Ways to manage your small business more effectively and efficiently
Small businesses are a vital contributor to the local economy but mismanagement can quickly lead to unforeseen failings. In these tough economic conditions, small business management is the key to business survival.
Business accounting tips for small business
With the global pandemic, where precautionary lockdown measures compel most of the population to stay home and business can’t operate, as usual, small businesses need to ensure effective management in all areas for maximum operational efficiency. One of the key areas of management in ensuring all business accounting is performed well. For those getting started, here is a look at some basic business accounting tips.
1. Set up a bank account
It might seem obvious, but many try to operate businesses using personal accounts. It’s important to open a separate business bank account to keep records distinct from personal expenses. This makes small business accounting much easier during tax season as well.
2. Expense management
Small business accounting relies on effective expense tracking, which means keeping financial statements, tracking deductible expenses, and preparing tax returns. When it comes to business expenses, it’s important to keep all receipts, including:
- Travel expenses – where, when, and why you travel by recording in a logbook.
- Entertainment and food – if you’re having a business meeting at a restaurant, then the receipt can be retained.
- Car expenses – repairs and maintenance for cars used for business must be tracked.
- Incentive and marketing – any items purchased as business gifts or that market the business must be recorded.
- Business from home – for those working from home, aspects such as rental/bond payment, WiFi and electricity need to be considered as a percentage that can be claimed back for business operations.
3. Monitor income and expenses
In addition to keeping receipts, small business owners will have to keep a record of all business incomes and expenses on a daily basis. All transactions will need to be categorised and then reconciled with receipts and bank statements.
4. Establish a payroll system
For small business owners who have to hire assistance from time to time or a small staff, a payroll system will need to be set up to ensure all payments are made timeously and relevant tax contributions are submitted.
5. Decide on the payment method
The drive of business is to generate an income, so small business owners will need to establish how that revenue will come in. The most common method is EFT payments, but business owners will need to establish what works best, as well as whether deposits and late charges are needed.
6. Get on top of tax returns
Consult with an accounting professional on what your business status is and exactly what tax returns you will need to submit throughout the year. Ensure you know the tax deadlines as you can incur SARS penalties if you don’t comply.
Digital solutions for small business management
There is a lot to monitor and manage when it comes to small businesses, but there are many digital platforms and innovative software packages that are now making small business management and accounting that much easier. Here are some of the digital solutions available.
1. HR software solutions
The automation of human resource (HR) management has drastically minimised the amount of administration performed by small business owners. There is now no need to outsource the task or hire a person specifically for this role; modern software solutions will perform the HR tasks efficiently, eliminating errors and saving on costs. Value-adding aspects such as employee performance can be tracked, and opportunities for growth and development identified.
2. Accounting software
Depending on the needs and type of small business, there is an accounting software solution available. Business owners can either invest in the most basic bookkeeping software, or they can invest in scalable accounting software that can perform more specific functions as the company grows. The basic computerised accounting solutions will manage the company’s books, monitoring basic income and expenses including accounts payable and receivable, sales and purchase orders, and the general ledger. Accounting software can effectively give an overview of the company’s financial viability by determining profit, loss, and asset status.
3. Tax accounting software
Further to the basic accounting software, small businesses can also invest in tax accounting software which has useful features such as deductible expense tracking and e-filing to allow for easy returns of tax information. A massive benefit of tax accounting software is the minimising of calculation errors and preparation for the financial year-end.
4. Data collection
A modern solution to small business management is the analysis of customer data to discover exactly what customers want and do not want. This form of Business Intelligence helps business owners to streamline operations by tracking, gathering, and analysing relevant data.
5. Digital logbook
Monitoring automobile expenses can be quite a tough task. Business owners and employees need to keep a record of kilometres travelled for work reasons so as to work out petrol, as well as wear-and-tear costs. Fortunately, there are now electronic logbooks that assist in monitoring these aspects of small business travel effectively. Unlike manual logbooks, there is less margin for error.
6. Payroll software
Another aspect of small business management that has moved to the digital platform is payroll. Innovative payroll software offers business owners a number of key features including time recording, payroll reporting, storage of personnel records, and planning for future costs.
7. Business oversight
As a business grows, business owners run the risk of losing a grip on the ins and outs of the various business activities and transactions, which is where errors can be made. There are many apps available that empower small business owners with valuable financial oversight at any time, via computer, tablet, or even mobile phone. This also means that, no matter what the situation, business owners are able to keep on top of all business operations.
There are so many modern tools to assist owners of small to medium-sized enterprises in the effective and efficient running of day-to-day operations. This takes away the administrative hassle of business ownership while also ensuring that all processes are within regulation and timeously implemented. Business owners should thoroughly research the various small business management and accounting tools available, and partner with reputable suppliers to ensure they are investing in the best possible tools for their particular business needs.