Operating a company is never an easy task. You need to play very smartly to stay above all. Your every competitor is trying their best to beat you but are not getting successful. Why? Simply because you have taken into consideration all the factors that can harm your business and planned accordingly.
However, you are still facing the issue of earning less than expected. Correct us if we are wrong, but it must feel very demotivating. Perhaps, to understand the reason behind low profit, you conducted a meeting. And by the end of the session, you found out that the reason is “high expenses.”
The simplest formula to understand/calculate profits is: “Income- Overheads.”
That means even if you are earning well, your overheads can reduce the profits. That’s why you need to keep track of all corporate overheads. However, truth to be told, it is easier said than done. But not impossible! That’s the reason why you must continue reading this article to learn how you can manage the company bills and take your company higher.
Are you ready? Okay then, let’s get down to the business!
Maintain your accounts properly
It goes without saying that you need to maintain all your financial accounts properly. They help understand how much cash in hand and cash at the bank is available with the company. So that you can plan the future course of action accordingly. Besides, it also helps in identifying the areas that are burdening the company finances.
That’s not all!
You should also ensure that your company and personal accounts are not getting mixed. Never use your own money for the payment of company bills. In addition to this, you should use the company cards (debit and credit card) very carefully. Don’t give access to these cards to just anybody. Ensure that the person is trustable and hasn’t committed any fraud in the past.
Use software to storing receipts.
One rule that you should teach all your employees is that they need to have receipts of all the payments. It helps in avoiding the miscalculation of all the payments and money.
However, when we talk about a hard copy of receipts, there are possibilities that they get misplaced or wash away. That’s why you need to provide them with the best receipt scanning software so that they have a digital backup. This way, you can save them on the computers and live worry-free. Isn’t it a great savior?
Adapt double-entry accounting system
Basically, there are two types of accounting systems that companies follow: single entry and double entry. As the single entry system is easy to follow for various companies that’s why they start using it. However, the results provided by this system are not always accurate. And this inaccurate information leads to rising expenses when your business starts to grow.
Therefore, if you are using the single-entry accounting system, you need to change it immediately. It is indeed true that the double-entry system requires proper accounting knowledge, but you need to understand that it provides you accurate information. Moreover, rather than just keeping the record of debit and credit, it helps you maintain separate accounts (personal, real, and nominal.)
In simple terms, there are several shortcomings of single-entry accounting, and all these shortcomings result in fewer profits for your business. Thus, you must change it!
Take advantage of tax-deductible expenses.
One of the unavoidable expenses that every business, including you, have to pay is “Tax.” Paying tax is your responsibility, and you should never neglect it. But, we can’t underestimate the fact that it reduces corporate revenue.
Gladly the IRS (Internal Revenue Service) understands this factor and has allowed companies to avail advantage of it. According to section 162 of IRS, all the general and administrative expenses essential for the growth and development of companies are tax-deductible. These include legal and accounting services, professional dues, salary, rent, training, equipment and supplies, and several others.
Thus, you must take advantage of these expenses to amplify your revenue.
Record daily activities in a spreadsheet
Last but most essential, for daily financial activities such as sales, invoices, purchases, and other bills, you should create a daily spreadsheet. It will help in keeping a record of all the money your company has used in a day. It comes in handy when you need to calculate the raw material used by the company. Along with that, it’ll also help you in understanding where the money is being spent unnecessarily.
Nonetheless, you need to be very careful while adding the amount and information in the sheets. Otherwise, there is the possibility of miscalculation. Besides that, when you keep daily records correctly and with the utmost care, it helps you while you are preparing the financial statements.
To sum it all up!
All these techniques will help you track down all the corporate overheads and in making better financial plans. Not to forget, it will also guide you while making a decision for the company’s growth.