Strategies for Reducing Accounting Costs in Small Businesses
Small business ownership will give you a world-class education on many things, including what you are made of as an entrepreneur. Everything falls onto your plate as the owner and making sure that the accounting is done properly is your responsibility.
That doesn’t mean that you need to do it personally, only that it is your responsibility that it gets done and that everything is in proper order. This is not only a time-intensive process, but it can also cost significant amounts of money to keep your accounting in great shape. That is why all small businesses can benefit from learning how to reduce their accounting costs as they run their companies. How can these small business owners do that?
What Accounting Services and Tasks Are Necessary for Small Businesses?
Amal from Accountingpreneur said “To understand how to reduce costs, you must first understand what accounting needs are present in a small business.” If you run a small business, you are aware of these areas (or at least you should be!) and are likely spending your time involved in at least a few of them. What are these accounting needs?
As a business providing services or productsin the marketplace, invoices need to be generated and delivered to your clients in order for you to get the payments you are entitled. Invoicing is a critical accounting task for all small businesses.
- Recording Transactions
Accurate transaction records can give insight into your business that is hard to attain any other way. What is selling, what isn’t and trends that are important to note are all discovered with this simple yet important accounting principle.
- Balancing Books
Balancing your books is the only way that an entrepreneur running a small business can track how much money they are making (or losing).
Paying your staff on time and accurately is another major component of your accounting program in your small business. This includes compiling the hours, figuring out the taxes, the benefits and all the other moving parts that comprise the payroll process.
End-of-year (or quarterly) taxes are the other critical part of your accounting needs. The government doesn’t take kindly to anyone avoiding or being late on their tax payments, making this an area of particular concern for small businesses.
With all these tasks needing to be done, how can you save money without cutting any corners in the accounting department of your business?
Review All Fixed Accounting Costs
There are fixed costs that are directly a result of your accounting needs and analysing your fixed costs with an eye on how you can reduce business expenses will illuminate ways you can save money. What are some of the fixed costs?
- Staff that oversees payroll
- Office space
- Bookkeeper to balance your books
- Separate tax professional
- Banking fees
Review All Variable Accounting Costs
Variable costs are less common in accounting but still exist. For example, if you are audited, you may want or need to bring in help for the audit. If you are expanding or opening a new product line or location, you may also need to bring in extra help for the financial end of those transactions. Variable banking expenses, such as closing costs on a new property or anything of that nature will also affect your bottom line.
Create a Strategy to Increase Revenue
This is not a strategy to reduce accounting costs, but it always helps if you have more money coming in. Look for ways to increase revenue, like building your customer email list for advertising, social media campaigns and others as a way to increase revenue and increase cashflow.
Compile Cost Reduction Strategy
Cost-cutting measures are always a good long-term strategy to reduce wasteful spending. Cutting business expenses (including accounting expenses) can be challenging but if you do opportunity costs benefit and future forecasting, it may be the right thing to do for your company. What are some cost reduction strategies?
- Analyse the effect of debt payments and determine if changes should be made to free up more cashflow.
- Review how your business credit cards are being used and see if changes should be made.
- See if you have redundant staff that can be replaced by a software program.
- Can certain accounting jobs be melded into one role, removing the need for staff?
- Do you have the appropriate accounting software for your type of business?
Use Professional Accounting Services or Professional Accounting Software
You may be able to use a professional accounting service or software to take care of all your accounting needs as well as provide suggestions for better processes. By removing all the extra or unnecessary positions, you may be able to have a net reduction in costs by consolidating all of them into one simple and easy service.