The 10 advantages of having the accounting updated

For some entrepreneurs, accounting can be seen only as a legal obligation and not as a system to create greater value for himself or his company.

 In general, every entrepreneur is committed and focused entirely on his business. Every single free minute you have available, or even the smallest amount of psychophysical energy, is certainly given to your business. Click Here
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Why all this?

Because every entrepreneur is aware that through his company he gets the economic resources to maintain himself, his expenses and his family.

In the daily life of a business, which is really important is to ensure that the product or service is supplied in the best way so that the customer pays for everything.

Accounting only as a legal obligation

 

Issuing invoices, receiving invoices, remembering to collect all the supporting documents and then sending them directly to the accountant are all things that take time away from the business of every entrepreneur.

• They take the time dedicated to customers to sell their products.
• They take the time to spend with their families.
• They take the time to devote to your employees.
• They take the time to study the competitors (who are always present and press to take customers away from you)
• They take the time to study a new marketing strategy.
• In summary: there are so many things to do and so many things to manage at the same time that preparing tax documents to give to your accountant are often things that are perceived as marginal to which you only have little time during the month (if not a few minutes 3 months).
• Often it is directly the accountant who reminds you to give him the invoices because he has to register them to calculate the VAT to be paid.
• For this reason, it is born in the minds of the entrepreneurs the association that accounting is only a bureaucratic thing, that it is only a legal obligation.
• But even if this is true (that de facto accounting is also a legal obligation), what is often overlooked is that having up-to-date accounting is a strong added value tool that can give you useful information to manage better your company, your marketing, defeat the competition and free up time for yourself and your family.
• If you don't know it's not your fault. It is simply because you have not thought of it before.
• With this circular, I want to give you valuable content to answer the following questions:
• Why do I need to update the accounts?
• What advantages can I get from updated accounting?
• What do you gain by having your accounts updated?

Accounting must be a system that generates useful information for your company

 

In fact, It is true that accounting is a legal obligation because you need it to identify the income to be included in your tax return.

But it is also true that at the beginning accounting did not serve to identify the tax income but to understand if the company produced profits.

So there is a lot of important information for our business that we can get from our accounting but over the years we have lost sight of it due to the fact that we perceive accounting only as a legal obligation and the fact that we are too focused on working in our business (without understanding the meaning of the numbers we get from accounting)

Since accounting is already a legal obligation it is your duty to find the useful information you need to:

• manage your business more effectively
• have more information for marketing and defeating the competition
• free up time for yourself and your family

What useful information can you get from your accounts?

Only you as an entrepreneur can know what are the useful data you can get from accounting to better manage your company in your specific context.

Below is a list of 10 elements that are useful to the entrepreneur to obtain valuable information from his updated accounts.

1. He can calculate in advance the income he will declare in the next tax return: so, as to quantify in advance the tax levy he will have to pay
2. He can know the margin he has on the products/services you sell: see if you have any waste and if you can optimize the procedure
3. You can calculate in advance the VAT you will have to pay (example if you pay quarterly VAT)
4. You can check if you are exceeding certain legal parameters: in this way, you can always be in the most complete legality (good and right)
5. He can know if the cost of the collaborators is eroding all the margin he has on the products
6. Can understand how much it costs to acquire a customer: evaluating how many customers generate a physical store by paying the rent and / or how many customers generate an online companion (example through facebook)
7. You can tell if the ordinary management of your company is really producing profits
8. Therefore it can also understand if it is producing or absorbing liquidity: acquiring a customer, selling a product is not always synonymous with greater liquidity. On the contrary, it could be that you absorb liquidity
9. Can understand when it is better to open a credit or a mortgage: liquidity is like oxygen. If you don't have liquidity your company is dead. To compensate for this we often ask for funding. And to find out whether a loan or a loan is worth it allows you to reduce the costs associated with financing.
10. You know how many and which are the fixed costs and the varied costs. In this way, you have the possibility to understand how many units of product/service you have to sell to get to balance (and therefore the minimum result you need to get to earn)

How often do I check?

• If you check the data once a year when you notice if your company is doing well or badly?
• If you check the data once every 3 months when you notice if your company is doing well or badly?
• If you check the data every month when you notice if your company is doing well or badly?
• If you look at your data once a year it is normal that you find yourself "surprised" by the too many taxes you have to pay or, even worse, that in the past year you have generated a loss instead of a profit.

This data cannot be checked only once a year. Minimum once every 3 months if not even once a month. Note that you don't have to spend whole days analyzing your balance sheet data. Just spend an hour a month checking your balance sheet data to understand, at the accounting level, where you're going with your company and identify what's not working and what's working.

But between saying and realizing, however, there are many other aspects related to programming and timing that must be respected and evaluated before starting to move.