your door and finds out that you have not been filing your taxes properly, he will not accept ignorance as a valid excuse. Nor should he. The laws are there for a reason, and whether your business is big or small, you should follow them.
There are many reasons why a starting enterprise fails. Maybe your idea is not as good as you thought it was, or the timing is not right. But don’t let negligence and a lack of attention to detail be the reason why your company doesn’t succeed.
Protect Your Operation
In 2018, MyFitnessPal, giant sports apparel maker Under Armour’s diet and fitness app, was hacked. It resulted in the open distribution of over one hundred and forty million personal records, including usernames, email addresses, and passwords.
If a multi-billion dollar company like Under Armour, an enterprise with enough financial resources to invest in software technology, is not fully safe, can you imagine what a kid with a little computer knowledge can do your business?
Of course, criminals will often target global enterprises before smaller organizations. This is common sense as they have much more to gain. But it doesn’t mean you should rest on your laurels and make their job easier. By investing in the right cyber-attack-prevention resources will be saving a lot of money in the future.
Automate Financial Processes
A calculator doesn’t make mistakes. But the person inputting the information on it might. As with most things in all industries and areas of business, mistakes are usually the result of human error. A person might be tired after having worked for 10 hours straight and mix up a nine for a six. He could also press the addition button instead of the one for multiplications.
These are elementary examples of things that can go wrong. The bigger the scope of the business, the bigger the chances of doing something wrong.
So, use the accounting and financial tools at your disposal. They will not only save you time and money but also avoid preventable disasters from happening.
As we have seen, there are four great ways for new business owners to minimize the risk of financial loss. They are having a clear distinction between corporate and private accounts, knowing the law pertaining to taxes, protecting their enterprises from cyberattacks, and automating financial processes as much as possible.
By doing this, they will give their firms the best possible chances for success.