It’s that wonderful time of year where we feel renewed hope and full of energy, so much so that we make resolutions in an effort to become better versions of ourselves. Why not apply that same energized vibe to your business and create business resolutions that will improve the health of your business?
New Year’s resolutions are usually centered around improvements to our health, both physical and mental. Let’s take it a step further and consider resolutions to improve the health of your business, specifically, financial health. A few to consider:
Improve record keeping/receipt tracking
We get it. Business owners are busy and don’t always have the time to deal with expense receipts in the moment. Receipts and record keeping are often those tasks that get pushed off until they absolutely need to be dealt with. As a result, there is a mad dash to find and reconcile receipts at the end of a financial period. Simple process fixes can often eliminate the stress of this situation. Changes can be small – such as setting a time once a week to reconcile receipts or incorporating an app, such as Exspensify or Shoeboxed, where you can simply snap a pic of your receipt to record it.
Whichever path you take, take a moment to review what is working in your current process and what is not. Then work with your team to find the best option for your needs.
Review expense categories
While we are talking about tracking expenses, we should touch on expense categories. The start of a new year is a great time to review your expense categories. What may have made sense a few years ago may not be the best way to categorize your expenses now. As your business grows, your accounting needs may change. For example, if you added retail or office space, you may need add in categories to record rent, utilities, building insurance, cleaning supplies, etc. Similarly, if you changed from in-person to remote work or consolidated product lines or services, you may want to simplify and inactivate some categories. Note: it’s best not to remove categories so that you can retain past history of that account.
Reviewing expense categories at the beginning of the year helps ensure that you are capturing information correctly now, which prevents having to do a mass adjustment later.
Reconcile bank accounts monthly (at a minimum)
Now that you have expense categories and receipt tracking in place, be sure to reconcile your bank accounts regularly. To truly know how healthy your business is, you need to have accurate financial information. Skipping this step will not only be frustrating later when you need the information, it can also be challenging to try and get caught once you have fallen behind.
Set up a schedule to review your financials
As a business owner, you have a lot to manage and reviewing financials may not be at the top of your list, especially if you do not have a finance background. However, if you do not know how money is moving in or out of your company, that is a sign that are missing vital business information. Whether you manage your financials on your own or with an accountant/bookkeeper, make it a priority to review your financials at least a quarterly. Having reliable financial information is critical to making strategic business decisions and growing your business.
Back-up your accounts/software weekly
Now that you have clean, up-to-date information, be sure to back up your system. If you have never had a hard drive suddenly die or have fallen victim to a virus that wipes out all your data, consider yourself lucky. As someone who has not been so lucky, I can share firsthand the impact of losing all your information. It is a horrendous feeling and a tedious task to try and rebuild the information you had. To avoid this situation, set up reminders to back up your info or better yet, automate the process if you can.
Get help when you need it
Getting help when needed applies to many areas of life, including in managing your business finances. A simple way to determine if you need to help is if you find yourself not doing your bank reconciliations monthly or feeling overwhelmed when working on your financials. These are important tasks that often get pushed to the bottom of the list when times get busy or if they are tasks that you dread.
If you find you are repeatedly skipping these month-end duties, it is a sign you need help. Rather than let your accounting practices suffer, we suggest hiring an accountant or bookkeeper to manage this process so that you can focus on where your strengths are and manage your business. If you are not ready to hire a full-time accountant/bookkeeper, a contractor may be a good option for you.
Remember, running a business is a team effort and you want all team members focused on the areas that they are strongest in, including yourself.
The key to successful resolutions is identifying those that are easy to accomplish and provide a high return. We believe that reviewing these items will provide you with a high level of return in your business. If you have questions or need assistance with any accounting or bookkeeping related task, we are here to help – contact us at 505-850-3908 or email@example.com.