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The Importance of Accounting for Small Businesses

The Importance of Accounting for Small Businesses

Accounting is one of the least-loved aspects of any small business. However, it is one of the most important parts of running a successful company. The Write Hand is here to help, throughout all your bookkeeping and accounting woes.

The Importance of Accounting for Small Businesses

Bookkeeping is necessary in any business. As a small business owner, it’s important to recognize that the best practices used by Fortune 500 companies also apply to you. Following basic accounting principles is essential for success in any size business; savvy record-keeping and financial analysis is key to not only monitoring your expenses, but to discovering new avenues of growth. In addition, it ensures you stay responsible for tax obligations to the government and to your employees.

small business accounting

Accounting entails more than just managing credits and debits, and it comes into play more often in everyday business decisions than you may realize. A few examples include:

  • Closely monitoring your accounts receivable to illustrate trends or behaviors in your customer base. It can also cut down on the costs you incur by pursuing late payers.
  • Establishing a detailed budget to help discover inefficiencies within your operations.
  • Sudden changes in vendor costs or sales revenues can alert you to important industry changes.
  • Understanding your financial position in order to spot problem areas that could interfere with loans earmarked for expansion.

As you consider your accounting strategy, review your company’s financial goals. Whether you are a solo entrepreneur or you employ a staff, your survival hinges on clearly stated financial objectives. You may be in business to reap as much profit as you can, or you may be interested in sharing a product or service that you believe in. Either way, experts agree that one of the most common reasons small business fail is because cash flow runs dry. To prevent this disaster, your business should implement policies for efficient record-keeping and a sound financial strategy.

Taxes are unavoidable. Depending where you operate and the nature of your business, the IRS has very specific requirements about the documentation you’re required to file. Submitting improper or inaccurate documentation can get you into trouble, and it can be extremely costly in terms of fees and penalties. Preparing the required tax documentation has its benefits though, and it can give you vital information about the health of your business. Monthly or quarterly financial statements, cash flow statements, and asset and income statements can provide a clearer picture of your business than your bank balance. Understanding IRS requirements and how you can make them work for you can give you a deeper understanding of your company’s financial health.

small business accounting

What information should I be tracking?

If you haven’t had formal training in accounting or are more interested in other aspects of your business, keeping meticulous records of financial data can be a chore. Furthermore, understanding precisely what information you should be tracking can be overwhelming and confusing. Most small businesses should track the following categories of data:

How should I track these metrics?

Though it’s quite common for small business owners to have a spouse or family friend “do the books,” effectively managing your small business’s finances goes beyond bookkeeping. Properly strategizing for your company’s future, as well as meeting your legal requirements, is best achieved with professional accounting methods. This is particularly true if you’re too busy or too uninterested in the nitty-gritty details to analyze the numbers. At this stage, successful small businesses consider either outsourcing their accounting needs or investing in accounting software. Each option has its pros and cons.

For many startup companies, funds are tight and it may be tempting to pursue the cheapest method. Because your legal requirements are only due once per year, you may choose to ignore it all until tax time every spring. Remember, if you choose this option, you’re essentially opting out of receiving crucial data that can encourage success. The short-term solution may not be the best one, and it pays to do your due diligence when making this critical decision.

Read more about accounting and bookkeeping resources here.

Find more accounting and virtual assistance help from The Write Hand LLC.

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What Can I Delegate to a Virtual Assistant by The Write Hand, LLC

Using a virtual assistant can shave hours from your workweek, but knowing which tasks to delegate can be tricky. When considering a virtual assistant, I suggest that you start with a list of tasks that take away from your main business goals. What are you doing that could easily be accomplished by somebody else?

Working remotely is rapidly becoming appealing to employees and employers. Both are finding and capitalizing on the many rewards. Employees are broadening their horizons, working flexible schedules, and finding greater work/life balance; thus creating a happier and more successful employee. Employers are realizing economic savings with the reduction of overhead and better output from employees that are truly enjoying what they do. Virtual Assistants are just one category of remote workers but they sure can save you a lot of time and aggravation.

Certainly running your own business can mean burning the candle at both ends. How many times have you been so overloaded that you just didn’t know which way to go next? Wouldn’t it be great to have your own virtual assistant? Well you can!! No, I don’t mean an assistant that shows up at your door Monday through Friday from 8 to 5. I’m talking about an assistant that is ready when you are, can do a lot or a little; an assistant that you keep in your back pocket for one off tasks or maybe a steady 2-3 hours a week to free you from pesky administrative chores.

