More than 60% of small business owners feel that they don’t know much about accounting. Painting is a profession that requires dedication and skill, and when you have little accounting experience bookkeeping can feel like a chore.
The good news is that there are plenty of tools available to help you manage bookkeeping on your own, no prior accounting knowledge required.
If you’re looking to simplify the bookkeeping process, we’ve got some pointers to get you going in the right direction.
Record transactions with accounting software
Step one in managing your painting business is digitally recording transactions. No matter the size of your business, doing this process manually can be tedious. You’re also more prone to errors and omissions.
Using accounting software essentially eliminates the need to learn about bookkeeping at all. The service does the job for you. These programs are designed to be user-friendly and customizable. They keep track of your growing finances so that you can analyze numbers in a meaningful way.
Benefits of recording transactions digitally
· Syncs all your financial data for easy tracking.
· Records and processes all your transactions in one place.
· Promotes overall accuracy of accounting processes.
· Analyzes financial transactions and generates reports that aid in improving management.
Factors to consider when purchasing accounting software
· Features and functions – Are you looking for simple software or something that handles more complex processes? Find a program that manages accounts receivable as well as accounts payable. Your system should enable both cash-based and accrual-based accounting. For most trade businesses under $10,000,000 in revenue, Quickbooks Online is often a good fit.
· Ease of use – This is particularly important if you lack accounting knowledge. The system should be easy to learn and use. Some systems are intuitive in that they track your usage patterns and tweak the user experience accordingly.
· Compatibility – Find a system that integrates with other programs you use, such as payroll and project management.
· Cost – The software’s price will factor in its features and user experience, but your choice ultimately depends on how much you’d like to budget for an accounting system.
Get ahead on payroll
Because staff is limited, painting entrepreneurs often forego using a digital payroll platform. But a payroll service can come in handy, even if you only have one or two employees.
Automating payroll is fast, convenient, and secure. You can ensure your employees are paid on time, every time.
Benefits of payroll services
· Ensures that everyone is paid in a timely manner.
· Accurately calculates wages owed to employees.
· Provides additional features such as tax calculation and compliance with legal guidelines.
· Controls costs and helps you better manage expenses.
Factors to consider when opting for a payroll service
· Scope of business – Choose a service that suits your particular needs. For example, one service may cover one company with up to 100 employees, while another service may allow 10 companies at 75 employees each.
· Payment options and frequencies – Painting often involves taking on multiple projects of varying magnitudes, so look for a system that supports multiple paying frequencies such as hourly, monthly, project-based, etc. You may also want multiple payment options, such as checks and direct deposit. For companies with fewer than 100 employees, Gusto is often a good fit. It auto-files your federal and state payroll tax forms and pays payroll taxes. Also, it often integrates with time tracking software and bookkeeping software.
· Additional features – Many payroll platforms offer other services like accounting, compliance, and taxation.
A major function of bookkeeping is tracking your expenses. Once transactions are identified and classified, it becomes easier to make informed decisions and reduce unnecessary costs.
Efficient ways to track expenses
· Bank statements – Monitor bank statements to understand the inflow and outflow of cash.
· Expense-tracking apps – Find an application that is dedicated to tracking all digital transactions. Though cash-only payments aren’t accounted for here, you’re covered for everything else. These programs can also send you payment reminders.
· Receipt management system – Certain software can track all invoice and sale transactions for future analysis by placing them in their respective categories. These systems operate on a larger scale than the aforementioned expense-tracking applications.
· Budgeting apps – Expense tracking falls under the larger umbrella of budgeting. These applications allow you to enter relevant information about your company, which is then charted and applied to a budget that can be managed via expense tracking.
Take care of taxation
Small businesses can pay up to 19% of their earnings in taxes. Taxation is an inevitable part of running any business and can become a burden if not taken care of from the start.
Keeping a log of expenses and investing wisely can help you stay ahead of your finances. You’ll need to consistently comply with guidelines to avoid penalties. A good accounting system and payroll service can help you stay on top of tax requirements.
How to manage tax
Here are a few tips to help minimize taxes on your income
· Stay ahead of the curve – Pay bills and file taxes in a timely manner to avoid late fees. Monitor updates or changes to guidelines and adjust accordingly. Businesses are meant to pay quarterly taxes, meaning you’re subject to four deadlines throughout the year.
· Investments – Investing in the market helps you save on taxes. You can also invest in land and machinery.
· Limiting cash payments – Pay digitally as much as possible so you can accurately track expenses and, in turn, stay organized.
· Keep an eye on TDS -- Many payments, such as ones made to freelancers, are supposed to be deducted at the source. If you fail to do that, the entire amount becomes ineligible for reductions. Keep track of TDS payments separately.
Tax planning to limit liability – This can help you save thousands of dollars in taxes.
Conduct Job Costing
Most painting businesses operate on individual projects, which can vary in scope and attention required.
While it is important to track the overall growth and profitability of a business, it is also important to track each job’s labor and material costs.
Why do you need to track jobs separately?
Tracking each job separately can result in better management. Here are some of the major benefits.
· Detailed breakdown of expenses and revenue of each job.
· Projects can be quantified on the same scale. For example, perhaps you earned 20% profit per day on a 2-day project, and 25% profit each day on a week-long project. By managing them separately, you can decide which project-types are more lucrative.
· Avoid unwanted expenses by tracking projects in real-time.
· Allocate resources more efficiently.
· Provides a blueprint for future projects and motivates crews to beat job budgets.
How to manage projects
Listed below are tools that can help you manage multiple projects.
· Accounting system – Certain programs, like Quickbooks Online Projects, may include separate tools for project management. Using built-in tools keeps all your data in one place. That means less time importing and exporting.
· Project management system – If you can’t manage projects in your accounting system, opt for an independent program to track projects. Popular project management software includes Monday.com and Basecamp.
· Project profitability – This is typically included in accounting systems and tracks the profitability of projects in real-time, helping you stay under budget.
All of these options work similarly. Simply add a new project, fill in the details, and track expenses separately. It may track invoices automatically or allow for them to be uploaded manually.
Some helpful tips
Improve your bookkeeping via the methods below.
· Acquaint yourself with accounting, even on a basic level. You’ll feel more empowered if you understand the language and processes.
· Whatever digital toolbox you choose, always stay organized and current.
· Plan ahead when you can to avoid missing deadlines.
· Habitually review reports to identify errors or issues that may arise.
Bookkeeping is an essential part of every business and requires diligent care. It helps you simplify finances and plan for the future.
There are many tools available today that make accounting easy and accessible for entrepreneurs at any stage.
Choose the tools that suit your unique needs and help you organize your business. Tidy books free you from tedium and give you more time to focus on your craft.