Maximizing Your Business by Understanding Your Business with QuickBooks
Understanding your financial information is one of the keys to maximizing your business. A lot of small business owners just know how their business is doing in their minds but as the business grows and their time is stretched, they often drift away from the earnings they once enjoyed or at least the earnings they could potentially have. Utilizing an accounting program such as QuickBooks is a way for business owners to stay on top of profitability. I hope to show you the benefits of using QuickBooks in your business.
The first key to maximizing profitability is to know the financial information of your business. Relying on your tax return does not count because you get the information for the previous year in March or April. By the time you review it some of your information is 15 months old.
You need to be reviewing your financial information on a monthly or at least quarterly basis to see what trends are going on in your business. What if costs increased by 10-20% and your purchaser does not tell you. You cannot afford to wait a year to find that information out.
In order to know your financial information, you need it in an accurate, usable format. I recommend QuickBook, more specifically QuickBooks Online (the web-based version of the popular bookkeeping program). Below are the 6 reasons I recommend QuickBooks:
1. User-Friendly: It is important that a novice can understand how to input basic transactions. A lot of business owners do not have accounting backgrounds and they need something they can understand and overall QuickBooks offers this. In QuickBooks Online, you can input estimates, sales invoices, purchase orders, create checks and much more while your accountant has live access to reconcile your books.
2. Multi-Users: This is why I prefer QuickBooks Online because it is easier to setup multiple users. No need to have IT setup the program on the server, you can setup several users and grant certain access levels to individuals who may need to input sales orders but do not need to see the checking account.
3. Mobility: Through QuickBooks Online, you can access from anywhere you have internet access, including a limited version on your phone. This is important in today’s on-the-run work environment.
4. Most Popular: QuickBooks has around a 90% market share which means they are investing in improvements and have a suite for almost any small business.
5. Tracking: You are able to track a lot of useful information such as inventory, customer purchasing habits, costs related to a project, employee time on a job and much more.
6. Reporting: At anytime you can print financial reports to include: income statement, balance sheet, Aging of Accounts Receivable, sales by item and much more. These reports are customizable so that you can see sales trends by month for each product to know how much inventory to order for the next season. Through reporting you can see trends in the business which is key early detection of a downturn. Utilizing reports and tracking, you can turn the information into new strategies and thus new profits.
Once you select a program, whether QuickBooks or an other option, the important thing is to keep it accurate. Many issues cause businesses to have incorrect entries which cause a host of problems. Errors can sometimes be just as bad as not having the information, so I recommend having an accounting professional verify your work periodically. It is good to give your accountant the file when they are preparing your taxes and ask them to make any correcting entries letting you know what they were.
With an accurate and up-to-date bookkeeping system, you can use it in helping you be more confident in making key decisions for your business. We will look at various ways to utilize this information in your business in the future posts.
If you have questions regarding selecting a bookkeeping software or how to check if it is accurate, send me an email and I would be glad to answer any questions or talk with you about your specific issues.