When you hear that as a small business owner, you're now in charge of your business's accounting—don't be scared. Is it not just 2x2?
Maybe and a little more details; anyways, if you're able to grasp the concept of basic accounting and bookkeeping, you will be able to understand your small business's strengths and weaknesses. The reason is that sound bookkeeping and accounting knowledge would boost your business growth.
This article aims to put you through some tips that can help you learn proper bookkeeping and accounting skills to prepare you for the business growth that is to come. They are:
Get a business bank account- Separate all your finances!
Time and time again, we have preached basic financial knowledge to you, and we hope you listen and take notes—separate your personal finances from your business's finances. There are several reasons why this is really important to your business
- It helps keep your finances in order
- You'll need it to apply for loans and credit
- It makes your business more trustworthy
- It's easier to sync with your accounting software
Choose how to report income and expenses-
I'm sure you already know your income and expenses, but do you know how to record them? In accounting and business in general, there are several methods you can use to keep reports. These methods are:
- Accrual Accounting (Not recommended)
- Cash accounting (recommended)
Accrual accounting, in simple details, means recording revenue before payment of a product or service has been made and recording expenses your business incurred before you pay for it. This typically means everything is on credit at the time of recording—it means you're recording accounting entries for the money you have but haven't gotten yet, recording for the money you spent, but it still has not left your account. This is not recommended because it tends to fit companies with larger and more complex structures, usually the ones with shareholders and investors.
Cash accounting means recording revenue, income and expenses when payment has been made. Nothing is recorded into your cashbook or financial reports unless that customer has paid in full for the service or product you sold.
Pay yourself a salary.
For small business owners in Nigeria, it's pretty common to forget to pay yourself a salary or not even pay yourself at all. But understand that it starts to affect your accounting. If there is no structure in place for your business profit and income, there's a high chance you'd lose track of your accounting.
A clear boundary needs to be established, what will be used to grow the business and what is for your hard work.
The pros of this are that it makes your life much easier. It makes it easier to stay within your budget lane and more straightforward to continue to separate your business finances and personal finances.
To know more about paying yourself a salary, read more.
Get a bookkeeping and accounting software.
In business, bookkeeping is essential because it determines the health of your business, your growth, Conversions, Return on investment, and your performance over some time.
For your business to grow, you should understand how to measure if its health and performance tally with your business goals. A way to do that is to measure these 6 finance metrics, with which you track sales, expenses, debts, cash flow, etc.
An easy to use finance and accounting software tool is Kippa. Currently, the online mobile version of the app Optimizes both small businesses and medium-scale businesses. Some of the resources the app provides are:
- A data recording feature lets business owners track their everyday sales, expenses, and credit transactions.
- Keep track of your debts with a sweet feature that sends reminders to you within the app.
- Save your time with a simple dashboard
- It manages all your transaction data and information.
- Keeps tabs on the details of your inventory
- Organize and manage your shop within the app
- It also provides you with a business bank account to take all your business payments.
Create a business budget
This is very important; if you don't want to run your business into the ground by freestyling on your monthly expenses, then you should sit down and come up with a budget. This gives you a safety net to know whether or not you are overspending and if you're even making a profit. It's just one of those business tips that are indisputable.
Finally, after we have established why you should adhere to better accounting, we hope you can learn a thing or two from these accounting tips.
Run your business with Ease,
A crucial part of what the Kippa app does for your business is analyzing financial reports to help you make better business decisions; help you understand cash flow. And overall, it gives you insights that reveal the bigger picture of how your business progresses.
All the tools you need to start/run/ grow your business, your go-to bookkeeping, accounting and business bank app; Kippa gives your business a way to measure your overall performance. It also provides information to make decisions related to your business, and it helps you ascertain your revenue and income.