Being a successful franchisee means having at least a general grasp on various aspects of running a business. You might not be an expert in marketing, management, or finance, but being well rounded enough to understand how each of these work will help you thrive with your franchise.
Today, let’s talk about accounting. It’s absolutely imperative to have a firm understanding of your balance sheet, income and expenses, and overall financial health. Here are some tips to help you succeed in managing your own accounting.
1. Use Accounting Software
Spreadsheets are so 1999. Now there are accounting programs designed to be used by your average business owner that make it so much easier to send invoices, categorize expenses, and simply stay on top of your accounts. FreshBooks and QuickBooks both make affordable and easy-to-use platforms that you can learn quickly.
2. Don’t Go it Alone
Even if you think you need to do everything in your business, that’s not necessarily true. Sometimes it’s better (and more cost-effective) to hire a professional who has deep experience in an area, like accounting, so you can put more time on running your franchise.
Even if you don’t need a full-time accountant, retaining one for a few hours a month to keep your accounts updated can be a major stress-reliever. Or just hire a CPA to help you file your taxes every year to ensure that you stay on the IRS’ good side.
3. Keep Track of Everything
It’s easy to forget to record a business transaction you paid cash for, and it might not seem like a big deal, but do this a few times and you could end up paying more in taxes than necessary. Use a business debit or credit card as often as possible to make it easier to track your expenses (accounting software can connect to your bank and download your transactions so you can categorize them appropriately).
4. Keep Business and Personal Separate
A really good piece of advice: have a separate business account for your franchise. When you share a personal account with your business, it gets too complicated to untangle which expenses go where. And come tax time, having separate accounts will take away at least some of the headache of being organized to file.
5. Build Credit, Even if You Don’t Need It
You may not see a need to take out a business loan for your franchise now, but there may come a day when you want to. Or when you want to negotiate better payment terms with your vendors. That’s why continually paying attention to your credit score and ensuring you pay all vendors and bills on time is important. Banks look at your credit history to determine whether you’re a good investment or not. So even if you don’t foresee that you’ll need a loan, keep your credit clean.
These are easy ways to ensure that your accounting stays up to date and doesn’t detract from you successfully running your franchise!