Strong Accounting Helps Your Business Grow

Using Strong Accounting to Grow your Business

For many business owners, especially small business owners, the decision to open a business was not driven by their skill with finance. That doesn’t mean finances or generating a profit isn’t important to these owners. It simply means they were driven to open a business because of their passion or because they had a great idea that they thought that they could generate a profit. This leads a surprising number of business owners engaging in poor accounting practices. In 2015, the financial success of every business is based on a solid foundation of accounting.

Cash Flow

It would seem like every business would keep detailed records regarding their cash flow.

However, that is not always the case. The problem is that many business owners confuse long term profitability with monthly cash flow. They maintain a solid eye on their end of quarter projections while neglecting to manage weekly or even daily cash movements within the organization. This can lead to disastrous situations in which an otherwise profitable business is suddenly lacking in short term liquidity. A an account can help ensure that bill and payments schedules are organized in such a way as to maximize daily cash flow and eliminate liquidity issues.

Loans and Investments

Long term growth for any business is often dependent on cash infusions in the form of loans or outside investment. Investors and lending agencies have certain expectations and standards when it comes to where they send their money. Many business owners have extremely efficient systems in place that help them manage their finances. However, these systems are often confusing to outsiders and not based on generally accepted best practices. A professional accounting system can help business owners make sure they are organizing their finances in a way that reflects industry standards and expectations. This makes attracting investors or obtaining a loan a much simpler process.

Tax Management

One of the most efficient ways that any business can facilitate growth is by using an accounting program to manage their taxes. Many business owners make the mistake of believing that they can manage their taxes on their own or simply seek help from a professional prior to filing their taxes. Tax laws and codes are not only extremely complex, but they are also constantly changing.

Maximizing growth through reduced tax obligation requires careful planning with one eye constantly on the future. A tax professional can ensure that a business is implementing a financial plan that reflects both the current and future tax situation of the company.

Gennady Barsky is the CFO of JetSmarter and has many years of experience in the investment and real estate industries.