Accounting for revenue and expenses can help keep your business running smoothly. Make sure you maintain proper bookkeeping and have a basic knowledge of business finances.
START WITH A BALANCE SHEET
The balance sheet is the foundation of managing your finances. It operates as a snapshot of your business financials. It helps you keep track of your capital and provide a cash flow projection for future years.
A balance sheet will help you account for costs like employees and supplies. It will also help you track assets, liabilities, and equity. You can get insights by separating and analyzing segments of your business, like comparing online sales to face-to-face sales.
COST-BENEFIT ANALYSIS (CBA)
Looking closely at money-in and money-out helps maintain a sustainable balance between profit and loss. From development and operations to recurring and nonrecurring costs, it’s important to categorize expenses in your balance sheet. Then, you can use a cost-benefit analysis to weigh the strengths and weaknesses of a business decision, and put potential recurring benefits and cost reductions in context.
A CBA is a technique for making non-critical choices in a relatively quick and easy way. It simply involves adding money in benefits and money in costs over a specified time period, before subtracting costs from benefits to determine success in terms of Rupees. This can come in handy with hiring another employee or an independent contractor.
PICK A METHOD OF ACCOUNTING
Businesses often use either the accrual or cash methods of recording purchases. The accrual method puts transactions on the books immediately upon completing the sale. The cash method only records this once payment has been received.
Establish a basic payroll structure to help you hire employees. Then, manage employees properly with a general understanding of State and Central Labour Laws.
Your business will need to meet its Central, State and Local tax obligations to stay in good legal standing. Your business structure and location will influence which taxes your business has to pay.
Make a marketing plan to persuade consumers to buy your products or services, then decide how you’ll accept payment when it’s time to make a sale.
MAKE A MARKETING PLAN
Marketing takes time, money, and preparation. One of the best ways to stay on schedule and on budget is to make a marketing plan. It describes the actions you’ll take to persuade potential customers to buy your products or services.
Your business plan should contain the central elements of your marketing strategy. Your marketing plan turns your strategy into action.
MEASURE AND UPDATE YOUR PLAN
Plan to compare your marketing and sales costs to the revenue it generates. You want to make sure you’re getting a positive return on investment, or ROI.
Some tactics are hard to measure — like print advertising or word-of-mouth campaigns. Get creative and use others’ advice, but be consistent in how you measure the effectiveness of your marketing efforts.
Marketing plans should be maintained on an annual basis, at minimum. Measuring ROI will help you know which part of the plan is working and which part needs to be updated.
Smart planning can help you keep your business running if disaster strikes. You’ll want to take the right steps to prevent and prepare for disaster, and know where to get aid if disaster strikes.
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