Take the Temperature of your Company's Financial Health

In any business, a clear understanding of the company's actual financial performance is critical to success. Measurement strategies and tools should be implemented to track and interpret the numbers generated by a business. An effective accounting and financial management system can provide this type of information to business owners, and the system's data can be manipulated and analyzed to provide key insights into the financial health of your company. A versatile accounting and financial management system can also enable you to interpret the status of your business to third parties, like banks and the government. The other advantages that accounting and financial management systems offer include:

Avoiding Assumptions on Financial Health: By maintaining an accounting system, you can make informed decisions about your business. Although there are multiple factors to consider, financial health should be a critical element in your decision making process for moving your business forward. Detailed accounting records and a proper financial management system reflect where the business stands financially. You won't ever need to guess about the financial position of your business.

Accuracy and Consistency in Information: Accounting plays a crucial role by offering you a means of communicating the financial aspect of a business to others. The most important function of any accounting system is to retain and present data so that managers and owners can analyze the decisions they have made. Financial status helps immensely in making profitable decisions for any business.

Aid in Analyzing Business Deficiencies: Professional and quality accounting systems generate reports that will enable you to assess the profitability and performance of your business. Accounting and financial management systems will not only allow you to make decisions, but they can also help you identify areas of your business that require improvement. Once the troubled areas are identified, you can work on those business functions to improve them.

Maintain Comprehensive Audit Trail: If your business requires loans, the lending firm will likely ask for financial reports and other relevant data so that they are able to estimate the net income and actual worth of your business. They may also assess and evaluate your financial statements to monitor your potential repayment of the loan. Availability of such information is almost impossible without any accounting and financial system in place that can provide financial statements.

Well maintained accounting records indicate where your business stands financially. Implement and retain your accounting and financial management system, and your business will find its way to success!

If you would like to discuss how I can help you plan a strategy to keep your company's financial health in the positive, please call me at 781.503.9004 or email at sales@aixsol.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Accounting and Bookkeeping Services for the Small business

Accounting and bookkeeping services function as the backbone for every business. As a small business, it is very essential to ensure you maintain your company's records in a comprehensive manner. Good accounting and bookkeeping practices include thorough record-keeping and ensuring that every bit of expense and revenue is accounted for.

If you're a small business and you're feeling overwhelmed keeping a track of your financial matters, especially your accounting services, you're not alone. Many small businesses start out with small capital. However, it is important to keep track of how this limited pool of funds is used, especially in the period before the business starts to earn revenue for itself.

When do you need help

As accurate record-keeping is vital to accounting services, you must ensure that all transactions, regardless of their size, are noted. However, this can often become a neglected area in daily operations, particularly if the business functions as an enterprise and there is very less manpower resource to spare exclusively towards accounting and bookkeeping department. This also extends to shortage of infrastructure. Most widely available accounting softwares in the market turn out to be an expensive investment. Together with hiring trained manpower resource and maintaining software infrastructure, carrying out integration, and automating systems, the costs of setting up a dedicated accounting unit can be pretty high for the small business.

Determining when you need help can be a tricky aspect, especially when considering accounting services. Even if you started as a small business, once your business starts earning revenue and building a bigger list of clients, your list of accounts payable and receivables will also increase. You may need to consider hiring accountant bookkeeping and accounting service provider.

Outsourced and more reliable

Contrary to what many people may be worried about, outsourcing your work can be a blessing. Accounting and bookkeeping services are a specialized area. If you don't have professional expertise, it is better, and much more profitable to hand over the work to someone who does it dedicatedly. Let's look at a few reasons why outsourcing requirements related to accounting and bookkeeping is a good idea.

Professional expertise: Your accounting & bookkeeping work will be executed by professionals, instead of being hastily put together by yourself after a short online self-teaching session.

A professional will also help you determine what kind of accounting is suited to your business (cash vs. accrual)

Save on costs: It is likely you have a resource in your organization who understands a bit of accounting and bookkeeping. However, it isn't profitable if this resource has to put aside his or her routine work to attend to accounting and bookkeeping tasks.

Superior quality: Accounting and bookkeeping need detail and accuracy. When your accounting work is carried out by a professional, you get reports that are comprehensive and detailed. Superior quality accounting work also helps your tax preparation.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Efficient Record Keeping Strategies to Ensure Smooth Audits

Take any process. You will find that efficiency most often results from investments of time and organization. The same theory applies to accounting functions as well.

Audits are an accounting function where financial statements are examined to verify information. A financial audit determines whether the information contained within financial statements is reliable and accurate.

An audit is significant because it represents the basis of confidence invested in the company by its shareholders. A financial statement is often referenced to assess the 'health' of a company, and an audited statement can significantly enhance an organization's credibility.

How can you ensure greater accuracy in your audits? Below are some ways in which you can improve your record-keeping methods to ensure smoother audits:

Records needed

Maintaining effective records requires that you have a clear understanding of the kind of records you need to keep, and this is dependent upon the type of business that you operate. Some businesses must maintain property and real-estate related records while others must track purchases of other assets, such as machines or vehicles used for your business. In general, the kinds of records needed include:

Gross receipts for income received as a result of your business. Examples include receipt books, credit card slips, invoices, Form 1099-MISC, etc.

Documents supporting purchases you have made for your business, particularly if your business includes procuring or purchasing raw material and converting it into finished goods for your clients.

Records of employment are equally important. As employers, you may need to preserve employment records for four years, as part of good record-keeping practices.

Why keep records?

Records assist in:

Consistent business monitoring

Keep track of triggers that may impact the progress of your business. This can include documents which may indicate areas of potential sales growth.

Accurate financial reporting

The importance of this cannot be overestimated. Make certain to maintain error free income statements and accurate balance sheets. These represent the way in which you manage your business and relationships with your creditors or lending institutions, such as banks.

Maintaining receipts

Compile and organize your receipts carefully. Most businesses receive payments or income from multiple sources. It is critical that you track these sources and segregate your taxable and non-taxable income. Your bank statements should be reconciled regularly, while your investment records should be organized to reflect any taxable income.

Maintaining organized receipts assist in facilitating smooth audits, any they also help you accurately track of expenses and income.

Review reports periodically

Review your accounting and financial statements periodically to check for accuracy. Periodic reviews allow you to note mistakes in their initial stages and avoid having them snowball into larger issues.

Additionally, reviewing reports periodically ensures you are tracking expenses and costs. If at any stage you uncover an expense discrepancy, it can be addressed immediately. Discovering discrepancies which could have been easily resolved at the last minute only points towards poor report management and can create problems during an audit.

Consolidate reports and data

Most accounting data is voluminous and substantial. Instead of manually pouring over multiple, diverse entries and worksheets, which can result in unnoticed errors, consolidate related data in a single place.

A single source will also assist you in knowing exactly where to look for specific information.

Again, consolidation is easier when you review your records regularly. A small unit of data is easier to consolidate than larger chunks, which makes regular review and consolidation more meaningful. Invest in automation, if it helps your financial record-keeping. If executed by the right vendors, automating your accounting systems can help you reduce actual errors while allowing you to process more data in a shorter period of time.

Implementing the above record keeping strategies will help ensure that your business has a smooth audit.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.