No matter if you’re running the race in corporate America or forging your own path in entrepreneurship; a quality virtual assistant can be an economical and beneficial facet of your success. Sometimes, all you need is an Ah-Ha moment to get the wheels spinning…

 
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Posted by on April 11, 2015 in Let's Share...

 

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3 Mistakes to Avoid when working with a Virtual Assistant

3 Mistakes to Avoid when working with a Virtual Assistant

I have no desire to recreate the wheel if it rolls along just fine. As a Virtual Assistant, I am very much in tune with my strengths and the strength of others. So when I found this article written by Dorie Clark, I felt it was right on and worth sharing. Using a VA can certainly help free up some your time on tasks that aren’t your specialty but you still have to make sure the job is getting done to your desired vision. And as Dorie mentions, I too have subscribed to the 4-Hour Work Week by Tim Ferriss, although in all honesty, I’m still trying to perfect that vision – haha. Frankly, I just like what I do and enjoy being the go-to chick that makes success for my clients.

Dorie Clark – Contributor to Entrepreneur Online Magazine – September 29, 2014

Like many entrepreneurs, I was introduced to the concept of working with a virtual assistant, or VA, by Tim Ferriss’ The 4-Hour Workweek. He extolled the benefits of outsourcing repetitive work (or tasks you aren’t good at or don’t enjoy) so you can focus on your most valuable tasks. Lured by the idea of following the 80/20 rule (i.e., spending my time on the 20 percent of activities that generate 80 percent of my returns), for the past six years, I’ve worked off and on with VAs locally and around the world. They’ve handled a variety of tasks for me, including transcription, sharing articles on social media, uploading and formatting blog posts, audio and video editing, writing interview questions, and more.

If you’re considering hiring one — or would like to improve your working relationship with the ones you’re currently contracting with — here are three mistakes to avoid.

1. Failing to scope out your tasks. Well before you hire a VA, it’s useful to make a list of tasks that you’d like them to perform for you. In my case, it includes things like booking travel arrangements, uploading blog posts and sharing articles on social media. Creating an accurate task list can help you select a VA with the right experience and aptitude. Once you hire your VA — either through personal networking, placing an ad or perhaps by using a service such as Zirtual — you’ll also want to put the same level of advance thought into describing each individual task you’d like accomplished. This is especially critical if you’re dealing with an overseas VA whose cultural reference points may be different than yours; they may not understand that booking a Boston to Atlanta flight with a layover in Los Angeles is a very, very bad idea. You can save yourself a great deal of trouble later by being very precise in your instructions and trying to anticipate questions your VA might have or ways things might go wrong.

2. Not making time to review their work. It’s tempting to think that once you hire a VA, you can delegate the task and then forget it. But, at least at first, that’s definitely not how it works. You need to build time into your calendar to review everything they do, so you can catch problems early and offer suggestions and feedback. Some VAs may be hesitant to alert you if they’ve hit a roadblock or don’t understand your instructions. So checking in frequently and monitoring their progress in the early days can ensure they’re not going down blind alleyways trying to follow instructions they’ve misconstrued. It’s easy to get busy and ignore your VA temporarily; they’re not demanding your time the way a client would. But if you want them to be effective, plan at least 30 minutes per day to review their work early on. That gives them timely and actionable feedback, and will save you money because they’re less likely to have to go back and redo tons of work.

3. Not creating a system. One of the best things I did with my most recent VA was developing an “assistant’s manual” prior to her starting the job. I wrote down step-by-step procedures for the most common tasks I’d be asking her to do and put all the relevant information, such as website passwords or frequent flier numbers, into one easy-to-search document. (Depending on the task, you could also consider making online videos to demonstrate procedures to your VA.) That ensured she wasn’t constantly barraging me with basic questions and she could quickly become self-reliant. When she took on a new task, I also instructed her to write up the procedure and include it in the manual, so that it could become an ongoing reference tool for the future. The goal is to enable an easy transition and avoid having to reinvent the wheel when there’s been a long gap in between performing a particular task (such as uploading a blog post to a particular website with its own layout quirks).

Working with a VA can exponentially increase your productivity – but that’s only if you fully leverage their time and talents. You’ll never harness the real benefit if you’re constantly having to clean up mistakes and do things over again. The only way to avoid that is by planning in advance and setting up the systems that will enable them to succeed.

Full credit and article here

 

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