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October 4, 202317 Ways Companies Can Prepare For Next Year’s Tax Season
October 4, 2023Original content can be found on the Forbes Finance Council website.
Additional Published Content by Julie DeLongOriginal Content
As a business owner or financial manager, keeping your company financially fit is a constant challenge. Effective accounting practices play a crucial role in achieving this goal, ensuring accurate financial records, informed decision-making and regulatory compliance.
To shed light on the subject, 19 Forbes Finance Council members share a list of the most helpful accounting tips. These insights provide valuable guidance on how to streamline financial operations, optimize cash flow and maintain long-term financial health.
1. Develop A Close Partnership With The Financial Planning And Analysis Team
Accounting should develop a very close partnership with the financial planning and analysis team. This partnership will help the accounting team not only understand the current performance within the context of future plans but also be able to steer the company in the right direction on the expected accounting treatment or impact prior to a financial decision being made. – Geetanjali Tandon, Ceridian
2. Include A Well-Structured Chart Of Accounts
Having a well-structured and fit-for-purpose chart of accounts and ensuring all accounts are reconciled and up to date, especially the control accounts and transit accounts, will ensure no “cookie jar” is sitting pretty and will go a long way in avoiding those nightmares when it is time for year-end close and audits. – Oluwatoyin Aralepo, Mastercard Foundation
3. Implement Effective Budgeting And Forecasting
Implement effective budgeting and forecasting. By creating detailed budgets and regularly monitoring and adjusting them based on actual performance, a company can gain better control over its finances. This helps in identifying potential issues early on and ensuring financial stability. It also facilitates resource allocation and setting realistic goals. – Jose Rodriguez, Got Credit?
4. Maintain Organized Records
Keeping organized records helps with every aspect of your business’s financial objectives and accounting needs. Get organized. Use a bookkeeping service to help you stay structured in real time, which makes this project less daunting. A popular program that many business owners use is QuickBooks. Quicken is also a good program for keeping track of your expenditures. – Letitia Berbaum, The Zandbergen Group
5. Utilize Balance Sheets
The balances on your balance sheet matter. You should have substantiation reports or worksheets that explain all balances on your balance sheet. If you do not know what the number is for, you need to get it off the financial report or discuss it with your CPA. – Marjorie Adams, Fourlane
6. Manage Your Accounts Receivable Properly And Prioritize Your AR Process
There’s not enough discussion on the importance of properly managing accounts receivable. Prioritizing your AR process ensures timely and prompt payments from clients. You can embrace innovative technologies like RTP to improve on-time invoice payments. By reducing processing time and fees, businesses can improve cash flow and gain immediate access to funds for expenses or debt coverage. – Nick Chandi, ForwardAI
7. Keep A 'Money-Owed' List
I accrue for all my expected and incurred expenses that I haven’t yet paid for. I then have a “money owed” list (accounts payable), which I consult before I commit to large expenditures so I don’t end up in a cash crunch when the bills I haven’t paid come due. – Aaron Spool, Eventus Advisory Group, LLC
Regular auditing keeps you close to the essential insight into your company’s financial health. This empowers you to make the best-informed decisions for your company and helps you anticipate and address potential challenges in your business operations. – Guadalupe Rodriguez, Talipot Holding
9. Update Your Books Every Week
The top accounting tip I have learned after 20-plus years as an entrepreneur is to keep your books updated every single week and have a “money date” with your business and personal finances. Using a money-tracking app like MyFigures can be helpful. Review your weekly and monthly cash flow, upcoming income and expenses and then track that to confirm how profitable you are on a regular basis. – Leo Kanell, 7 Figures Funding
10. Avoid Too Much Debt
Sometimes the wisdom of the ages has the best solutions. The best accounting tip for a company is to avoid too much debt. Sounds simple, but there is clear data that shows 60% of companies over lever and 90% of companies under stress have some component over too much debt. – Paul Daneshrad, StarPoint Properties
11. Invest In Excellent Accounting
As a business owner, I carefully keep tabs on the financial health of all of my businesses. I believe that investing in excellent accounting shouldn’t be considered a cost but an investment that sets the company up for success. Subpar accounting can set one back financially in both the short term and the long term. – Julio Gonzalez, Engineered Tax Services Inc.
12. Maintain Adequate Levels Of Working Capital
Maintaining adequate levels of working capital is critical, especially with market volatility. Prioritize working closely with key customers to ensure that funds are received in a timely manner and build strong relationships with your vendors to maximize the benefits of working capital for the company. Better communication across the board leads to success in the long term. – Omar Choucair, Trintech
13. Invest In Your Company
Invest back into your company. Use your finances for more growth and development to expand operations. Expand by hiring and promoting, building and improving technology—anything that can improve and grow your business. Reinvesting in your company is a great demonstration of your confidence in its success. – Austin Mac Nab, VizyPay
14. Establish A Realistic Budget
Establish a realistic budget and stick to it. Develop this budget to align with the company’s objectives and financial goals. It should incorporate investments and the company’s projected revenue and expenses. To maintain positive cash flow, regularly review and compare actual performance against the budget to identify any concerns. – Anthony Georgiades, Pastel Network
15. Set A Budget To Track And Control Your Expenses
Create a budget to track and control expenses. By setting limits for various categories, you can identify areas where costs can be reduced or reallocated to more critical areas of your business. – Sean Frank, Cloud Equity Group
16. Save Cash In Reserves To Support Your Business For Three To Six Months
Just as you have an emergency fund saved up (or should) in your personal finances, it’s equally important to keep enough cash in reserves to support your business for three to six months. This enables you to weather the inevitable storms that arise in your business while still having the confidence to make the strategic moves to grow regardless of the business climate. – Justin Goodbread, WealthSource Partners, LLC
17. Understand Your Monthly Cash Flow
Know how much money comes in and out each month. This sounds obvious, but many business owners don’t understand the ebb and flow of their cash. Step one for that understanding is to separate personal finances from business finances. A business checking account and credit card help business owners track expenses, revenues and profits. – Carolina Martinez, CAMEO
18. Review And Analyze Key Financial Ratios And Indicators Regularly
One accounting tip that has proven invaluable in maintaining financial fitness is to regularly review and analyze key financial ratios and indicators. Monitoring metrics such as gross profit margin, operating margin, return on investment and cash conversion cycle provides insights into the company’s financial health and performance. – Jared Weitz, United Capital Source Inc.
19. Work With A Qualified Bookkeeper
Many small business clients tell us that the best part of working with an expert bookkeeper is that they are confident their books are always accurate and current. If they need to work with a CPA for income tax strategy, apply for funding or work on financial strategy, they can just use their most recent financials. Working with a qualified bookkeeper is the first step toward financial fitness. – Julie DeLong, Backyard Bookkeeper