The global pandemic has affected businesses worldwide since the COVID-19 outbreak. However, small-scale and medium-sized enterprises (SMEs) were the most impacted. While some businesses went on a temporary shutdown, others had to close their business for good. In fact, about 100,000 establishments have gone out of business at the onset of the pandemic.
Surprisingly, there has been an increase in new business applications in the U.S. Some employees who were laid off from work have ventured into business. A few others have thought the pandemic has opened doorways to new business opportunities. These include opportunities such as mask creation, delivery service, cleaning service, telehealth, digital marketing, and online freelancing.
If you’re one of those who have launched a startup during this pandemic, you must set proper accounting and bookkeeping. With these in place, here’s how to grow your small business amid the pandemic:
1. Record all financial transactions
Bookkeeping and accounting go hand in hand. While the former entails recording all transactions, the latter already involves analyzing, reporting, and making sound financial decisions. The rule of thumb is to record ALL your financial transactions, whether big or small. Be sure to track what comes in and out of your business funds. These primarily include all your income and expenses. Plus, include your assets (capital, tools, equipment, and property) and liabilities (business loans, utility bills, etc.) on your financial report.
2. Track your cash flow
Apart from merely recording all your financial transactions, tracking your cash flow is extremely necessary. Simply put, cash flow is the money that comes in and out of your business. With cash flow, your goal is to ensure that your business earns more than it spends. When it comes to this, it’s best to hire a cash-flow management consultant. A third party will be able to help you balance your profits and expenditures while ensuring your business makes more money.
3. Monitor your inventory
Inventory management is vital for a business, especially for a small business looking to grow and expand. For the uninitiated, inventory refers to your stocks used for production and sales. Your stocks can be in the form of goods or materials necessary for your business. It’s important to have proper inventory management in place. You or your accountant must establish strategic ways to procure raw materials, process your stocks, store them, and deliver products right at your customers’ doorsteps. That way, you’ll ensure your overall business efficiency and productivity.
4. Pay attention to your taxes
Tax is part and parcel of a business. However, it’s easy for some small businesses to dismiss their tax obligations. They fail to realize how keeping up with taxes and staying compliant will keep their business for good. If they don’t, this can lead to legal implications, financial penalties, and even business shutdown. In fact, hiring a tax specialist or an accountant who is well-versed with taxes can make all the difference. This professional will take of everything, from tax preparation up to tax filing.
5. Take advantage of accounting tools
As accounting and bookkeeping are essential, it’s best to invest in accounting software. These accounting tools are typically automated and partially AI-integrated. This means that they automatically calculate your finances and even generate reports. You don’t have to do the recording and reporting manually. Gone are the days when you had to use Microsoft Excel to perform your accounting and generate your reports. Today, you can take advantage of accounting software such as Xero, QuickBooks, FreshBooks, and NetSuite. These accounting tools are readily available.
6. Hire a professional accountant
If accounting and bookkeeping are time-consuming and laborious for you, work with a professional accountant. But make sure to hire someone who can take care of everything—from bookkeeping and accounting to inventory down and tax filing. That way, you can solely focus on your core business function: to increase your profit and grow your business. When looking for one, factor in their licenses and credentials, industry experience and areas of expertise, as well as their commitment to helping your business grow.
Accounting and bookkeeping are integral components of a business. They are all the more necessary when launching a startup and looking to grow your business over time. Be sure to record your financial transactions, track your cash flow, monitor your inventory, and pay attention to your taxes. Also, consider investing in an accounting tool and hiring an accountant for your small business. With proper accounting and bookkeeping, you’ll manage and maintain the financial health of your startup. Ultimately, you’ll be able to grow it over time even in the midst of the pandemic.