Managing your expense accounts
Managing your business accounts, needless to say, is of the utmost importance, especially if you're a small business owner. For a small business owner, the poor handling of expense accounts can lead to plenty of other trouble besides that which comes with tax time; mismanagement of expense accounts means you can lose money and not know it, pay more for something than it's really worth, buy something you don't really need, and so forth. Let's look at some pointers for managing your expense accounts.
- For starters, let's take the case of a non-business owner; let's take the case of a college student, Jimmy. Jimmy pays twenty dollars a month to use a workout facility near his apartment. After a time he finds that it's too expensive, and when his contract runs out, he makes sure to call in and cancel it. Three months later, while perusing a printout of his checking account expenditures, he notices that he's been charged three months in a row for gym privileges he already opted out of. Not only is he short sixty bucks, he has to call the local office of the gym, and be put on hold until he reaches the main office, and be put on hold etc.-you get the picture.
- Take Jimmy's case and multiply it a hundred or even a thousand times, and you'll begin to get the picture of the potential financial hazards of running a small business. Managing your expense account isn't an easy thing to do, but it's certainly possible; and you never know when ten dollars here, twenty dollars there, is just running down the drain and costing you a fortune because you didn't manage your expense accounts properly.
- In Jimmy's case, he could have seen the problem immediately if he'd simply made it a habit to check his bank statements thoroughly once a month. The failure to spend a few minutes on a boring task led to the waste of lots of money and hours. As a business owner, managing your expense accounts will be a more complicated task than simply scanning a bank statement. But of course it's the same idea, and it's your business, after all-that is, managing your expense accounts is just part of the job. Make it a habitual, painstaking part of the job and you'll be well rewarded.
- Every month, you should put together an in-depth income statement and review it carefully. Find out what you're spending, where you're spending it, and whether the investment is paying off. Keep a careful eye out for glitches like Jimmy's. Greet your expenditures with the question: "Was this really necessary to perform such-and-such? Could I do it differently, could I do it less expensively?" Better yet, ask these questions with an accountant. If managing your expense accounts is your goal, hiring an accountant is a fantastic step toward accomplishing that goal. An accountant is not only professionally trained in the art of managing expense accounts, he or she is full of the latest information on how to do things right. Your accountant will teach you how to better manage your expense accounts just by doing the job he or she was hired to do. As the owner of a small business, you'll want to watch your accountant carefully to see how it's done, so as to always be on top of things.
- Managing your expense accounts is like staying physically healthy. Exercise becomes less painful with routine, but it's never going to be as pleasant as taking a nap. A nap, on the other hand, isn't as generally pleasant as feeling healthy and strong all the time, and mentally calm, too, knowing that your arteries are nice and clean. Managing your accounts on a monthly basis, ideally with the assistance of an accountant, will allow you to feel confident that your business is healthy and on its way to becoming healthier still.