In a recent interview, leading CPA Pauline Ho, head accountant at Laus Consulting Services, LLC in Orlando, FL, revealed essential information for business owners regards small business bookkeeping. —
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When asked to comment, Ho said, “Accurate bookkeeping is one of the most important aspects of keeping a small business on track. Without it, small business owners could end up going bankrupt before being able to expand their business.”
Reviewing the books weekly is one of the best things a small business owner can do to ensure a company’s financial stability.
When asked about the benefit of this, Ho said, “Looking over the books weekly will allow you to understand the current status of your company, particularly when it comes to cash flow management, outgoing expenses, and current invoices.”
She was quick to add that this can also help in identifying and dealing with any potential business-related issues in a timely manner.
According to Ho, small business owners should retain all financial records and keep a copy of them.
“Checking your books on a weekly basis won’t make any difference if you’re not keeping all the business’ financial records. These documents include balance sheets, profit and loss statements, bank/credit card statements, as well as receipts and invoices.”
Related to this, staying on top of business invoices is essential to the financial health of any small-scale business.
“Late or unpaid invoices can seriously decrease cash flow and could have an impact on nearly every facet of a business. One way to prevent this is by ensuring your clients are paying their invoices before they place an order for more materials or products from you,” she said.
Ho was quick to add that another way to avoid late or unpaid invoices is by setting deadlines and penalties if those deadlines are not met.
One crucial thing that Ho says small business owners should keep in mind is to separate different types of funds.
When asked to elaborate, Ho commented, “Many businesses regularly fail because they manage their funds poorly. My advice is to separate funds that have been paid by the customers and funds that have been borrowed by the business."
“The best way to do this is by using software that can keep track of borrowed funds and income so there won’t be any confusion going forward,” she stated.
Purchasing easy-to-use accounting software tailored for a small business can dramatically help with bookkeeping.
“Much of the accounting software on the market these days is user-friendly and can work on a number of tasks to keep track of a company’s income and expenses. This will also allow you to access a business’ financial status at any point in time.”
“That said, before springing for the first accounting software you come across, you’ll need to choose one that fits all your business needs. The best thing to do is to get in touch with an experienced accountant before making a purchase,” Ho added.
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