Ann Marie Puig on improving small business accounting oversight in 2020
Date : March 24, 2020 By
The words budget, balance, inventory, customers, payments and invoices are part of the vocabulary of any entrepreneur, and living the first days of the new year, all this can be summed up in one word: accounting. Accounting is a key instrument for the management of any company, and keeping it organized and cautious from the first month of the year can determine the growth or decline of our businesses. Ann Marie Puig, a successful business owner, accounting expert, and philanthropist from Costa Rica, provides insight on how small businesses can better manage their accounting practices in 2020.
It is good to take into account the financial projections and cost of operations planned for this new year. With this, the accounting area will be able to advise any financial decision made by management. This carries the accounting in a comprehensive way. Says Puig, “It is recommended to keep the accounting up to date through periodic reports of investments, income, expenses and debts. This will allow controlling business management and will help make better decisions.”
It is necessary to schedule the filing dates of the tax documents in order to avoid fines or interests that may complicate the accounting management and liquidity of the company. Among the most common infractions are legalizing the accounting books out of date, declaring taxes outside the established deadlines, expenses not recognized by tax authorities, or not issuing payment receipts for consumption.
All income should be deposited into a company bank account. This is necessary in order to keep records of these, and the State supervisory entities can identify the origin and destination of the money. It is essential to require that your suppliers deliver banknotes, invoices or payment vouchers.
Electronic invoicing makes the accounting process simpler and ensures proper record keeping. Adds Puig, “The use of this tool not only allows you to reduce costs and facilitates the calculation of taxes, but also transmits security to banks and finance companies, at the time evaluating the conditions for financing and facilitating audits.”
To implement electronic invoicing, you can easily choose a provider like Gosocket, with a free version for companies and professionals. In addition, it offers emission and reception of your documents, and storage and administration of these in the cloud.
Additionally, the improvement of the management that is carried out in relation to costs goes through a better control of budget compliance. The budget execution can be followed in detail to detect problems, deviations, bad practices or unexpected expenses, always with the aim of having full control of the use made of the company’s economic resources. Thus, and continuing with the previous example, in the case of an increase in spending on the posting of workers, it will be much easier to detect the origin: if taxi fares increase, the price of gasoline increases, etc. For this reason, it is essential to have tools that allow the detection of these accounting deviations in order to adjust the current budget (but especially later ones) based on the informative feedback received.
On the other hand, management accounting also allows a better allocation of expenses by department, by cost center, even by clients and projects. Explains Puig, “With this information you can study the profitability of the work done, know how much has been earned by each individual client or by each order. This also allows improving the efficiency of the company: empowering clients or types of projects more profitable than others, reorienting the business if necessary or increasing profitability with the analysis of indirect costs.” Thus, focusing managerial accounting on analyzing the profitability of business lines can be crucial to know whether or not they are worth it.