The use of the word secret in regard to a successful business can simply be expanded to say that some small businesses today do not understand or realise the main ingredients that drive a business to success.
Success of a business
is a fine mix of several important factors such as:
- The expertise and proficiency to apply your skills to the highest quality.
- Satisfy your clients as without clients there is no business.
- The ability to manage time effectively to balance work and life.
- The ability to diversify and the willingness to make changes to improve the business.
- The main ingredient is the ability to understand the financial operations of your business.
Most business owners are able to manage factors 1 to 4 without too much difficulty. Where they tend to fall down is on the main ingredient number 5 the management of the financial position of the business. This is backed by the alarming rate of insolvency by professional tradespeople, professionals and small to medium businesses alike. Simply put Bookkeeping and that means the recording of all financial transactions including sales, purchases, income, and payments by an individual or organization.
And here is a little tip smart businesses outsource this roll knowing the savings against having an in house bookkeeper can be quite substantial and businesses that attempt their own bookkeeping are making a huge mistake.
Successful business operators understand the enormous strengths of using the services of a professional bookkeeper to assist in the management of the company finances. They can provide a business owner with not only the profitability of the business but also the cash management plan.
A good bookkeeper
will provide you with information to assist you in making informed business decisions such as regular financial reports and cash flow reports. They will identify the areas of your business that may need some attention.
One of the requirements of the Australian taxation office means that all businesses are now required to keep adequate records. Calculating and lodging your Business activity statement forces this requirement. Your bookkeeper is trained in the area of record keeping and the preparation and lodgement of Business activity statements. As such the tasks are completed in a fraction of the time that it may take a business owner with no knowledge to undertake these tasks.
One of the main areas of concern for a large number of small businesses is the GST tax regime. A director of a company in Western Australia was recently sentenced to three years jail for not declaring cash income and underpaying GST obligations. The ATO
compliance program is increasing its focus on non compliant businesses.
In order to ensure that your business is compliant, seeking the services of a professional such as a Bookkeeper/Registered BAS agent provides the confidence that the business is meeting its obligations.
Another area of concern is cash flow. Establishing the terms of payment with your clients up front can ensure that you are receiving payment when expected. While there will be some clients who fail to pay on time, setting the guidelines assists in the follow up process.
Your bookkeeper will be able to provide regular cash flow reports and use these as a guide to steer the business in the right direction and toward a healthy cash flow. And let’s not forget payroll and the numerous changes that occur in regard to entitlements to employees, including superannuation and salary sacrifice
To sum it up what this means is that the owner of the business has more time to concentrate on growing the business and allows for more time for activities outside of the work environment. Think of a qualified bookkeeper as a navigational guide driving your business in a forward direction.